Steelcase approaches city for tax exemption

December 14, 2009
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Grand Rapids city commissioners will hold a public hearing this week on whether to grant Steelcase Inc. a personal-property tax exemption for relocating employees from Gaines Township to its longtime campus at 44th Street and Eastern Avenue.

The hearing on Tuesday is the first step in a three-step process to potentially award the office-environment maker a 12-year abatement that would reduce the company’s state and city tax burden by an estimated $351,898 each year.

Granting the exemption would also give Steelcase an eight-year tax credit from the Michigan Economic Growth Authority worth $4.7 million. MEGA approved the tax credits almost a month ago. But City Economic Development Director Kara Wood said those credits are contingent on city commissioners approving Steelcase’s request for the exemption.

If approved, the city would abate nearly $77,000 in property-tax revenue for each year of the exemption. Wood, however, reported that the city would gain almost $390,000 in new city income-tax revenue each year from the jobs Steelcase plans to bring to its Grand Rapids’ campus over the next three years.

Steelcase said it will relocate 480 full-time jobs to its corporate headquarters and learning and exploration center at 901 44th St. SE from its corporate development center, also known as The Pyramid, in Gaines Township.

The company said it would invest $18.2 million into the relocation effort, which involves rehabilitating and renovating the two buildings in Grand Rapids. Of the investment, $11 million is reportedly going into upgrading real property. Steelcase will invest the remaining $7.2 million into personal property on the site.

The credits from MEGA and the exemption from the city would give Steelcase $939,398 in tax reductions each year for at least eight years.

Tax exemptions for personal property are allowed under state law.

A few weeks ago, the city terminated a personal-property exemption for Steelcase and requested that the State Tax Commission do the same. The revoked abatement was for $3 million worth of equipment that hasn’t been located in the city since 2007. Steelcase said it had removed the equipment from its 44th Street location and has reimbursed the city $93,766 in personal-property tax payments.

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