Official Floats Idea For Tax Break Proposals

July 21, 2008
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Official Floats Idea For Tax Break Proposals

PLAINFIELD TOWNSHIP — Even as Plainfield Township moves forward with a review of its industrial tax abatement policy, a broader conversation is beginning on a potential regional approach that could be used as an economic development tool.

Plainfield Township Manager Robert Homan said last week that he suggested that property tax abatement policies be standardized across the region.

“My suggestion was to get it on the Grand Valley Metro Council’s agenda to see if we could have a uniform IFT (industrial facilities tax) policy and procedure for all communities in the Grand Rapids metro area,” Homan said.

GVMC Executive Director Don Stypula said Public Act 198 abatements and other ideas to boost West Michigan’s economic profile were discussed at a recent meeting of municipal leaders, The Right Place and Lakeshore Advantage.

“If we can adopt some common principals, from my way of thinking, my vantage point, it would make sense to do that,” Stypula said.

Public Act 198 allows communities to excuse up to half of taxes on real property and equipment for as long as 12 years for industrial firms that locate or expand in the community.

Since the state law was enacted in 1974, local communities have crafted rules for its implementation, setting regulations in areas such as duration of abatements and job creation.

Plainfield Township has had the same P.A. 198 policies in effect for 12 years, Homan said.

“One of the things we talked about (at the Township Board)  was when we give a tax break on business equipment, we’re giving a tax break where value of the equipment depreciates rapidly, so essentially we’re not getting much money ever,” Homan said. “That’s a legitimate discussion.”

A three-member committee of Township Board members, led by Trustee Rebecca Borek, is focusing on the issue. Homan said he expected a discussion before the full Township Board after Labor Day.

The Township Board recently approved tax abatements for two established businesses, KB Stamping and Couturier Iron Craft.

Homan said Plainfield’s policy uses a point-based system to determine whether a company qualifies for a tax break and for how long. For example, the system awards points for established businesses and for a brick façade on the building.

Several industrial parcels have recently been developed off of West River Drive NE behind Valley City Sign Co. and there is the potential for a 120-acre industrial park near 10 Mile Road and U.S. 131, Homan said.

“In my 12 years, never has there been an application for an ITF tax abatement that has been denied,” Homan said. “There’s no real debate here. We’re going to give them because they are available, and they’re going to ask because it’s available.”

The Right Place President Birgit Klohs, whose organization is the region’s economic development champion, said she and her staff keep a matrix that shows each West Michigan municipality’s P.A. 198 policies so they can be interpreted for companies considering relocation.

“It’s a dilemma we have,” Klohs said. “Over the years, individual communities have developed their own procedures and their own criteria for granting the abatements. If we show a client three municipalities and three buildings, each of the municipalities will have different rules … which makes it difficult for us to say you’re going to get X number of years in this township.”

Local industries are frequently bombarded with letters and visits from elsewhere offering cash and a laundry list of other incentives to entice them away from West Michigan, she added.

“If anybody, if any region in this state could do that, certainly it is here,” Stypula said.

“We stand a better chance of being successful at that than any other region.”

He said the recent Right Place meeting was “eye opening,” but consensus on whether to even pursue the idea of a regional approach is still a matter of discussion, which he expected the GVMC to take up.

Homan said he thinks the Legislature should undertake an update of the state law.

“This is 1970s legislation,” Homan said. “Times have changed.”

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