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Wednesday, April 17,2013

New GM, same old corporate partners

by Andy Balaskovitz
Photo by Dylan Sowle
Outside Corina Slaughter’s front door, beyond a 10-foot-high wooden fence across the street, is a lifeless stretch of concrete extending past Martin Luther King Jr. Boulevard, appearing to become one with the Grand River. 

It’s a massive reminder of good manufacturing years gone by. And it’ll stay that way for the foreseeable future, despite the property owner’s potential $38 million investment into the property.

General Motors has a history in this city that binds politics and capitalism. A significant employer. A major contributor of tax revenue. And a beneficiary — GM officials would call it a “partner” — of millions in tax breaks from the city. After going through Chapter 11 bankruptcy in 2009 and receiving billions of dollars in government loans, the new GM’s presence in Lansing is physically smaller. Four former GM properties totaling 260 acres in the area are owned by a trust looking to clean them of groundwater contamination and market them for reuse. They were liquidated as part of the bankruptcy.

But at the 111-acre site of the Grand River Assembly Plant just south of downtown — where thousands of Cadillacs are made — the company may spend $38 million on a new 400,000-square-foot “logistics optimization center” on the southeast portion of the property. GM has asked the Lansing City Council for a 12-year tax abatement worth $4 million. 

The company has no plans for the western part of the property, the vacant parking lots outside Slaughter’s front door — an expanse of broken, uneven concrete, some of which is closed off by chain-link or deteriorating fences.

“It looks pretty ghetto,” said Slaughter, who’s lived at her Middle Street house for six years. She remembers when the lots were full of cars. “It’s a lot of wasted space.”

What can you envision there? “Anything. A park? A shelter for the homeless? Why not donate a portion of it?”

Slaughter was surprised to learn that GM is expanding. She figured the company was struggling, which might be easy to surmise from her front lawn.

Is it fair then, to ask why the company is — at this point — not investing in cleaning up a massive eyesore while seeking a $4 million tax break over 12 years? And should the City Council consider using the abatement as leverage to get some aesthetic improvements?

The Bernero administration, local economic development officials and City Council members are lining up behind the plan and the tax abatement because of GM’s promise to bring 150 jobs into the city, as well as new income and property tax revenue. You might argue a majority of Lansing residents would do the same.

But some are not so willing to bend over backwards for a company that also has a history of environmental pollution and which has received tens of millions of dollars worth of tax abatements from Lansing in the past two decades. Some wonder how they can leverage GM’s abatements for property improvements. We saw it in 2002 when the company, backed by major politicians and business leaders in the city, stood up against environmentalists who’d hoped GM would compromise on air pollution standards. The notion of such bargaining made those politicians sour who rarely looked past the almighty jobs promises. As former Lansing City Councilwoman Ellen Beal told a City Pulse reporter at the time: “In this town you’re either for GM, or a Communist.”

But why can’t we ask more of GM — like brainstorming a plan to repurpose dozens of acres at a prominent intersection of the city? Is it so bad to ask for a favor while the company does the same?


The plan

The Lansing City Council held a public hearing Monday night on GM’s request for a 12-year, $4 million Industrial Facilities Exemption Certificate. The Council is told that GM is planning to bring in 150 new jobs and $1.7 million worth of new property and income tax revenue. The request was referred to the Development and Planning Committee and could be up for a final Council vote Monday, committee Chairman Brian Jeffries said.

The company is unsure whether it would go ahead with the expansion if the Council votes against the tax abatement. The building would be used for warehousing and sequencing, which reportedly can save time for assembly line workers.

John Blanchard, director of local government relations for GM, told the Council Monday the new facility would “fund key manufacturing needs going forward. It’s the latest example of how GM is doing business differently.

“This plant and location is a prime example of the strong partnership we view between GM, the UAW and the city of Lansing.” His comments drew a brief round of applause from the audience, a rare occurrence at meetings for comments not bashing the Bernero administration.

The company is seeking a similar tax exemption in Milford Township, where it’s reportedly looking to build a new $258 million IT facility. However, the township board there reduced the initial length of the abatement request from 15 years to 12 years, asked for assurance that GM would give preference to hiring local workers, and asked the company to upgrade all of its exterior lighting by 2022. Negotiations are ongoing. But Blanchard said last week that the lighting requirement would be a “non-starter from our perspective,” according to a local Gannett publication there.

On Monday, Blanchard said he’s unsure whether the Lansing expansion will happen if GM doesn’t receive the tax abatement. As for not having plans for the rest of the property, a GM spokeswoman said some of the space was needed for parking last year.

“We will probably use it again in the future,” said Erin Davis, the Grand River plant communications manager. “We’re still in the rebuilding phase of getting things going and becoming a profitable company.”

Davis and Blanchard referenced ramped-up production at the plant, like adding Cadillac production in October 2010 that brought 650 jobs to the plant and plans to make the next generation Camaro and new Cadillac models there. 

“A lot of those things are going on. That’s where our focus currently lies,” Davis said.

In the case of the Camaro, production is moving from Oshawa, Ontario, which angered union officials there — Lansing’s gain is Oshawa’s loss.

Jeffries said the new building would be built on the south end of the property near the river behind the plant.

It’s his understanding that repurposing the vacant lots on the site — “If they were to green up the area” — would cause the company to immediately address environmental contamination issues, which could be expensive. “I suspect that’s why they haven’t done anything. The good news is they keep adding to that site.”

Jeffries said he’s had “a lot of questions and concerns” from nearby neighbors about the appearance of the property. He said it’s a concern of his as well. “I do have concerns about that and would like it to be cleaned up. It’s a major entrance to the city.”

Bob Trezise, president and CEO of the Lansing Economic Area Partnership, praised GM for this “very significant development for the overall GM campus, if you want to look at it that way.”

