A pair of tax abatement requests from Wixom businesses did not come to fruition given the fiscal challenges the city is facing.
The Tax Abatement Review Committee met last month to review Three M Tool and Machine’s request for an extension of its recovery zone abatement and considered Hallmark Tool & Die’s request for an industrial facilities tax exemption.
“Our recommendation is based on a several factors — a lot of it is timing or strength of the proposal,” said John Lee, a member of the Tax Abatement Review Committee. “The idea of a tax abatement is that the city makes an investment and gets a return on it in the future. It didn’t seem like a good investment for the city at this time.”
Mayor Kevin Hinkley added that city’s financial condition was a major consideration.
“We’re going out for a millage and currently have a $1.7-million budget deficit for (Fiscal Year) 2013-14, so that makes it difficult to award a new abatement or extend an exiting one when the burden would fall onto the taxpayers,” Hinkley said.
The Recovery Zone Program is an effort by the state to provide assistance to tool and die companies suffering economic hardships in recent years. The law provides for a three-year phase-out requirement on both real and personal property, in which the tool and die company begins paying an increasing portion of their property taxes — 25 percent in the first year of the three-year phase out period; 50 percent in the second year; and 75 percent in the third year.
“Three M wanted an extension and wanted it to go back to the original year’s percentage,” Hinkley said. “We are saying you already got it and it’s not going back. That’s like double-dipping. Based on the current business climate, it’s not a good investment.”
Three M has approached the city several times looking for a tax reduction. In 2008, the city awarded a tax reduction after the company purchased its building at 50759 Century Court. In August 2009, the company appeared before the city requesting an abatement under the Recovery Zone Program and was granted a tax abatement of five years for both real and personal property.
Likewise, Hallmark Tool & Die submitted an application for an industrial facilities tax exemption certificate, but given the city’s initial response opted to withdraw the request.
Hallmark was seeking an approval on a proposed investment of $327,835 in personal property to invest in manufacturing equipment at its building located at 51200 Pontiac Trail.
“Hallmark already had the machine on order, so it’s not only about getting the abatement. They were going to get the machine, with it or without it,” Hinkley said.
Hallmark was previously granted a six-year, $1.3-million abatement in October 2011 so it could add a 12,000-square-foot addition to their building and purchase new machinery.