Two big tax subsidies for local bigshots hit the news yesterday ...
$7 million tax break for yacht-builder.
Guv Jen is picking winners and losers again. S2 Yachts announced a $21 million expansion of its boatyard in Holland, Michigan. The owners of the luxury yacht-builder are putting up two-thirds of that cost and you, the taxpayers, are covering the last third. In return for the tax subsidies S2 Yachts says it will stay put in Holland and will add 400 jobs to its facility there. So, folks, you now know the secret to getting a tax subsidy. Threaten to leave the state, and the government will throw money at you to stay. Just remember to send your change-of-address card to Guv Jen to get the ball rolling.
[An aside: If any reader is a corporate accountant, maybe you can help me out here. Four hundred jobs sounds like a pretty big number for a $21 million investment. That’s only about fifty thousand bucks of capital behind each job, and I imagine a lot of that capital is going to bricks and mortar rather than productivity-boosting equipment. I must wonder how many good-paying jobs the taxpayers are actually getting for contributing $7 million to S2 Yachts expansion plan.]
Amway billionaire gets new subsidies.
Well, let’s face it. Amway co-founder Rich DeVos acquired his wealth through the world’s greatest multi-level marketing scheme, which by definition is financed with other people’s money. So, should we be surprised that DeVos’s plunge into real estate development isn’t also financed with other people’s money? A few months ago the alleged billionaire garnered millions in taxpayer subsidies to build a new hotel in the middle of downtown’s ailing lodging market. A lot of howling over that.
However, nothing but the sound of crickets concerning the big subsidies for DeVos’s latest project: The Michigan Street medical towers complex. Technically the developer is Michigan Street Development L.L.C. It is operated by RDV Corporation, which is owned by DeVos, Alticor Inc. (Amway’s successor), and The Christman Co. (a Lansing-based construction firm). So far the politicians have approved $18 million in state and local tax breaks for DeVos’s project. That figure represents 15% of the estimated $120 million price tag for the redevelopment of the corridor between Michigan Street and the I-196 expressway across from Spectrum Health’s Butterworth campus and the Van Andel Institute.
The pols and the developers are marketing the tax giveaway as an investment in River City’s burgeoning bio-tech industry. Don’t be fooled. Your tax dollars flowing into this project will not return one dime to you. Indeed, it’ll cost you even more in the end. These new towers are a for-profit venture and their largest customer will be Spectrum Health – of which DeVos just happens to be the former chairman and current boardmember. At this year’s annual public meeting, Spectrum CEO Richard Breon announced an eight percent hike in hospital fees, which he justified as necessary to buy more space for the hospital’s operations. Don’t be surprised by a new round of rate hikes when DeVos is ready to sell space in his new medical towers to Breon.
[Another aside: The promise is that this $120 million investment will create 2,300 jobs. Once again that works out to a ratio of about $50,000 in capital per job, which sounds slim to me, especially because the entire investment is going into bricks and mortar. Therefore, a whole lot more capital will have to be poured into the medical towers project, to purchase equipment if nothing else, before these jobs will materialize. What promise do the taxpayers have from DeVos that any of that will happen? Oh, that’s right, his big piggy bank on the hill, otherwise known as Spectrum Health.]