Ford would receive more than $100 million in tax abatements from the City of Detroit as part of a proposed $238.6-million aid package for the tech campus the automaker plans to build in Corktown, according to a presentation made Monday night by the Detroit Economic Growth Corp.
Ford said in August it would spend nearly $740 million to renovate the deteriorating Michigan Central Station, the centerpiece of the campus, and other properties and would seek from "federal, state and local economic development groups and officials" at least $250 million in "tax or other incentives" to support the project.
Ford said in June it had purchased the station the other properties in the Detroit neighborhood for the purpose of building the tech campus where as many as 5,000 people eventually could work.
At the time, the automaker said tax incentives would likely play a role in the development. When making the official announcement at the train station in June, Bill Ford, executive chairman of the automaker, thanked not only Detroit Mayor Mike Duggan and Michigan Gov. Rick Snyder for their help with the deal but also the Michigan Economic Development Corp. and the DEGC — the two government agencies that hand out tax incentives for major projects.
A summary of the estimated tax abatement for Ford, prepared by the DEGC. pic.twitter.com/1XdQUBDGGc
— Allie Gross (@Allie_Elisabeth) September 10, 2018
On Monday, the DEGC broke down how this would ideally play out — with $103,591,804 in tax incentives coming from the City of Detroit and $134,967,693 coming from other sources. The total estimated abatements come out to $238,559,497.
The tax abatements would come from an array of requested incentives.
According to the presentation, Ford is asking for:
$208,796,791 in tax abatements for being in a Renaissance Zone. This is an abatement of real and personal property taxes, city corporate income tax, and utility users tax. It would occur over 30 years. Nearly $90 million would come from the City of Detroit.
$8,056,085 from the Commercial Rehabilitation Act (P.A. 210). It would occur over 10 years. Nearly $4 million would come from the City of Detroit.
$18,763,677 from the Obsolete Property Rehabilitation Ac (OPRA)t. This act allows the taxable value of a property to be frozen at its pre-improvement value with some exceptions. It would last 12 years and nearly $9 million would come from the City of Detroit.
$2,933,944 from the Neighborhood Enterprise Zone Act. This law allows taxable values of property to be frozen at their pre-improved value. This incentive lasts 17 years (it reduces at 15 years) and just over $1 million would come from the City of Detroit. The benefits accrued would affect future condo owners, rather than Ford.
To come up with these figures, the DEGC said it analyzed the economic benefit of having Ford move to Corktown. It said it anticipates a $370.1-million net fiscal benefit to the city over 35 years.
That number was arrived at by estimating the number of jobs Ford would bring to the city (an estimated 2,500 direct permanent jobs, 2,500 indirect jobs in Ford facilities and 2,000 construction jobs) and also the promise by Ford to invest nearly $740 million in the rehabilitation of blighted buildings like the train station and the Book Depository.
More: Corktown residents choose representatives to be voices for Ford projects
More: Ford says it will spend $740M to bring Detroit train station project to life
While proponents of tax incentives pointed to the jobs the project would bring, critics questioned why a multibillion-dollar company like Ford cannot foot the bill itself.
"They have literally $17 billion in their bank. They're not going to go out of business unless they suck at business," said North Corktown resident Jon Koller, an engineer who attended the Ford-Corktown community meeting Monday where the DEGC presented the incentive plan.
According to the company's most recent quarterly report, it has $16.8 billion of cash on hand.
"We got a company taking $100 million out of city future tax receipts. They're taking the cool thing we did — the train station is the most famous building in the world. This is the good thing. We're going to have $100 million less, just in the city, to do stuff," Koller said.
The Detroit Free Press sought comment from Ford Land on whether Ford would have moved forward with the project without incentives, but did not hear back by the time this report was published.
For comparison purposes, Michigan offered Amazon $4 billion in incentives in the failed bid to lure Amazon's second headquarters to Detroit, the Michigan Economic Development Corp. said in May.
