Lyon Twp. halts tax breaks for huge firms for 6 months
LYON TOWNSHIP – When Craig England was looking for a new home for his multimillion-dollar company, a 50% tax break was a big lure to Lyon Township.
Moba USA Inc. was hooked and moved in January from Farmington Hills into its new facility on Lakeview Drive in Lyon with the promise of half off its real property tax bill for seven years.
“We looked at several communities in the I-96 corridor and ended up leaning toward Lyon Township for several reasons, but one was because they offered tax abatements to companies coming into the township,” England said.
He anticipates Moba, which is headquartered in the Netherlands and is one of the world’s largest manufacturers of egghandling equipment, will save at least $200,000 per year in taxes because of the abatement it was granted by the township.
Moba is not the first company to take advantage of the tax abatements that the township has been offering since about 2009.
But it could be one of the last.
Lyon Township will not take any tax abatement requests from businesses looking to locate here for at least the next six months.
Lyon sets moratorium on abatement requests
Officials are reconsidering their policy that often gives industrial facilities up to a 50% break on their taxes for up to as many as 12 years in order to attract them to the township.
“The problem with these tax abatements are they become something that is an entitlement rather than something that someone comes in and asks us for,” Supervisor John Dolan said. “People are even advertising: ‘Come to Lyon, you get a tax abatement guaranteed.’”
No more.
The board unanimously agreed in a resolution to stop accepting or processing applications for tax abatements. Among the reasons cited were no need to offer additional incentives for a township that has experienced significant growth which has also created a large demand for improvements to public services, facilities and infrastructure.
The resolution noted that “many” tax abatements were granted in the past, but concluded that additional tax abatements are “not in the township’s best interests.”
The township currently has 10 tax abatements in effect for varying terms with two more pending. Three additional tax abatements recently expired.
“If you saw the whole roll, you’d be surprised at how much money we’ve given away,” Treasurer Patricia Carcone said.
Just for this year alone, she said the township gave away $682,000 in real property taxes and another $208,000 in personal property taxes to the companies under the tax abatement umbrella.
Need to entice businesses to Lyon has passed
Downtown Development Authority Executive Director Amy Allen said the original tax abatement policy in the township was established at a time when different economic conditions existed and there was more of a need to entice businesses to locate in the township.
“Now we’re working on limited parcels available and looking at a dire need for road improvements and we don’t have the money for it,” she said.
The Downtown Development Authority looks at the tax abatements as a good marketing tool and doesn’t want them to go away.
However, Allen said the policy needs to be reevaluated to encourage retention of businesses rather than to bring in new ones, particularly as the township looks to fund construction of the final section of the ring road between Milford and Grand River.
Trustee Kristofer Enlow said the township didn’t need to be offering tax abatements any longer.
“Who are we competing with (for businesses)?” he wondered. “Maybe Novi. Never in Milford or Green Oak, not Salem Township or the City of South Lyon. I don’t see it as a need. They are coming to us anyway, why do we need to give that away?”
Moba England, who lives in South Lyon, acknowledged that being given half off their tax bill was not the only reason Moba liked Lyon Township. The new facility in the industrial park was easily renovated to fit its needs and the company felt the area would be attractive to its 64 employees.
The tax savings, however, enabled Moba to add three employees of a higher skill level, England added.
Without a tax abatement, England said Moba would have looked harder at other communities along the I-96 corridor, including Wixom, Walled Lake, Brighton, and Green Oak Township.
He also believes that other Lyon Township businesses are benefiting from Moba’s presence in the community, including the retail stores, restaurants, and gas stations his employees and customers frequent.
Carcone looks at it another way.
“Multi-million dollar companies get these tax breaks and not the small mom and pop businesses,” she said. “They don’t employ hundreds, but they still provide a service or benefit to the township. All these big companies get these breaks, but we should not be giving away any more of our money.”
DDA Coordinator Tina Archer said the township’s current tax abatement policy was put in place in 2015, but prior to that, some industrial corporations were granted tax breaks, including aerospace company Testek Inc., in 2010, and in 2012 Henrob Corp., (now called Atlas Copco) a maker of Swedish automotive fasteners, as well as Richard Tool & Die, all receiving a 50% tax abatement of real property taxes for multiple years.
The tax abatement policy was started to stimulate development of two business parks that were stagnant in growth and has since used a scorecard system that grants a break on taxes for terms that can be anywhere from 1 year to 12 years.
Allen said as the number of available parcels of land in the township decrease, officials need to target what businesses are brought in and an overhaul to the policy will help in recruitment.
“I think there are positives and negatives to tax abatement. We see both sides of the coin,” she said. “Our goal as the DDA Board is to have 6-8 months to present a policy for tax abatements to the township board.”