Source: Sherman Publications

Twp. approves tax abatement policy

by CJ Carnacchio

November 16, 2011

The debate was passionate, and at times contentious, but in the end, Oxford Township officials last week voted 4-3 to approve a tax abatement policy pertaining to industrial facilities.

Having this guideline in place “gives us a fighting chance to retain and maintain existing jobs while providing a means for creating new jobs in our community,” said Planning Commissioner Jack Curtis, who chairs the township’s Economic Development Subcommittee, which came up with the policy.

“This is one of the baby steps we feel must be taken” to get the township “on par with other communities” when it comes to having the ability and the necessary tools to attract new economic development, he noted.

The policy’s goals are to expand the township’s industrial base, encourage investment in the community, create new jobs and provide economic stimulus to other private sector facilities. (For a summary of the policy, see the box to the right.)

Curtis noted when he met with Auburn Hills City Manager Pete Auger, “one piece of advice that was offered to us was we better have a tax abatement guideline in place so that we could be prepared should the need arise.”

Auburn Hills possesses a much larger than normal amount of industrial and commercial properties and is known for granting many abatements.

“The township doesn’t want to become another Auburn Hills, we just want to learn from them,” Curtis noted.

Curtis said Auger told him the city’s industrial and commercial properties are “95 percent occupied” right now, so “he would help support our efforts (by) sending business our way.” An up-to-date list of all the commercial and industrial properties available in Oxford Township was given to Auger.

But not everyone believes offering tax abatements will bring new economic development, investment and jobs.

“Jack’s spiel was very nice and I appreciate it, but it doesn’t work,” said Treasurer Joe Ferrari, who, over the years, has repeatedly expressed his opposition to tax abatements.

Both Ferrari and Trustee Sue Bellairs wanted an expert or experts to come before the township board and present the pros and cons of abatements.

“Base it on fact,” Ferrari said. “What Jack said sounds fantastic, I mean, it really does. But you look at the studies that have been done. That’s what you look at it. You need to hear from both sides.”

“I just would really, truly like to (see) someone come in, so I can make a better informed decision on this,” Bellairs said. “I might even change my mind.”

Ferrari indicated he doesn’t believe Oxford should offer abatements just because other communities like Orion Township and Auburn Hills do.

“Orion has a landfill,” he said. “I don’t think Oxford should have a landfill.”

Curtis argued the policy wasn’t simply created just because other communities have one.

He explained there is a requirement by the state that says if a developer is looking for state funds, the township or municipality that they go to must at least have a (tax abatement) guideline in place.”

“We need (something) that says our township has a guideline for tax abatements in order to play in this arena of development,” Curtis said. “In order for these people to at least attempt (to obtain) state monies, we have to have a guideline. We’re not doing it just because the other municipalities have it. They have it so that they can get these companies that get state monies.”

Curtis made it clear that just because the township has a policy doesn’t mean it automatically has to grant tax abatements to everybody that requests one.

“All of you can vote ‘no’ on the abatement when it comes to you,” he said. “It’s just a guideline for approval. You don’t have to approve them.”

According to the policy’s language, “The township board reserves the right to reject any and all (abatement) applications.” It further states that “final approval of an (abatement) district or (tax) exemption certificate issuance shall be decided by the township board.”

“Having these guidelines in place does not mean that the developer would automatically be awarded the abatement,” said Carol Mitchell, who serves on the Oxford Board of Education and spoke in support of the policy. “This township still has a final say in awarding or denying any local abatements.”

In Bellairs’ view, the discussion was not simply about adopting a policy or a set of guidelines to have on the books; it boiled down to whether or not the township was willing to offer tax abatements, something it currently does not do.

“No matter what you call it, a rose is still a rose,” she said. “We are talking about tax abatements. Once the policy’s in place, then the tax abatements start.”

Ferrari expressed his concern that granting abatements to businesses ultimately means “our residential properties pay more” in property taxes.

“Especially with debt millages,” he said. “You have a fire and a library bond debt. If you grant abatements and (the businesses) don’t pay their full share, we pay more. It’s a fact.”

That was another reason he cited for needing an expert or experts to come in and present data to the township board concerning the benefits and drawbacks of abatements

“If I’m going to pay more in taxes and ask my residents to pay more, I want to tell them why I’m doing it,” he said.

However, Planning Commission Chairman Todd Bell argued having an abatement policy will attract new economic development that will ultimately increase and diversify the tax base as a whole, thereby lessening the tax burden on residential property owners.

“If we thrive on rooftops (i.e. homes) alone, we are going to starve,” he said. “We’re going to tax these people to death (and) out of their homes.”

Bell argued having a “well-balanced community” with residential, commercial, industrial and research-office facilities “is where the action is.”

“I want my tax bill to go down and the only way we can do that is (to) have a balanced attack in this community.”

Oxford Village Manager Joe Young, who also spoke in support of the policy, argued that even though abatements cut local property taxes by 50 percent, the township would still be getting additional revenue it didn’t have before.

“You’re getting half a loaf (of bread), which is better than no loaf,” he said.

Young noted that when the abatement period ends, the township can then collect 100 percent of the property taxes as it would on any other property.

Ferrari pointed out that in the past, the village granted numerous abatements to industrial facilities that left town before the abatement period ended, so the municipality never got to collect the full tax amounts.

He said the only exception is Master Manufacturing, which is still located on S. Glaspie St.

“We don’t want to bring up past history because those people didn’t enter into a contract,” Bell said.

He explained that’s why the township’s abatement policy contains contractual obligations that the recipient of the tax break must honor.

The policy contains provisions where if a company “ceases operation, so that it is no longer employing people and producing goods and no successor employer is providing employment during the term of the abatement” it must then repay a certain percentage of the abatement. If it shuts down less than two years after the tax break receives state approval, it must repay 100 percent of the abatement. If it’s between two and four years after, the company must repay 50 percent.

The policy also states, “the (tax) exemption certificate may be revoked or reduced if the applicant has not substantially complied with the conditions of the abatement with respect to the items described in the application and within the time frame provided.”

“I’ve been saying it for three years that you’ve got to have a solid contract,” he said. “That’s what’s part of these guidelines.”

“I have read study after study after study that says (abatements) do work if you follow the contractual guidelines,” Bell added.

Ferrari also criticized the policy for being solely focused on traditional industrial facilities and not including “21st century knowledge-based industries” such as information technology, biotechnology and computer sciences.

“Chasing manufacturing isn’t working,” he said. “It’s proven it doesn’t work.”

However, Curtis noted this policy is a “living document” that can be amended to include those industries and anything else the township board wants in there.

“This is a minimum requirement and can be revised or improved at any time,” he said.