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Chair: Time To Take Economic Development Bull By The Horn

October 18, 2021

Senate Economic and Small Business Development Chair Ken Horn(R-Frankenmuth) called Ford Motor Co.’s decision to build new plants in Kentucky and Tennessee a “gut punch to the state of Michigan.” 

And he told his committee Thursday he’s ready to fight back.

On Sept. 28, Ford Motor Co. — Michigan’s largest company — announced it would build two battery plants in Kentucky, bringing 5,000 jobs, and a truck assembly plant in Tennessee, delivering 5,800 new jobs.

The move comes after General Motors invested $2 billion into its Spring Hill, Tennessee factory to start building electric vehicles, Horn said.

“Michigan really needs to take a look at what we have to offer our incumbent businesses, to keep them here in the state of Michigan when they expand and when they grow and when they retain employees here,” he said.

According to one report, Michigan “missed out” on a $11.4 billion investment in electric-vehicle operations, putting two Southern states in a position to be the up-and-coming leaders in the electric-vehicle manufacturing race.

“It was interesting because Michigan wasn’t even in the hunt,” Horn said. “Don’t get me wrong, I will never blame Ford Motor Co. for making decisions that are best suited for their organization and their employees . . . “

However, Horn said he blames himself a lot for how over the last several years, while he and his committee were designing tools for job development and workforce training — the two forgot to emphasize why they were so crucial.

“We forgot to tell our colleagues in the state of Michigan why we needed these tools — why we desperately need these tools . . . Well, that is going to change,” Horn said. “It is my intent to grow Michigan by a million people to get us up to 11 million people to fill all the jobs that we have and all the jobs we plan on creating.”

He said he is now seeking coalition members and partners, adding it should be a “no-brainer” for both Republican and Democratic leaders across the state. He also said at Thursday’s meeting, the committee will start hearing more testimonies around what is most pivotal for Michigan’s economic growth.

“We need to provide all the tools because it’s not us making these big investments — that are making these risky investments into jobs, into factories, into housing developments, into building our communities . . .” Horn said. “We have people that are taking those risks, we just need to help them.”

At Thursday’s meeting, Horn presented SB 0671 for transformational brownfield plans — referring to a regeneration project of a polluted property — which is related to the Thrive Initiative from 2017 with modifications.

Under the legislation:

– The mixed-use requirement would be waived for projects in a municipality with a population of 25,000 or less and consisting of a $15 million investment

– Eliminates the mandate for a positive fiscal impact test

– Clarifies the process for calculating and withholding captured revenue for when employees are on-site versus working remotely

– A third-party underwriting analysis would only be expected from projects with at least $10 million in captured revenue

Through the original Thrive Initiative that was signed by previous Gov. Rick Snyder, projects were authorized to collect up to 30% of the state tax generated from new jobs and residents within the completed development for a period of up to 20 years.

However, in order for the project to be economically viable, a financial need or gap needed to be demonstrated and there was a need for the idea to be a “mixed-use development” with the purpose of having a transformational impact on the area.

There was also a cap of $300 million for tax captured during the construction period and $800 million for income withholding tax captured over the life of the program.

“The bill before you doesn’t authorize a single extra penny. The money is there. The problem is we made the program so difficult, communities couldn’t use it. So, this is about extending it and reforming,” said Jared Fleisher, the vice president of government affairs for Rocket Mortgage.

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