TAX NEWS - June 2010

Michigan Tax: Holland considers full tax breaks for two businesses looking to expand

HOLLAND -- City officials are facing a decision next week on approving tax incentives for two major projects expected to bring hundreds of jobs to Holland.

The City Council is being asked to approve a full tax abatement for up to 12 years on nearly $12.5 million worth of investment by Haworth Inc., and a $1.2 million project for Novo 1.

The Haworth project, which involves the transfer of moveable wall systems and wood office furniture product lines from a plant in Calgary, Alberta, Canada, is expected to create at least 70 jobs by the end of the year, and more than 100 more positions within two years of the project's completion in 2012, city officials said.

Novo 1, a marketing services company, is expected to create at least 250 jobs within the first two years of opening a new regional call center at 1351 Waverly Road. The tax break request is for new machinery and equipment for the call center, officials said.

The two companies are seeking the tax breaks under a different portion of state law than a typical manufacturing company that seeks a 50 percent break on taxes, usually over a 12-year period. While state law allows a 100 percent tax break indefinitely, the city has developed its own policy limiting such breaks from 6-12 years, depending on the size of the building improvements and how many jobs are being created.

The tax break proposals, which will go through a public hearing process next Wednesday, are part of an effort to lure more jobs to the Holland area. Last year, the Michigan Economic Growth Authority approved more than $22 million in state tax breaks as part of an incentive package to encourage Haworth to move the Calgary product lines to the company's headquarters at 1 Haworth Center.

The Novo 1 project, meanwhile, received approval of a $1 million Community Development Block Grant, which will be used to renovate the building that will serve as their call center, buy new equipment and conduct staff training.

In a quirk that was criticized by some city officials earlier this year, 85 of the first 125 jobs to be created must be offered to applicants who live outside the Holland city limits because of the terms of the grant.