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Pros and cons of tax abatement discussed at public hearing

Written by Amy Mayhew   
Thursday, June 24 2010

Tri-Tec Polymers is located at...

HOLLY, Michigan – It seemed more like a candidates’ debate than a public hearing on Tuesday evening as several members of the Holly area – many of whom may be running for council seats in November – turned out to offer their opinions on a proposed Industrial Rehabilitation District along the village of Holly’s Elm Street.

Village Manager Marsha Powers said the village of Holly had received an application for an industrial facilities tax exemption certificate from Rory Scheving, owner of Tri-Tec Polymers.

Powers said Scheving’s company will manufacture Teflon seals, molding, tubing, and washers for the automotive industry, and is looking to bring at least 10 new jobs to the community over the next two years.

Scheving is asking for a tax abatement on all new office and shop equipment that he brings into the 209 Elm St. facility, still paying taxes on the building and property itself, but only paying 50 percent of taxes on new property  brought into the facility.

Larry Lilly

Initially, village resident and council-hopeful Larry Lilly was against the idea. “We went through this in 2002 and it was on Elm Street just a few doors down from where this one is,” he said. “They were going to hire one person per year, but they never hired nobody.”

Lilly continued. “It you’re going to give anybody a tax abatement, give it to the homeowners – give it to us. We’re the ones who need it, not some outsider.”

Holly Township Treasurer Mark Freeman spoke both as a former Holly business owner, and a Holly Township official.

“My purpose here this evening is to provide the council with facts and information,” Freeman said. “I will be discussing both the pros and cons of this proposal but it is not my intent to be persuasive either way.”

Mark Freeman

The former owner of Freeman’s Inc., Freeman said his father began the company in 1959 before selling it to him in 1982. Freeman owned the store for another 23 years before selling in 2004.

“For a total of 46 years, Freeman’s paid property taxes on both real property, which is real estate, and personal property which is equipment,” he said. “As you all know there is a lot of equipment in a supermarket so our personal property taxes were quite high.”

Freeman “guesstimated” that over the nearly 50 years in business, Freeman’s Inc. paid approximately $400,000 in property taxes, never having received a tax abatement or any other special consideration.

“My point is that if council approves this abatement, there is the potential for public relations repercussions from long term business owners in Holly and you may hear the question, ‘What have you done for me lately,’” Freeman said, adding that the same business owners understand the theory of tax abatements and wouldn’t automatically be opposed to it.

Switching gears, Freeman spoke in the capacity of the Holly Township treasurer. “If this abatement is approved, it will result in a reduction in tax revenues collected by the village, Holly Area Schools, Holly Township Library, Holly Township Parks and Recreation and the Holly Township general fund,” he said. “These other governmental units do not get to vote on this issue, so when the council votes, do so knowing that individually and collectively, you own this vote.”

Joseph Kowall

Village businessman Joseph Kowall has owned and operated his business at 400 Elm St. since 1999 and supports the notion of tax abatement.

“Revenues from real estate won’t change, but I think by not giving this some serious consideration, you’ll be putting out the message that you don’t want new business,” Kowall said. “To discourage business, to me, is to discourage the economy – the American dream,” he said. “I think we need to embrace people’s insanity or bravery – I don’t know which it is – but we need to nurture them and let them come alive.”

Fred Hopper

Businessman and potential Holly Village Council candidate Fred Hopper agreed.

“We’re not losing any money – we’re gaining half of the taxes on new equipment,” Hopper said. “What’s the problem?”

Ryan Bladzik

Ryan Bladzik, a member of the Economic Development Task Force and a possible November council candidate urged council to use the tax abatement issue to broaden their approach to attracting new businesses to the area.

Last to speak, Scheving assured council members he was in it for the “long haul.”

“It’s not a flash in the pan,” Scheving said of his business. “It’s not something that’s only going to be around for two or three years.”

Scheving began Tri-Tec Polymers in December of last year, partnering with Brad Sekulich, owner of Tri Tech Seal in Grand Blanc. Scheving said Tri Tec Seal has been in business since 1987.

While the partners initially thought about adding 5,000 square feet onto Sekulich’s Grand Blanc facility, ultimately, it was more economically feasible to lease the Elm Street building.

“The building had been vacant for over 3 years,” Scheving told council members. “It was nothing but an eyesore, but we’ve been repairing it, adding lighted signage, pulling weeds, mowing and putting in a sidewalk.”

Scheving said he is expecting delivery of $628,952 worth of shop and office equipment in the days ahead.

Rory Scheving

“This is a viable business – it’s going to work,” he said. “I told Marsha (Powers) that we would employ 10 people over the next two years because I’m a very conservative person, but I believe in the next two years, we’ll could be looking at anywhere between 20 and 30.”

Councilman Bill Kuyk asked whether Scheving or his partner had considered what would happen without the tax abatement.

“We haven’t really looked into what we would do if we don’t get the abatement,” Scheving said. “I believe this is a really great opportunity for everyone but you’re right,” he said. “If we don’t get the abatement, there is nothing that would keep us here and we could possibly add onto the facility in Grand Blanc.”

Before the public hearing was closed, Lilly had changed his mind. “That was 2002 when we went through the other one – they didn’t follow through,” he said. “This man here is going to come in, fix the building – what he’s doing is he’s bringing in an asset to the Holly community and I’m all for that – I think he should get the abatement.”

Should the state approve Scheving’s paperwork before the next meeting on July 13, council is expected to pass a resolution and award the requested tax abatement certificate to Tri-Tec Polymers.


#1 BrianS 2010-07-04 15:03
Just as an intersting sidenote.

Report from Land Policy Institute at MSU stating that tax abatements are largely useless and possibly counter productive.

I'm generally in favor of tax abatements, but it is a classic Prisoner's Dilemma. Ideally, no community would offer tax abatements and reap the benefits of higher tax revenues. Howoever, if one community, sensing an advantage, offers tax abatements, the others will too, resulting in lower revenues for both communities.
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