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Economic Evolution in the Great Lakes State
Mon October 31, 2011
reWorking Michigan: Aerotropolis plan needs state approval to fly
By Kevin Lavery, WKAR News
Lansing, MI –
ReWorking Michigan examines our evolving economy, as citizens of the Great Lake State explore new ways to make a living and build a future for their families.
Last week, Lansing and DeWitt Township approved two agreements that would divide property tax revenue between the two entities. Now, officials are applying to make the airport a special economic zone. It's the latest action designed to spur the airport's growth as a commercial logistics hub.
Bulldozers and backhoes
The earth movers are in full rumble on the edge of the Capital Region International Airport. Bulldozers and backhoes are carving a trench to carry water lines to future buildings. Next spring, crews will pave the adjacent road. The airport is writing its next chapter with giant mechanical pencils.
The airport is focusing on 110 acres prime for economic development. The plan is to create a commercial park for an array of manufacturing and logistics companies; an "aerotropolis" linking air, road and rail transportation.
Extra revenue for Lansing
The so-called "425 agreements" the city of Lansing and DeWitt Township approved last week bring that vision a little closer. Jerry Ambrose is Lansing's finance director. He says if the state approves the plan, Lansing could reap nearly $900,000 in new revenue over 15 years.
"And that's very conservative," Ambrose says. "That assumes pretty minimal growth in terms of the impact of this entire structure with the state incentives. We really believe it's going to be much better than that."
Earning state designation
The city, township and airport want to become what's called a "Next Michigan Development Corporation." As such, the team would qualify for state incentives that are currently unavailable.
That designation is part of the airport's strategy for becoming a more viable international trade center. In the last five years, the airport has extended its main runway, become a U.S. port of entry and a federal foreign trade zone. Designation under the "Next Michigan" program is meant to pull business assets towards those amenities.
"If you think about companies that are already at the airport that are in these fields that are related to aeronautics in some way, shape or form, or logistics...they're going to see a boost to their bottom line over the long run because we're going to be bringing in companies that are synergistic to their needs," says the Lansing Economic Development Corporation's Ken Szymusiak.
A plan with two parts
The 425 agreement has two parts. Current businesses would pay DeWitt Township's real estate tax rate, but new enterprises would pay Lansing's rate, which is higher. Lansing's one percent corporate tax would apply to all of them.
Developers like the Gillespie Group are have their eye on the airport property. But president Pat Gillespie says ultimately, future deals will rest on how prospective clients feel about the new tax structure. Some current tenants are already expressing criticism towards the planned rate hike. Gillespie says the interest he's hearing so far is "lukewarm."
"I think it's a great location being next to the airport, but I don't know what will be available once they get the designation that will attract people and make them be in a hurry to get there," says Gillespie. "I don't know enough about it to know if that's enough to attract them there; hopefully it is to the Lansing region, but to this point, we haven't seen anybody that's very interested to be there."
Application is in the works
The partners have until the end of the year to submit their application for development corporation status to the board of the Michigan Strategic Fund. They don't plan to waste any time. The board has already approved Detroit's application, and other urban centers are vying for it too.
"If Lansing was really the next in line behind Detroit in terms of their readiness, they've been talking about this for quite some time," says Katherine Czarnecki. She's the managing director of community development for the Michigan Economic Development Corporation. "And so it's important to us not to waste one of those slots if they weren't going to be able to make their end of the year deadline," she says.
The regional partners want to get their plan before the state by November 30, when the Michigan Strategic Fund board holds its next meeting. A yes vote will clear the aerotropolis for takeoff. But a no vote could scrap the new 425 agreements, and push the entire project back into the hangar.
For more on economic evolution in the Great Lake State, visit WKAR.org/reworkingmichigan