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Bill would ease process for companies in Michigan border towns to receive incentives

BY Sunday, February 12, 2017 08:00pm

KALAMAZOO — Legislation that passed the state Senate last Thursday seeks to level the playing field for economic development organizations trying to attract companies to Michigan’s border communities.

Current rules set thresholds for new job creation for a company to receive incentives through the Michigan Strategic Fund’s Business Development Program. To be counted as a “qualified new job” under the program, an employee needs to be a resident of Michigan.

That requirement puts communities along Michigan’s southern border at a disadvantage when they try to help attract new companies, according to Derek Nofz, the director of public policy at Kalamazoo-based Southwest Michigan First, a regional economic development organization.

“Some of our projects don’t qualify because people come in from Indiana,” Nofz said. “There’s been probably a couple projects a year over the last three years that were affected by this. Each was a fairly good sized project. We’re not talking 10 or 15 jobs; these are 100-200 jobs.”

Senate Bill 40, introduced by state Sen. Dale Zorn, R-Ida, would change the definition of a “qualified new job” to cover nonresidents for companies located in a Michigan border county.

Nofz said the issue came up the most for Southwest Michigan First’s attraction projects in which it tried to help a company that wanted to relocate its operations to the region near the Indiana border. A company that set up shop in a community like Buchanan, Niles, White Pigeon, Constantine or Sturgis, for example, would draw workers who lived in Indiana, meaning the firms often would not qualify for the state incentives.

It’s an issue unique to the border region, according to economic development sources.

“This bill is about cutting punitive regulations that currently put local border towns from Niles to Sturgis at a disadvantage in the competition for new jobs and investment,” state Sen. John Proos, R-St. Joseph, said in a statement supporting the bill.

According to Proos, an Indiana company currently is considering moving its manufacturing facility to Southwest Michigan but remains unsure about the relocation project “because they would be unable to count Indiana employees who would travel to the Michigan facility” when seeking incentives.

According to a Senate Fiscal Agency analysis, the bill would result in no additional costs to the Department of Talent and Economic Development because the incentive programs have caps on what can be awarded on an annual basis. Likewise, it would not have any fiscal impact on local governments, according to the analysis.

The bill, which passed 24-13 in the Senate, now heads to the state House of Representatives for consideration. Nofz remains hopeful it will pass after it failed to advance in lame duck last year.

“I think it has a pretty good chance. I think we’re better positioned with the House to get this through. We just ran out of time in lame duck last year,” Nofz said. “I’m pretty encouraged. This bill is what we want for the border areas.”

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