City says project pipeline tightens
Economic development report shows businesses committed to $173 million in new private development in 2017.
The city of Grand Rapids has released a report showing the number of projects in its approval pipeline dipped in 2017.
Grand Rapids’ Economic Development Office on Jan. 9 reported to the city’s Economic Development Project Team the commitments from businesses that received approval for various city incentive programs during calendar year 2017.
The commitments include $173 million in new private investment spread across 12 projects, 835 jobs created with an average wage of $24.12 per hour, 189 new housing units and an annual increase of $839,435 in city tax revenue generated.
This compares to 2016’s reported commitments of $566 million in new private investment across 38 projects, 2,467 jobs created, 1,453 new housing units and an annual increase of $2,197,229 in city tax revenue generated.
During the past 15 years, the Economic Development Department has assisted with 568 projects, an average of about 38 projects per year.
Kara Wood, managing director of economic development, said the dip in project load for 2017 can partially be attributed to Michigan’s personal property tax reform initiated in 2014 that started to take effect in 2016.
“One of the things that’s really changed our work in terms of number of projects ... is the personal property tax reform that in ’16 resulted in significantly (fewer) property tax abatements for us in the city, and that’s because personal property tax isn’t being charged to those acquiring new equipment,” she said. “So, our abatement activities are down. Attribute that decrease in our project load to that.”
The approvals report for 2017 includes industrial and facilities exemptions (PA 198), obsolete property rehabilitation exemptions (PA 146), neighborhood enterprise zones (PA 147), brownfield redevelopments (PA 381) and tax-exempt bonds.
This particular report included only new commitments approved in 2017, as opposed to showing outcomes of previous tax abatements, and none of the projects approved have progressed to construction phase.
The Economic Development Department also produced an annual tax abatement survey report conducted to assess private investment and job creation within city limits in years prior to 2017.
Businesses that used city incentive programs in 2015 and 2016 reported recent investment of $200 million, accompanied by the creation of about 400 new jobs.
The incentive programs include the obsolete property rehabilitation exemption, industrial facilities tax exemption, neighborhood enterprise zones and new personal property exemption.
Projects approved in 2010-12 under the tool and die renaissance zone exemption and new personal property exemption programs also were surveyed.
Collectively with the results above, from 2010-16, businesses surveyed invested $321 million and created 1,536 jobs with an average wage of $32.17 per hour.
The overall return on investment to the city was found to be 74 percent, which is calculated as the percentage of new property and income taxes paid ($1,605,429) compared to property taxes abated ($921,956).
Additionally, 296 new or rehabilitated housing units have been or will be created with the support of these programs.
“I am grateful to our partners in the business community for their strong commitment to growth in our city,” Mayor Rosalynn Bliss said. “We are looking forward to 2018 as another solid year of business development, growth and investment in Grand Rapids.”
Wood said the 2018 project pipeline is looking “very robust” and includes the previously announced development at 201 Market.
She said the pipeline also includes “projects coming to fruition in the next year,” including “property transactions that have occurred, projects in development and planning commission approvals that are occurring or will occur.”
“Many of the projects approved in 2016 began construction in 2017. We expect those projects to come online in the next 12-24 months, with numerous new projects to be considered in 2018,” Wood added.
To view both reports from the city’s Economic Development Office, visit growgr.org.