Janesville23.9°

$195 million not enough for GM to return to Janesville

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Gina Duwe
Marcia Nelesen
July 8, 2009
— Janesville was ready to borrow $15 million and Rock County an additional $20 million to sweeten the pot and lure General Motors back to Janesville.

Beloit would have added $2 million.


Private parties pledged about $42 million more.


The state was ready to kick in $115 million.


But the $195 million package wasn't as sweet as the $779 million offered by Michigan, which won the contest to build GM's new small car at its plant in Orion Township north of Detroit.


Michigan's offer reportedly includes business tax credits over the next 20 years, along with $130 million in federal funds for worker training. Local officials threw in additional $102 million in incentives.


Tennessee's plant in Spring Hill near Nashville also was among the three finalists for the GM small car. Tennessee Gov. Phil Bredesen said last week that GM had wanted "north of $250 million" upfront to select Spring Hill, but his state offered only about $20 million in training and education money in addition to long-term tax breaks.


The local offer

Rock County and city taxpayers would have ponied up about $38 million to bring GM back to Janesville.


The city of Janesville pledged $15 million in cash. Janesville also offered to run GM's wastewater facility, a value of up to $1 million a year.


General Motors had 12 criteria, and the city tried to fit its offer to the criteria, City Manager Eric Levitt said.


In making its offer, the city council considered the impact of the plant locating here and the 1,200 jobs it would create.


"With all those things added together and with all the indirect job creation, they wanted to provide the best proposal possible to GM," Levitt said of the council.


"It was a good effort. I think all the various entities came together. It enhances (our) working relationship moving forward."


The method of financing was not determined and the details hadn't been negotiated with General Motors, said Jay Winzenz, director of administrative services.


The money likely would have been borrowed through general property taxes or TIF funding. Some of that was dependent on the value decrease at the General Motors plant and the corresponding value increase if production had started again.


The city also could have bought some of GM's assets, Winzenz said.


Craig Knutson, county administrator, said the county board was in a unique situation, given the economic impact GM's closing had on the county and the benefits bringing the plant back would have had.


Details as to how the county money would be used or the timeframe were subject to future negotiations, Knutson said.


The county, too, would have borrowed the money.


"I believe that the (task force) worked very well together, and all the participants were fully involved, and I think put forth their best efforts.


"Unfortunately, it was not successful, but it wasn't for lack of a real good try," he said.


About $42 million would have come from private sector incentives that Zach Brandon, executive assistant at the state Department of Commerce, said he could not release. The usual private-sector suspects in economic development efforts typically are economic development entities, health care systems and utilities, he said.


Mercy Health System Vice President Rich Gruber said Mercy's involvement included incentives tied to MercyCare insurance.


Gruber declined to cite specifics, but said the more jobs GM retained or created in Janesville, the more incentives Mercy would have offered.


"We were proud to be able to make some concessions and do something in that arena that helped build the incentive package that GM would take a look at," he said.


The state's contribution

The state of Wisconsin offered $115 million, mostly in tax credits and energy efficiency grants, Brandon said.


The state's tax credits were developed under the Enterprise Zone Program, Brandon said. The incentives included a performance-based payroll tax credit of up to 7 percent and a tax credit on capital improvements of up to 10 percent, he said.


The money carved out for energy efficiency grants would have helped create efficiencies in the plant's lights, windows or roofing, he said.


"When you look at the collective picture—the private sector, local government, state government and the labor union—all coming together to develop a comprehensive package, although it wasn't successful in this specific situation, that's a formula for success," he said, "and one we'll continue to replicate in order to assist Janesville in building new companies and diversifying its local economy."


Brandon also said the collaborative model used—a local task force headed by local individuals—is one that the state will look to replicate elsewhere.


The incentives available through the Enterprise Zone Program offer one of the most powerful economic development tools available now in the country, he said.



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