MACKINAC ISLAND — The passage of a new statewide economic development incentive for attracting new good-paying jobs could pay dividends in West Michigan, regardless of whether companies in the region use it.
That’s according to Birgit Klohs, president and CEO of The Right Place Inc., a Grand Rapids-based economic development organization.
Out of the 60 or so current leads in its development pipeline, at least one or two of The Right Place’s prospects would qualify for the incentive, if it were to be passed by the House and signed by Gov. Rick Snyder, who supports the legislation, Klohs told MiBiz. Additionally, the legislation would put Michigan in consideration for new investment opportunities from corporations that would not have considered the state in the past because of its lack of incentives, she said.
“This is like having Right to Work done,” Klohs said. “Once we got that done, we ended up on lists we were never on before. This would put us on a different spectrum for possibilities for at least getting a chance to make our case. That doesn’t mean we’ll get it, but if we don’t get the chance to make the case, we know we will never get it.”
To that end, The Detroit News reported Friday morning that Taiwan-based Foxconn Technology Group, a contract electronics manufacturer, is eying Michigan for a more than $4 billion expansion in the U.S. that would result in more than 5,000 jobs. The company makes parts for the Apple Inc. iPhone.
Foxconn also is considering central Pennsylvania for its expansion, according to the report.
Passing the “Good Jobs” legislation has been a priority for Detroit-based Business Leaders for Michigan, the state’s business roundtable organization.
The legislation allows for up to 15 annual business expansion or attraction projects to capture up to half of the personal income tax generated by the new jobs. The legislation is capped at $250 million annually and companies must create a minimum of 500 new jobs and pay 100 percent or more of the average regional wage.
“We’ve been attracting businesses to Michigan, but they tend to be these smaller businesses,” Michigan Gov. Rick Snyder said in a Thursday press conference during the annual Mackinac Policy Conference on Mackinac Island. “That’s critically important, but now we’re finding success in larger organizations saying they want to come to Michigan. We need to have another tool in our toolkit to make sure we can get them in our state. We need a closer and that’s what this is about.”
Snyder said multiple projects in the pipeline would qualify for the incentive if the legislation passes.
“There are some that are reasonably close, so there is some urgency in my view to get this done,” Snyder said. “We could lose opportunities if this doesn’t take place in the next month or so.”
In addition to Snyder’s backing, the state Senate has already passed the legislation, which has support from a broad range of other stakeholders including skilled trades unions, the Michigan Manufacturers Association and municipal leaders, including Grand Rapids Mayor Rosalynn Bliss.
Despite the broad base of support, the package of legislation has drawn the ire of some groups such as the Midland-based Mackinac Center for Public Policy, which has compared the incentive to the tax credits issued by the now defunct Michigan Economic Growth Authority (MEGA), which continues to create budget problems.
Supporters of the incentives contend the legislation offers no tax incentives until after a company creates jobs.
While the jobs legislation has already passed the state Senate, its status in the Republican-controlled House remains unclear, according to recent media reports.
Policymakers and economic developers have long worked to create more tools in the toolkit to attract additional jobs and corporate investment. As the Good Jobs legislation makes its way through the legislative process, another package of bills known as MiThrive would make Michigan more competitive with states such as Ohio, Pennsylvania and the Carolinas, according to proponents.
The legislation allows for large-scale, transformational brownfield redevelopment projects to capture new sales and use taxes, as MiBiz has previously reported. The enhanced brownfield legislation has passed both the House and Senate, but had not yet been sent to Snyder’s desk for a final review, as this report was published.
The governor expects to sign the legislation pending the final review, according to a spokesperson.
For Klohs at The Right Place, the addition of the brownfield and jobs incentives would go a long ways to help Michigan become more competitive with other states seeking large-scale investment projects.
“We’d have two new tools that would really make a difference in my opinion, that we can really market,” said Klohs, who added that the legislation would modernize Michigan’s incentives at least in the short term. “In the long term, you don’t know because you have to continually track what your competitors are up to.”