Tax abatement process begins for two manufacturers
February 16, 2011 - It's by no means a done deal, but the process has begun for two Oxford Village manufacturing companies to potentially receive tax abatements lasting up to 12 years.
By a 5-0 vote, the village council last week moved that applications for tax breaks for Royal Oak Boring and Royal Oak Medical Devices, both located at 650 S. Glaspie St., be processed according to the municipality's "Industrial Facilities Tax Abatement Policy," adopted in July 2000.
"In order to become, in my opinion, a business-friendly community, a community where companies want to come in here and do business, it's important that we offer these type of abatements," said Councilman Tony Albensi.
Before any tax abatements are granted or denied, there's a lengthy legal process that must be followed, which includes a public hearing. Both companies are requesting personal property tax abatements lasting up to 12 years. The duration of the abatement is subject to council's discretion.
The abatements, if granted, would apply only to the personal property taxes paid by these two companies. It would include village, township, school, county and state property taxes, which equal a total of 58.4961 mills.
Personal property taxes are levied against the equipment, machinery, furniture and fixtures a business uses to operate.
Royal Oak Boring is planning to invest $1.36 million in items subject to personal property tax, while Royal Oak Medical Devices is planning to invest $1.12 million.
In their applications, both manufacturers indicated they need a whole laundry-list of new equipment to meet the demand from their new customers.
These abatements, if approved, would effectively cut the State Equalized Value, which is already half the market value, of the new equipment by 50 percent.
So, instead of Royal Oak Boring paying $146,152 in personal property taxes on its new equipment over 12 years, the company would pay $73,076 with the abatement, according to calculations made by village Manager Joe Young.
As for Royal Oak Medical Devices, with the abatement, the company would pay $59,837 in personal property taxes on the new equipment over 12 years, instead of $119,674, based on Young's figures.
As a result of these investments, Royal Oak Boring indicated that seven new jobs will be created within two years of completion, whereas Royal Oak Medical Devices indicated it would create 10 new jobs.
Councilman Tom Benner indicated the village should look "very closely" at these applications and perform its "due diligence," given there are so many other businesses in the community who are currently paying the "full rate" and "not asking for tax breaks."
"I'm not opposed to giving someone a tax break," he said. "I want to be fair (to) the people that have been here and are paying the high-dollar taxes."
Benner noted that both of these companies are already located in the village, so it's not like they're looking to relocate here from elsewhere.
But Albensi pointed out if tax abatements aren't something the village is willing to provide, then he fears businesses could decide to set up shop in neighboring communities like Orion Township, which he said gives out tax breaks "left and right."
"Look at the rapid growth in Orion Township," he said.
To Albensi, businesses that pay less in taxes buy more equipment and hire more employees. This growth in business leads to more people paying taxes and greater revenue for government.
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.