Council intends to offer tax abatement to LED company
February 10, 2010 - It's by no means a done deal and nothing's for sure yet, but a local company looking to move into the Village of Oxford, expand its operations and hire hundreds of additional employees got one step closer to obtaining the state and local tax incentives needed to help make it all happen.
On Tuesday night, the village council voted 5-0 to approve a letter of support indicating the municipality's intent to offer a Public Act 198 tax abatement to Relume Technologies, a leading-manufacturer of light-emitting diode (LED) products for outdoor lighting.
"This is exciting, new technology and I appreciate (Relume's) desire to come to the Village of Oxford," said Councilman Tony Albensi. "To me, this is a no-brainer to support this."
Relume has not been given a tax abatement by the village at this point. Council has merely indicated its intent to offer one.
Village Manager Joe Young said the actual process to apply for an abatement is "rather involved."
"There's a lot of paperwork to fill out and public hearings," he said.
Under P.A. 198 of 1974, local units of government have the ability to reduce property taxes on new investment by 50 percent for manufacturers and high-tech businesses. These abatements can provide relief on both real and personal property taxes.
The proposed P.A. 198 abatement for Relume could translate into a $241,029 savings in local property taxes over an 11-year period. Included in that total is a $79,217 (or 50 percent) abatement of village taxes, which currently total 10.12 mills.
Relume's operations are presently housed in a 35,000-square-foot space located in Oxford Township at 925 N. Lapeer Road, right across the street from Meijer. But Relume CEO Mike McClear indicated the facility is inadequate to meet the growing company's needs.
"That building is probably not going to be suitable for the plans that we have for expansion and so we're actively seeking to relocate," he told council. "We have a number of opportunities in Michigan, in Mexico, and also in California to relocate the business."
But McClear indicated Relume wants remain in Oxford. "The support that the village has given us so far, particularly the support that Joe (Young) has given us, has been amazing," he said. "We would really like to stay here in Oxford."
That's why the company is currently negotiating to lease a 60,000-square-foot building located at 575 S. Glaspie St. The vacant facility used to house Saturn Electronics and Engineering, Inc.
Relume needed a letter of support from the village, so it can be considered for tax incentives from the state, which are needed to make the potential relocation happen.
Relume is scheduled to be on the Michigan Economic Growth Authority (MEGA) Board's Feb. 25 agenda.
"In order for the MEGA Board to even consider our application, you must have local support," McClear said. "Without that local support, we would not even be in a position to be able to make an application."
The MEGA Board can approve a refundable tax credit for projects that will create high-wage, high-quality jobs in Michigan.
MEGA Tax Credits are offered selectively, and benefits are negotiated based on multiple factors including the number of jobs created, average wages of those jobs, total capital investment and the economic development assistance provided by the local unit of government.
"The whole purpose of the MEGA Tax Credit is to provide an incentive for businesses to either relocate to Michigan or to stay in Michigan," McClear explained.
Back in late December, the Michigan Economic Development Corporation (MEDC) sent a letter to Relume in which the agency put forward an economic development package of state and local tax incentives totaling up to $4.6 million.
Included was a $2.629 million MEGA Tax Credit based on job creation.
This package was based on Relume's estimated project parameters, which, according to the letter, included making a qualified capital investment of $6.6 million.
"The $6.6 (million) represents what we're forecasting our investment is going to be," McClear said. "That would include property, you know, plant and equipment. That's broken down into various types of tooling, production assembly lines, things like that. That $6.6 million is what we're projecting that we will have to invest in order to sustain that business."
That investment would create at least 436 new jobs over five years, according to the MEDC letter.
"I can say, with some certainty, that we expect to add between 50 and 75 jobs in 2010," McClear told council.
That includes 10-12 "high-level, professional jobs" such as design engineers, mechanical engineers, quality engineers and additional administrative staff. The remainder would be production staff that earns an average of about $12.50 per hour.
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.