Economic development collaboration is much appreciated

August 29, 2011
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The Michigan Economic Development Corp. and Michigan Strategic Fund last week approved a rather significant and focused decision to create the Michigan Business Development and Michigan Community Revitalization programs, replacing the Michigan Economic Growth Authority, Brownfield Redevelopment Authorities and Historic Preservation Tax Credit programs. The new programs begin Oct. 1.

The long-awaited changes are rooted in recommendations made prior to the gubernatorial election in 2010 by six economic development offices in West Michigan: Benton Harbor, Battle Creek, Kalamazoo, Zeeland, Newaygo, and The Right Place in Grand Rapids.

The economic development chiefs put their heads together to create a White Paper that includes a look at economic development efforts around the world — and hindrances to efforts. Recommendations supported maintaining the statewide business development gateway and replacing MEDC with a more focused business development office. Among the most important was this recommendation:

“MEDC treats expansions differently from the relocation of new-to-state companies because ‘they were going to expand anyway.’ Moreover — in Michigan, as in other states — state incentives have a built-in bias against expanding companies since they tend to create fewer new jobs than relocations. Globalization has changed the dynamics of manufacturing. In the era of advanced manufacturing, when companies invest substantially in automation equipment to enhance their flexibility, fewer new jobs can be expected from expansions. Michigan needs to recognize that companies have many viable choices when they consolidate or automate plants. States that reward capital investment for modernization will prevail over those that insist that incentives be tied to job creation. This is particularly important for Michigan, which has one of the nation’s largest manufacturing sectors, and hence the most to lose by not addressing the realities of globalization.”

As reported on page 3 this week, Gentex has been granted a MEGA state tax credit, assisting its $160 million facilities expansion at its Zeeland and Holland Charter Township sites, as well as new equipment. The automotive automatic mirror inventor is currently hiring another 300 new employees, who are among the 1,100 new employees the company will hire over the next five years.

The economic development group also had recommended replacing discretionary incentives with a system of statutory incentives, providing clarity to site selectors and reducing administrative costs.

The new programs eliminate business retention and retail projects from consideration of Michigan Strategic Fund consideration, but will focus on factors that include out-of-state competition, private investment, business diversification opportunities, near-term job creation, wage and benefit levels and “net positive return to the state.” The Community Revitalization Program provides grants, loans or other economic assistance of up to $10 million to projects that revitalize regional urban areas, act as a catalyst for additional investment in a community, reuse vacant or historic buildings and promote mixed-use and sustainable development.

It is important to note the collaborative work of the six economic development groups in West Michigan as state policy advances new millennium objectives.

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