It was a tale of two cities as Maureen Krauss, deputy director of Economic Development and Community Affairs for Oakland County, addressed the Rotary Club of Oxford last week.
Krauss talked about the different roles played by the state, county and local community when it comes to attracting new businesses and retaining existing ones.
‘In Michigan our tool, and the tool of many of our neighbors, is the tax abatement,? she said. ‘We like abatements at the county because we like to be a player, we like our communities to be a player and we like to win deals.?
The decision as to whether or not to give a business a tax break lies solely with municipalities.
‘It’s up to the local community to say yes or no,? Krauss explained. ‘The local communities collect our tax and abate our tax for us. We don’t get a vote on that at the county level. But that’s just how our tax structure is in this state.?
Although abatements mean a municipality won’t collect as much as they normally could in property taxes for a certain number of years, Krauss said the long-term benefits of having a strong business community are worth it.
‘We like to tell communities abatements are important because you’re getting half of something instead of nothing,? she said.
To illustrate her point, Krauss talked about the cities of Novi and Auburn Hills.
Novi doesn’t offer any tax abatements whatsoever.
‘I can name many projects that the City of Novi has not received because they’re not interested in doing abatements,? Krauss said.
Auburn Hills is the exact opposite.
‘I’ve been in many communities where they like to criticize Auburn Hills for giving away abatements to anyone who walks in,? Krauss said. ‘I just challenge the communities to tell me who wouldn’t want to be Auburn Hills right now.?
‘They have a great business community there of solid companies that are going to stay and are growing,? she explained. ‘Most of the abatements are pretty much expiring now because you can range them from one to 12 years. So now they’re getting the full tax benefit in their community.?
And what does that ‘full tax benefit? mean?
‘They pay cash for virtually everything they want to do ? $14 million for a new police station, cash; $10 million to build a new downtown, cash; let’s repave all the roads in the community for two years, cash. They’ve really done an astonishing job.?
Now that Auburn Hills is ‘filling up,? Krauss said the city changed the focus of its abatement policy from attraction to retention.
‘If you’re an existing company and you’re expanding, you get a much greater tax abatement than if you’re brand new to Auburn Hills,? she said. ‘They’ve really turned around their whole policy to reward companies that are there and encourage them to grow.?
Krauss reminded the crowd that it’s business and industry that carries the biggest tax burden in a community, not residents.
‘Here’s the most unpopular thing I can say in front of a group of people ? residents don’t pay enough taxes for the services they use in their community,? she said. ‘It’s the businesses who pay the taxes that carry the freight. Study after study has shown this.?
‘Businesses don’t go to the library every week,? Krauss explained. ‘They don’t call police and fire all the time. They just don’t use the services that individual residents do.?
‘So it really is healthy for a community to have a good mix (of commercial and residential) supporting their local tax base.?
Abatements aside, Krauss said it’s also ‘very critical? for communities to be consistent when it comes to things like the site plan review process and issuing permits.
‘The worst thing that can happen to a business is for the rules to change in the middle of their project,? she said. ‘Or for you to tell a company we’ll have your permits in two weeks and then four weeks later the permits are nowhere to be found.?
Instances like these negatively shape how a municipality is viewed by others.
‘That really makes or breaks a community’s reputation among businesses, among developers and quite frankly among our staff (at the county),? Krauss said. ‘If we know every time we bring a project to a community it’s going to take five times as long to get the permits in Community A as opposed to Community B, chances are Community B is going to win more deals when it comes down to it.?
As a result, Krauss said, ‘I always encourage communities to have clear and consistent procedures for businesses to follow.?
Even though the county can’t offer a lot in the way of dollars as incentives to attract new businesses, it can help introduce companies to communities and broker deals between them.
‘If you have a project that you’re working on ? no matter how small or big ? please give us a call,? Krauss said. ‘It doesn’t matter if it’s a pizza shop or a large manufacturing operation or a (Research and Development) center, whatever, please engage us so we can provide assistance.?
‘We’d like to see how we can help Oxford and Oxford Township win those projects.?