Yesterday, our friends at MLive published an article which discussed the award by Council of Industrial Tax Facilities (IFT) abatements to Continental Dairy Facilities. A common question we hear is "Aren't tax abatements taking money from the City?"
The answer is no, not really. IFT abatements were created to help bring new businesses and keep existing businesses in Michigan. The primary advantage of IFT abatements is to use it as an economic development tool, but specifically in Coopersville, to build jobs and grow companies. To be clear, IFTs are granted for specific real property (buildings including new, additions and remodels, and land modifications, but not land itself) and personal property (equipment) for a limited number of years. The businesses who are granted IFTs are still required to pay something on their property taxes. For example, a company can apply for an expansion of their manufacturing floor, which may mean real property - a building addition - and personal property - new production machines. They will continue to pay taxes on their existing plant and machinery, property, and water & sewer.
The article states that last year, Continental Dairy Facilities and fairlife paid for 23% of the City's operating budget, even with the abatements in place, which is comprised of city taxes and property taxes. Over the next few years, those numbers will go up with the fairlife expansion which is currently taking place and the expansion for which Continental Dairy is planning.
The article states:
The answer is no, not really. IFT abatements were created to help bring new businesses and keep existing businesses in Michigan. The primary advantage of IFT abatements is to use it as an economic development tool, but specifically in Coopersville, to build jobs and grow companies. To be clear, IFTs are granted for specific real property (buildings including new, additions and remodels, and land modifications, but not land itself) and personal property (equipment) for a limited number of years. The businesses who are granted IFTs are still required to pay something on their property taxes. For example, a company can apply for an expansion of their manufacturing floor, which may mean real property - a building addition - and personal property - new production machines. They will continue to pay taxes on their existing plant and machinery, property, and water & sewer.
The article states that last year, Continental Dairy Facilities and fairlife paid for 23% of the City's operating budget, even with the abatements in place, which is comprised of city taxes and property taxes. Over the next few years, those numbers will go up with the fairlife expansion which is currently taking place and the expansion for which Continental Dairy is planning.
The article states:
"Continental Dairy and fairlife ... have invested upwards of $375 million in the two businesses in the last five years, according to Ken Rizzio, of Lakeshore Advantage.
During the 2014 fiscal year, the two businesses paid $637,784 in water bills and $1,799,148 in sewer usage fees while all of the other users in the city combined paid $511,375 for water usage and $463,627 in sewer fees." [emphasis added]
The City has undertaken some radical water and sewer infrastructure improvements in order to keep up with the needs of Continental Dairy, fairlife, and other growing businesses. Has it cost the city some money? Yes - but we also had help from grants. But have there been massive advantages to the residents and smaller businesses? Yes - and will for years to come as Coopersville grows.
Think about IFTs this way: We're giving companies a head start in the race to grow and expand. The more they grow, the more they create jobs and invest back in our community. We are letting them win because in the end, we all win.
Think about IFTs this way: We're giving companies a head start in the race to grow and expand. The more they grow, the more they create jobs and invest back in our community. We are letting them win because in the end, we all win.
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