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Tax break approved for Systems Control

THE IRON MOUNTAIN City Council on Monday agreed to provide Systems Control with a 12-year tax break for its planned $9.9 million addition. (Theresa Proudfit/Daily News photo)

IRON MOUNTAIN — Systems Control received a tax break Monday for a $9.9 million addition at its Iron Mountain manufacturing facility, as well as a concession from the city on terms of the abatement.

The company is getting an Industrial Facilities Tax Exemption that provides a 50 percent tax reduction for up to 12 years. As a condition of the IFT, the city had wanted the company to make no appeals to the Michigan Tax Tribunal for the duration of the 12-year exemption. On Monday, at the request of the company, that requirement was reduced to three years.

“Any city in the Upper Peninsula would die to have them as an employer,” City Council member Bill Revord said in support of the agreement. The expansion will create at least 100 jobs within two years, lifting total employment past 800.

The council’s vote was unanimous, though Mayor Dale Alessandrini joined the majority after some hesitation.

“I just feel they could have worked with us a little bit,” he said. “If you’re getting a 50 percent tax reduction, you shouldn’t take us to the Tax Tribunal.”

After Systems Control filed an appeal to the state panel in 2016, a settlement was reached that lowered the company’s taxable value by 63 percent, erasing some $67,000 in annual city tax revenues. That agreement set the 2017 value at $3.9 million, compared with the $10.4 million claimed by the city.

The company’s tax appeal came only a year after the city had granted an IFT exemption for a $5.85 million expansion. For the latest expansion, the third by Systems Control in the past decade, the city anticipates additional taxable value in the range of $1.7 million. The three-year ban on tax appeals applies only to the new addition.

“We have limited ability to defend a higher value due to the approach being used by the tribunal,” City Manager Jordan Stanchina said.

Large developments across the state have gained what municipalities believe is special treatment from the tribunal in lowering the assessed value of their properties.

“It doesn’t appear the Legislature will do anything to help change this,” Stanchina said. Officials hope, however, a court case involving the city of Escanaba and Menards will be resolved in the city’s favor and set a precedent to help even the scales.

Revord, meanwhile, said a company shouldn’t be penalized for taking advantage of the tribunal’s support.

“Blame the tribunal,” he said. “Others are doing it in many other places.”

Alessandrini said Systems Control is “a great company,” but he fears citizens are being asked to pay too much in support of business.

The 89,000-square-foot addition will bring the footprint of System Control’s headquarters, manufacturing and engineering facility to 403,000 square feet. The additional space will be devoted mainly to the manufacture of electrical substation equipment and energy storage enclosures. The project is slated for completion by March 2019.

The only public comments came from Lois Ellis, director of the Dickinson Area Economic Development Alliance, who said Systems Control is a key segment of the local economy and very important to retain.

The company has grown from 377 employees in 2013 to 714 today, and provides a $70 million annual economic wage impact through its direct and indirect jobs, Ellis said.

The expansion will mean another $10 million in annual wage economic impact, she said. The company provides comparatively good benefits and also contributes to local non-profit organizations, Ellis said.

The city council Monday approved as well a Commercial Rehabilitation Exemption certificate for Hillcrest Realty/Erickson Jewelers. The business has qualified for a tax break at its new location at 511 S. Stephenson Ave., where it invested about $450,000 in improvements.

Under the city’s economic development incentive, the new investment will be exempt from local property taxes for six years.

Ellis said she hopes the Erickson Jewelers project can be a catalyst to others. “It’s a showcase kind of property addition to the downtown,” she said.

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