FREMONT — The Michigan Strategic Fund has approved a 10-year Renaissance Zone tax abatement for Gerber Products Co.’s $36 million expansion at its Fremont facility.
Officials with the Michigan Economic Development Corp. say the incentive played a key role in ensuring the expansion takes place — and retains employees — at the Newaygo County facility.
“There was a high risk this (project) could have been taken to another state,” said MEDC General Counsel Amy Lum. “This (Renaissance Zone) makes it more financially viable to do this project here than in another state, and when it expires the property will be back on the tax rolls and go back to the city.”
The investment will support new product lines to advance production of Gerber melts, which are freeze-dried snacks made with yogurt and fruit. The snacks are designed to melt in a baby’s mouth, and are one of the fastest growing segments in the company’s snack portfolio with 15 percent growth year-to-date.
The Renaissance Zone authorized by the Michigan Strategic Fund on Tuesday is expected to save the company up to $6.5 million in taxes over the 10-year period.
Renaissance Zones are virtually tax-free areas that are typically only used when a company invests heavily into a property and there is an aspect of competition, Lum said. For the last three years the zone is in place, the incentive will gradually phase out and fully return to the tax roll after the 10-year period is over.
Because of the significant abatement, Gerber has an agreement with the city of Fremont for direct payments to the city in lieu of taxes, Lum said.
Gerber plans to create 50 jobs as part of the investment, which is the minimum requirement for receiving a Renaissance Zone designation. The Gerber Fremont facility at 405 State St. currently employs more than 500 people.
MEDC spokesperson Otie McKinley said the project also has a retention component.
“If this would not have passed, there was the potential for those (existing) jobs to leave the area,” McKinley said. “A $36 million investment in that corner of the state is an incredible opportunity and we’re keeping a Michigan business in the state.”
Gerber worked with The Right Place Inc. and the MEDC to secure funding incentives for the project.
“Gerber’s Fremont facility has been a critical component of our regional economy for decades,” The Right Place President and CEO Birgit Klohs said in a statement. “Beyond providing hundreds of quality advanced manufacturing jobs with competitive wages, Gerber also supports the regional agribusiness industry and has strong relationships with local growers and suppliers.”
The baby food producer was founded in 1928 in Fremont before joining Nestle in 2007. Gerber produces nearly 190 food products distributed to 80 different countries.