GRAND RAPIDS — City commissioners admitted two tool and die companies into the Renaissance Recovery Zone last week, a move that will allow both manufacturers to reap the full benefits of being part of a new statewide collaborative.
Metric Die & Engineering Inc. at 320 Marion Ave. NW and Michigan Wire EDM Services Inc. at 1221 Taylor Ave. NW gained entrance into the nearly tax-free zone for five years, with options to remain in the zone for two more five-year periods. Both will be required to report to the city in two years on the progress they have made.
“We’ll be losing about $9,000 a year to both of them,” said Mayor George Heartwell.
And it’s a loss the city can absorb, as Economic Development Director Susan Shannon reported the city still has “cap” room of more than $160,000 a year for Ren Zone tax losses.
But recent action taken by state lawmakers to retire the Single Business Tax two years early, a levy that is exempted in the zone and credited in brownfield awards, has city officials wondering what will happen next. First Ward Commissioner James Jendrasiak asked if the previous awards the city made to local companies and development firms would be coming back to them when the SBT vanishes at the end of next year.
“I hope that not all of our SBT credits with brownfields would come back to us,” said Shannon.
From 1998 through March of this year, the city awarded brownfield designations to 52 projects and all have SBT credits.
Before legislators stamped the SBT with an early expiration date, Deputy City Manager Eric DeLong wrote to Rep. Kevin Green saying that the credits are vital to urban redevelopment. He said repealing the tax could have a “severe consequence” for projects that aren’t likely to be completed by the sunset date of Dec. 31, 2007, and could “destabilize” the current value of those credits.
“This means that their financial pro-forma will be driven negative by millions of dollars due solely to lack of attention to this important transitional detail,” wrote DeLong.
Shannon said lawmakers told her whatever tax they create to replace the SBT would also include legislation to offer credits from it. But 2nd Ward City Commissioner Rick Tormala said the new levy isn’t expected to generate as much revenue for the state as the SBT did, and if so, fewer credits would be available.
“I think the real issue is going to be how they’re going to capture $1.9 billion,” he said.
Metric Die and Michigan Wire are expected to be part of a new collaborative the state could approve as early as next month. The collaborative can have up to 20 tool and die firms that have fewer than 75 employees. Applications are due in Lansing by Sept. 18.