Sterling Heights OKs $23.3M tax freeze for FCA

Michael Wayland
The Detroit News

The Sterling Heights City Council unanimously approved a $23.3 million, 12-year property tax abatement Tuesday night for Fiat Chrysler Automobiles NV.

The tax freeze is related to the automaker investing nearly $1.5 billion for the company’s Sterling Heights Assembly plant to build the next-generation Ram 1500 pickup and potentially other “future truck products,” according to the company’s application to the city.

Joe Judnick, a candidate last year for the council who was not elected, was the only one to speak out against the abatement.

“I’ve always been opposed to tax abatements,” he said, adding the potential taxes could go to help the city and school system. “I’m really opposed to this one.”

Several council members applauded the company and its investments in Sterling Heights in recent years.

“There’s no way we can say ‘no’ to this,” said Councilwoman Barbara A. Ziarko, who called the company an “economic miracle” for Sterling Heights.

Mayor Michael C. Taylor said the plant, which was slated to close as part of automakers 2009 bankruptcy restructuring, a “success story” for the city.

City officials touted the incentives as beneficial for the long term for job growth and investment. The city estimates the new investment and 700 new jobs when production of the pickup begins at the plant will have a regional impact of 2,800 new jobs and $112 million annually for southeast Michigan, according to public documents.

As first reported on Monday by The Detroit News, investments outlined in Fiat Chrysler’s application for the abatement include $940 million in personal property such as machinery and equipment and $72.3 million in land and building improvements. It excludes special tooling costs as well as a small portion of the investment that will occur at the Sterling Heights Stamping Plant.

The property investments, according to public documents, include $5.8 million test track and its enclosure; $41.8 million for “a complete renovation of old south plant paint shop”; $8.1 million in Trim Chassis Final upgrades; $6.4 million addition for a frame unloading area; $5.7 million for truck docks; $2.6 million for a body shop; and roughly $1 million each for new drum storage and trestle upgrades for the Paint to Body area.

Three Fiat Chrysler representatives were at the meeting but did not speak.

Kevin Frazier, a Fiat Chrysler spokesman, declined to comment after approval of the abatement.

Questions remain surrounding the company’s investment in the city, including the amount of workers expected to come from Warren Truck Assembly, where the Ram 1500 is being produced, as well as what the company plans to do with its self-proclaimed “state-of-the-art” 425,000-square-foot paint shop if it plans “a complete renovation of old south plant paint shop,” as the company’s application suggests.

The company spent $850 million on the current paint shop for production of the Chrysler 200 midsize sedan, which is being axed by the company in December to prepare the facility for the Ram 1500 pickup, which is moving 10 miles north from a plant in Warren.

The incentives from Sterling Heights are in addition to the Michigan Business Development Program performance-based grant of $4.56 million, and the Michigan Strategic Fund board’s approval of a 15-year property tax exemption last week valued at $11.3 million on up to $1 billion in new equipment at the plant.

The investments, according to the application, began Sept. 1. They are expected to be complete by Aug. 31, 2018 — in line with statements by Fiat Chrysler CEO Sergio Marchionne that the next-generation Ram 1500 should begin production in Sterling Heights in the first quarter of 2018.

The Sterling Heights City Council approved two other smaller tax abatements at the meeting for Ultra Manufacturing USA, Inc. and Ring Screw, LLC.

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Twitter: @MikeWayland