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Wednesday, October 13,2010

Virg Watch

An economic page from the GOP playbook

by Andy Balaskovitz
Wednesday, Oct. 13 — Democratic gubernatorial candidate Virg Bernero unveiled a “revolutionary” economic plan today that looks a lot like an idea from … former Republican Gov. John Engler.

That’s right. Bernero’s “Make it in Michigan for Free” plan — meant to entice business development in urban areas — is based on the idea of Engler’s Renaissance Zones, Bernero’s campaign spokesman Cullen Schwarz said.

“It’s like Renaissance Zones on steroids,” he said.

Renaissance Zones are geographical areas “virtually” free of state and local taxes. They were created in 1996 and include 150 areas in Michigan. Properties for business and residential use are included in Renaissance Zones, as well specific sectors like agricultural processing, renewable energy and forestry processing.

Lansing is in the middle of a 111-acre Renaissance Zone, which includes three subzones. The Capitol Club Tower is part of this and its tax breaks expire in 2023. There were another 110 acres throughout the city designated as such whose tax credits expired in 2008.

Cullen said Bernero’s plan goes “far beyond” what Renaissance Zones do for businesses.

Bernero’s plan, announced today at a campaign stop in Detroit, would offer 100 percent tax forgiveness for up to 12 years for businesses that want to redevelop abandoned properties in urban centers, Schwarz said.

The state would also allow businesses to take over the building and land for free and help them leverage federal money for cleanup costs of the site. To top it all off, the company would be eligible for interest-free loans for up to five years, Schwarz said.

Bernero’s idea is also different because it is site-specific. “It is targeted at old abandoned facilities, so communities can identify specific problems,” Schwarz said.

Schwarz made no bones about Bernero’s plan being compared to Republicans. He even mentioned one of outspoken Republican Newt Gingrich’s ideas to make Detroit a completely tax-free zone.

“If a good idea is a good idea, we need to work with it,” he said. “But Virg thinks his (own) plan is better.”

This plan has been worked on with economic development experts for “some time,” Schwarz said.

Meanwhile, these types of economic incentive plans have been stirring the pot back here in Lansing. Two of developer Pat Gillespie’s plans to rehab the types of properties Schwarz spoke of have hit a snag — not so much for the incentives themselves, but on who will get the construction jobs once there is interest in rehabbing the site. Regardless, the tax incentives were voted down.

Gillespie sought a 24-year year tax abatement on his $23 million Market Place plan to build residential units next to the City Market. That request was turned down by a 4-4 vote at City Council Monday night because some Council members worried Gillespie did not have fair wages in place for the potential construction jobs.

Gillespie also wanted a two-year extension on tax incentives already given to him for his Marshall Street Armory redevelopment. The $14 million project seeks to transform the old armory into a regional hub for five major nonprofit organizations. A last-minute amendment to the extension would have added a project labor agreement, or PLA, which would have guaranteed union jobs on the site’s construction. However, that was voted down after being deemed illegal by City Attorney Brig Smith.

Tony Conley, who hosts a daily radio show on WILS 1320 AM, had Bernero on his show this morning to talk specifically about Gillespie’s pair of redevelopments in the city.

Conley said Bernero expressed “disappointment” at the City Council for not approving the two tax incentive plans. (A recording of the program was unavailable.)

Conley also said Bernero will “increase his efforts to see the deal gets done.”

Schwarz would not comment on efforts the city is making to approve the tax incentives for the Gillespie project, which look a lot like what Bernero would do under his proposed “Make it in Michigan for Free” plan.

“At this point, that is a city issue, not a campaign issue,” he said.

Bernero’s chief of staff, Randy Hannan, and city Finance Director Jerry Ambrose did not return calls for comment.

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