That GM didn’t shed the vacant lots during the bankruptcy proceedings says to Trezise “they’re interested” in increasing production into the future. “I love an open space like that. It says to me: future jobs.”

“I think we take issues one step at a time,” he said of repurposing the vacant lots. “We are extremely pleased to be working with GM. We’re unconcerned about the parking lots.”

A New York Times report in December showed that GM has received at least $1.7 billion in local tax incentives on properties throughout the country over the past five years. Nearly $800 million of that came from Michigan alone in 2009 — “just a month after the company received a $50 billion federal bailout and decided to close seven plants in Michigan,” the story says. The report also found that at least 50 properties that were liquidated as part of the bankruptcy proceedings were in places throughout the country that had given GM tax incentives.

Under the old GM, the company received a $21 million tax abatement in 1996 in Lansing. Three City Council members at the time tried to use the tax break as leverage for a commitment from GM to fix odor and air pollution problems in the Westside neighborhood. The company threatened to leave without the abatement. The Council voted 5-3 against making the abatement contingent on fixing the air pollution.


Environmental issues

The Grand River site, like other former GM sites in Lansing, is plagued with groundwater contamination. The state Department of Environmental Quality’s Part 201 list shows lead and zinc is found in groundwater onsite and that an “interim response” is in progress.

The company is putting together a “voluntary corrective action agreement” to clean up contamination onsite, which is overseen by the DEQ and the U.S. Environmental Protection Agency. A prior agreement was in place, but that was halted during the bankruptcy. As the company puts together a plan, it will determine the extent of contamination on the 111 acres.

Thomas Simpson, of the DEQ’s Leaking Underground Storage Tank division, said there are still more than a dozen underground tanks there leaking mostly gasoline. While GM does quarterly groundwater sampling and has a “pump recovery control system” to keep contaminated water from going into the Grand River, “there is still some substantial risk still remaining,” like leaking to surface water, wetlands, drinking water wells or the city’s water supply, Simpson said. The controls “keep it contained on site, but it’s a big site.”

Bob Byrnes, a DEQ air quality inspector for the site, said the department hasn’t received complaints about odor after the company stopped using some solvents a year ago in its paint shop at the plant. He said based on the proposed expansion plans, “I wouldn’t anticipate any environmental impacts increasing.”

It’s unclear whether the vast areas of concrete cause surface water runoff pollution into the Grand River. A groundwater inspector with the DEQ wasn’t familiar with any particular issues, “not anymore than any other impervious surface. If you have a hard surface, you’re going to have runoff from it.”

The Mid-Michigan Environmental Action Council said in a statement for this story: “Mid-MEAC is happy to see an industrial site reused rather than allowed to go to waste. We would strongly recommend that the City of Lansing require the removal of much of the impervious surface and place requirements that would ensure that no pollution is getting into the Grand River at the site from the former parking lots and buildings.”


Mixed emotions and leverage

James Cheeks, who lives around the corner from Slaughter, has no problems with the company — except for an “obnoxious” smell over the past four summers from the site. It would wake up Cheeks, who has lived near the Grand River Assembly plant for all 56 years of his life, and his roommate at night.

“Other than that I have no issues with them,” he said.

Across the Grand River along the more affluent Moores River Drive, resident Larry Lee can see the vacant parking lots. He’s lived there since 1999.

“There’s a lot of things I wish GM would do. But since it’s been so industrialized, I’m not sure what you do with it. When I go by, it certainly is not the best use for a river site. But in the scale of eyesores, it’s not the worst I’ve seen.” According to his own “revisionist history,” it would have been nice to take advantage of the river lot, he said, with green space along the banks and residential behind.

Fourth Ward Councilwoman Jessica Yorko, whose ward includes the area around the site, said she “most likely” will support the tax abatement request. She acknowledged the site is “definitely not good the way it is. It’s not attractive, and environmentally having all of that surface parking next to the river is not a good thing. But it’s really promising and encouraging General Motors wants to go ahead and add a new operation there.”

She mentioned GM’s LEED-certified facility in Delta Township, which has been heralded for its environmentally conscious design. “I would like to see that level of investment in what I would call the curb appeal and environmental protection at the Grand River site.”

But as for using the tax abatement as leverage for seeing such improvements, Yorko said she wants to hear more from what residents want.

“I think it’s an interesting tool to have a legal agreement that gives neighborhoods what they need and deserve in investment beyond just jobs. I don’t know yet what the climate or wishes of residents of Lansing are — how much more are they willing to ask for from companies or are the jobs companies bring enough?”

At-Large Councilwoman Carol Wood will also “probably” support the abatement, based on what she said was the company’s fulfilling of past promises on jobs. “I look at them as a good corporate partner in this whole process.”

But she, too, said, “It’s important they clean up that property,” referring to the vacant parking lots. “It might be their back door, but it’s someone else’s front door. It’s important that be taken care of.”

First Ward Councilwoman Jody Washington says she’ll vote for the abatement because the expansion will bring “good union jobs.” And while “we probably should address some of their cleanup places” — like the lots surrounding MLK — “I’m not going to stop this because of that. I’m not one to tie-bar … the lot and this exemption. I will look at them separately.”

Brad Vauter, a Westside Neighborhood resident, spoke against the tax abatement Monday night during the Council meeting. “I don’t think it is the better part of wisdom for this Council or councils across the state to play this corporate Kwame Kilpatrick pay-to-play game GM is bringing to us tonight. I know the mayor and others have said we want to welcome GM as good neighbors. I want to welcome neighbors who are willing to help out.”

Two other speakers echoed Vauter’s notion of “corporate welfare.”

When asked to respond to those comments, Blanchard, GM’s director of local government relations, declined. Then added: “We definitely disagree.”

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