Transparency urged as economic gardening tools are distributed
Gov. Rick Snyder’s Pure Michigan Business Connect, announced as he participated in the Detroit Regional Chamber of Commerce policy conference on Mackinac Island, drew attention from across the country last week, from Wired Magazine on the West Coast to Wall Street out East. It also drew involvement from locally based Varnum LLP law firm, which is offering $1 million over five years in legal services to targeted Michigan startup businesses as part of the governor’s program.
Varnum is the third largest regional provider of pro bono services, behind Warner Norcross & Judd LLP and Scholten Fant PC, as measured in hours donated and reported in the Business Journal survey published June 6. It may be likely Varnum will be joined in the effort the governor calls “economic gardening” of Michigan companies.
Pro bono services have enabled hundreds of businesses through the Michigan Small Business Development and Technology Center, an organization likely to benefit from Snyder’s expansion of such business services. Using such existing programs with a long track record of helping new and small businesses succeed is important. It offers one necessary window for public scrutiny for the businesses assisted and assisting.
Huntington Bancshares earlier last week announced it, too, would enter the “public-private” partnership with the Michigan Economic Development Corp., committing $2 billion in commercial and small business lending throughout the state over a period of four years. Regional bank leaders told the Business Journal about half of those funds would be earmarked for mid-market and larger businesses, and the rest for small businesses leveraging Huntington’s Small Business Administration loan program. Huntington is the top SBA lender in Michigan, and the third largest in the country.
Varnum and Huntington join Consumers Energy, DTE Energy, Stage 2 Innovations, Automation Alley and Export Import Bank in contributing to a now $3 billion initiative in collaboration with the MEDC.
The MEDC hopes to leverage several more millions of dollars for the new Pure Michigan Business Connect program. The Business Journal is mindful that the hope for new business stimulus comes at a time when existing business owners remain haunted by the mortgage lending “crisis” detailed in the book “Too Big to Fail,” and now the subject of an HBO movie currently airing in various time rotations. They are haunted, too, by continued cuts in business lines of credit from financial institutions.
Further, the new economic development stimulus policy draws its funds from incentives and tax breaks, like the Renaissance Zones, brownfield and historic tax credits, which leveraged in Grand Rapids an average payback of $12.60 for every $1 in state tax credit granted — and which has returned dozens of properties to the tax rolls. The governor is urged to restore those credits in a new formula proposed by an MEDC work group proving its viability. It is a bridge for those caught between lending restrictions and the governor’s garden, those who have already proved the worth of such incentives.