WYOMING — The passing of today’s deadline for third-round applicants to the state’s tax-free Tool and Die Recovery Zones further reinforced what has become a worst-case scenario for toolmakers in the city of Wyoming.
As a direct result of the controversial tax abatement, nearly an entire industry segment is now at least investigating the possibility of moving out of the city. Among these are many firms that had once praised the municipality for its pro-business philosophy, but now are shocked at what many describe as shortsighted, adversarial and often insulting behavior by the administration.
“I am moving. In my book, I have absolutely no choice but to move,” said Pat Roys, owner of Rapid EDM Service.
With the exception of funds for schools and libraries, the municipality sacrifices all of a Recovery Zone firm’s tax revenue, with no promise of job growth or investment in return. And unlike a Renaissance Zone, it is limited to a specific industry.
“This is different than traditional tax abatements,” said Ray DeWinkle, vice president of The Right Place Inc., who serves as a local liaison for municipalities with zone concerns. “Like a Ren Zone, it takes an existing revenue stream and eliminates it. I think
Many communities voiced strong opposition to the legislation, but at least in West Michigan, only
“I was vehemently opposed to this when they created it,” said Bill Berry, president of Die-Tech & Engineering Inc., a 40-employee moldmaker. “And it turned out how I most feared it would.”
Although it was facing the same challenges as its regional peers, Die-Tech was a productive and profitable enterprise when the legislation was drafted. Today, the tax-free status of his regional competitors has erased the efficiency advantage it once held.
“If they were 3 percent below break-even, and I was 3 percent above, look what happens when you give them a 6 percent break,”
“They said, ‘Why should we give that to you? We don’t have enough tax money; manufacturing is dying anyway. We don’t do this for retailers,’”
“I can’t understand why the governor would sign something into law that would leave this up to the city of Wyoming,” said Phil Parsh, president of Robb Machine Tool Co., a seven-employee, 46-year-old Wyoming firm. “Now I’m having trouble competing against firms three miles away from me, much less
If his firm could handle the expense, it would already have left
Some firms have already moved. Last year, Legacy Precision Molds Inc. relocated to Grandville after “being shut down” by the city. Company President Tom Van Ree said the neighboring city welcomed him “with open arms, and gave us the green light all the way” for his firm’s Recovery Zone application.
Deputy City Manager Barbara VanDuren noted that no firm has even applied for the Recovery Zone in
“Nothing formal has been brought forth,” said VanDuren. “But they probably would not have been approved; they realize that and don’t bring the applications forth.”
Had things gone differently, Rapid EDM could have been the first application. Instead, his only concern as to a relationship with the city is to facilitate a smooth transition to another community and the sale of his current facility. Like two other firms, one for each round of recovery zone applications, Rapid EDM only made it as far as a city council’s work session meeting.
The Business Journal could not find any public record of
That company has actually nearly doubled since that time, growing to 65 employees. The firm is looking to expand within the next 12 months, and indicated that if there is a fourth round of Recovery Zones, it will seek admission through the city, or move.
“To be fair, the city has helped us out a number of times with tax abatements,” said General Manager Doug Vriesman. “But with this they were, quite frankly, rude.”
During his work session, Vriesman was not able to make his case to the council, with council member Bill VerHulst moving to table all discussion before he could speak. The next day, Vriesman actually received a call from another council member apologizing for the city’s actions.
Vriesman hopes that with three new council members, the sentiment will have changed when he reopens the case next year. He believes that if the council were to take a closer look at the numbers, it would find the revenue loss much smaller than it assumes.
Spencer Bertram, one of the new council members, indicated that he would indeed be open to reviewing the Recovery Zones.
“I think we should at least take a look at them,” he said. “I’m not personally opposed to it, if they could make a solid case to give up the tax revenue.”
DieTron Inc., a 65-employee firm, has also found it would be too expensive to move.
Vice President Dave Rose contacted Wyoming Mayor Carol Sheets about the issue last month, curious if the city had changed its stance under the new administration.
Her response, via e-mail: “Our stance on Tool and Die Recovery Zones has not changed and in fact is more set due to the legislature ending the SBT in 2007 with no plan to replace that lost revenue. … Should the tenor in
Ironically, Die-Tech, Rapid EDM, DieTron Inc. and Detail Technologies are all actively involved in coalitions. Robb Machine Tool was the other company involved in a work session.