According to the DEGC, the Corktown incentive approval timeline is in crunch mode because at least one deadline is quickly approaching: Municipalities seeking incentives under OPRA must submit proposals to the State Tax Commission by Oct. 31.
City officials aim to submit the incentives package to the City Clerk by Sept. 19. On Sept. 25, City Council as a whole will refer the package to the Planning and Economic Development (PED) Committee. On Oct. 11, there will be a public hearing and review by PED. On Oct. 16, tCity Council will vote on the incentives.
According to the DEGC, work on the train station will not begin without the OPRA approval.
Crain's Article Michigan Central Station
Re: Crain's Article Michigan Central Station
Ford will pursue $238.6 million in tax incentives, including nearly $103.6 million from the city of Detroit, for its plans to redevelop the long-abandoned Michigan Central Station and establish an autonomous- and electric-vehicle tech campus in the city.
The Detroit Free Press reports that the figures were divulged during a presentation Monday night by the Detroit Economic Growth Corp. Ford has said it plans to spend about $740 million to rehabilitate the blighted former train depot and other properties in the city's rapidly revitalizing Corktown neighborhood, money it would take from a fund already set aside to overhaul its Dearborn campus. The amount of federal, state and local in incentives it's seeking is consistent with what the automaker previously projected.
Ford purchased the massive train station for an undisclosed sum in June and held a big celebration event there to outline its vision of establishing it as an anchor of a campus for mobility innovation. The company is reportedly seeking four different types of tax abatements and must work quickly because a key deadline to submit proposals for one of them is Oct. 31.
The incentives are sure to raise objections in Detroit, which emerged from the nation's largest municipal bankruptcy in 2014. The city's long-struggling public schools remain, by the mayor's own reckoning, one of the biggest impediments to recovery, with continued declining enrollment, a high dropout rate and now a drinking-water crisis, and more than a third of residents live below the poverty line. What's more, Ford's second-quarter earnings report listed $16.8 billion in cash on hand, leading many to ask why incentives are needed.
An analysis by the Detroit Economic Growth Corp. anticipates a net fiscal benefit of $370.1 million to the city over 35 years. That's based on Ford's projections of bringing 2,500 employees and another 2,500 employees from suppliers, startups and other partners, 2,000 construction jobs and the automaker's promised $740 million investment.
Article link includes video and diagrams:
https://www.autoblog.com/2018/09/11/for ... yptr=yahoo
The Detroit Free Press reports that the figures were divulged during a presentation Monday night by the Detroit Economic Growth Corp. Ford has said it plans to spend about $740 million to rehabilitate the blighted former train depot and other properties in the city's rapidly revitalizing Corktown neighborhood, money it would take from a fund already set aside to overhaul its Dearborn campus. The amount of federal, state and local in incentives it's seeking is consistent with what the automaker previously projected.
Ford purchased the massive train station for an undisclosed sum in June and held a big celebration event there to outline its vision of establishing it as an anchor of a campus for mobility innovation. The company is reportedly seeking four different types of tax abatements and must work quickly because a key deadline to submit proposals for one of them is Oct. 31.
The incentives are sure to raise objections in Detroit, which emerged from the nation's largest municipal bankruptcy in 2014. The city's long-struggling public schools remain, by the mayor's own reckoning, one of the biggest impediments to recovery, with continued declining enrollment, a high dropout rate and now a drinking-water crisis, and more than a third of residents live below the poverty line. What's more, Ford's second-quarter earnings report listed $16.8 billion in cash on hand, leading many to ask why incentives are needed.
An analysis by the Detroit Economic Growth Corp. anticipates a net fiscal benefit of $370.1 million to the city over 35 years. That's based on Ford's projections of bringing 2,500 employees and another 2,500 employees from suppliers, startups and other partners, 2,000 construction jobs and the automaker's promised $740 million investment.
Article link includes video and diagrams:
https://www.autoblog.com/2018/09/11/for ... yptr=yahoo