The Michigan Economic Development Corp. and Kellogg Co. requested APRZ designation for the plant, which Kellogg planned to close.
The MEDC projects that the designation will save Kellogg as much as $20.4 million in property, state and single business taxes over the 15-year period that the Ren Zone provides tax relief.
Renaissance Zone designations are issued by the state with local government approval.
With creation of the zone, the company expects to invest $35 million in the 28th Street facility over the 15 years, $10 million of it by the end of 2004.
The company has further committed to retaining 390 jobs and opening up 43 new ones by December 2005.
Keebler also agreed to contribute $40,000 a year for 10 years to reduce the amount of tax dollars the city would lose as a result of the zone designation.
The city would have faced a net loss of $156,000 in property and income tax revenues by designating the tax-free zone, but another agreement commissioners approved Tuesday with Siemens Dematic offsets the loss.
Siemens Dematic agreed to pay $2.3 million for the city’s water system administration facility at 530 Ball Ave. NE. The five–acre property, which is adjacent to the company’s 25-acre campus on Plymouth Avenue, will accommodate Siemens’ future expansion plans.
Siemens currently employs 1,600 at its Plymouth Avenue facilities.
The company intends to invest more than $20 million developing the Ball Avenue site and create 100 new high-tech jobs.
The Siemens Dematic deal will not result in any tax loss to the city.
According to the city, proceeds from the Ball Avenue property, coupled with a $700,000 (MEDC) grant, will combine with 15 years’ worth of tax increments from a yet-to-be-created satellite SmartZone district to cover the estimated $7.1 million cost of relocating the water system administration facility.
A public hearing on creation of the satellite SmartZone is tentatively scheduled to by held before the City Commission on Oct. 22.
Combining the Keebler and Siemens Dematic projects reduces the city’s tax loss to $19,676 a year.
Siemens, the MEDC, The Right Place Program and the city had worked together for months to swing the deal.
“Everybody wins on this,” said First Ward Commissioner Roy Schmidt, as he complimented the partners and city staff on the effort.
“Why we’re so strong and continue to be strong is because we’re able to work situations out that, normally, people, I don’t think, can handle.”
Commissioner Rick Tormala of the city’s second ward referred to staff’s work on the project as “an excellent balancing act” and to the Siemens and Keebler agreements as “a great economic stimulus package.”