Industrial business in danger of losing tax abatement
STANDISH — About ten years ago, Competitive Machining (CM), located in the Standish Industrial Park on Airpark Drive, expanded and was awarded a 12-year tax abatement by the city of Standish if it employed at least 18 people.
According to Standish City Manager Michael Moran, the abatement calls for CM to pay half of the millage to the county, Standish-Sterling Schools District and the Bay Arenac Intermediate School District; and half its property tax to the city as long as it maintained the employee quota put forth in the agreement. The business, though, currently only employs eight and at the Standish City Council meeting on Feb. 16, a discussion began on whether or not the company should be allowed to keep its Industrial Facility Tax abatement (IFT).
Moran says if the IFT is revoked, this being the eleventh of the 12 years, CM would have to make retroactive payments for 10 years.
“By doing that, they (CM) would have to drop back and pay 100 percent of the amount rolled back,” he said. He added this would equal between $1,500 and $2,000 per year.
Laura Puzzuoli, the owner of CM, says revoking the IFT, which could cost the company up to $20,000, could be a major blow to the company, possibly even the final one.
“It would probably be the last straw. It would be an incredible blow,” Puzzuoli said. “We’ve been in the business for 25 years and it’s extremely depressing. … We’re just struggling everyday.”
She says the issues in sticking to the IFT only surfaced last year.
“We started experiencing problems the entire year of 2008,” Puzzuoli said, adding the business does contract work, assembling products for the Department of Defense and Caterpillar. “We’ve lost several contracts to China, we’ve lost some to Taiwan and Mexico.”
Puzzuoli says the problems finally hit home last November when layoffs began. However, she said since then, CM has picked up some new contracts,, but hasn’t been able to secure the necessary lending to bring back any laid off employees.
“We have some contracts right now. … If we can get the financing back, and we can get the cash flow going again, we have work,” Puzzuoli said, adding the lending would go towards assisting in utility payments. “We would probably call back four of the people we laid off in November.
“All finance has dried up, all credit has dried up.”
At the meeting on Feb. 16, city council tabled the discussion to revoke the IFT until its March meeting so Puzzuoli could be in attendance to explain CM’s situation.
“We (city) will do nothing until we have that meeting,” Moran said. “They’ve (CM) been a good corporate neighbor. They’ve been an excellent employer and I’m hoping that we can work something out with them.”
At the last meeting, though, councilman Mark Winslow said he was concerned that by letting the abatement remain for two more years, even though the contract was technically breached, a bad precedent may be established, since he says several businesses in Standish also enjoy the benefits of an IFT.
“I’ve had mixed feelings about these sorts of things (IFT’s),” he said, adding in the past, business owners coming to the city have held IFT’s over city council’s head, making it seem like they wouldn’t do business in Standish without the abatement.
But while he acknowledged the fact a precedent may be established that the city wouldn’t want to deal with, Winslow says he has not made up his mind about whether or not CM will keep its tax abatement.
“We’re probably going to look at this thing a little more closely,” he said, adding that if CM can show proof it can recall some laid off employees when credit is avialable, it may weigh in his decision on how he’ll vote on whether or not the abatement is revoked.
He also says that since CM has lived up to its end of the deal for the first 10 years of its 12-year abatement, it could also help its cause before city council.
According to Standish City Assessor Mary Wojtowicz, if the city votes to revoke the IFT, a petition is then sent to the Michigan State Tax Commission, which has to officially lift the IFT. She says this process could take up to six months.