FCA to seek $160M in tax incentives for Detroit plant expansion

Fiat Chrysler plans to invest $1.6 billion in expanding its Mack Avenue facilities with a new plant and investing $900 million to modernize its Jefferson North Assembly Plant.

Detroit — Fiat Chrysler Automobiles said Tuesday that is seeking up to $160 million in tax incentives from the state for its $2.5 billion plant expansion on the city’s east side.

“FCA has confirmed that it has applied for up to $160 million from existing state incentive programs as related to its proposed development at the Mack Avenue Engine Complex and Jefferson North Assembly Plant,” the automaker wrote in an email Tuesday. “As these incentives have yet to be approved and negotiations are still pending, we cannot comment further.”

According to a final community benefits report submitted to the City Council this week, the state incentives FCA seeks involve the following programs: Industrial Property Tax Abatement, Good Jobs for Michigan Program, Michigan Business Development Program and State Essential Services Assessment Exemption. The incentives would represent about 6.4% of FCA’s $2.5 billion investment, according to the document.

The Michigan Economic Development Corporation declined to confirm the tax incentive request Tuesday. Any request would have to go through the Michigan Strategic Fund for approval. Its next scheduled meeting is May 28.

“At this time, FCA and the MEDC are still finalizing the incentive package that will go before the MSF Board,” MEDC spokesman Otie McKinley said. “As is always our process, the MEDC does not share project details until time of MSF board approval.”

Earlier Tuesday, the City Council approved a series of land swaps to pave the way for the proposed assembly complex.

The transactions involve Hantz Farms, DTE Energy Co., Detroit Land Bank Authority and property owner Michael Kelly.

The panel voted 7-2 in favor of the initial land transactions, with Councilwoman Raquel Castaneda-Lopez and Pro Tem Mary Sheffield voting no.

The vote comes after Detroit's administration on Monday touted "significant progress" two days past a 60-day deadline to gather 200 acres of land for the $2.5 billion plant expansion. 

Meanwhile, the status of an 83.37-acre manufacturing site at 12141 Charlevoix, tied to Moroun-owned company, Crown Enterprises remains unclear. The company has not yet commented on the land, which represents a significant piece of property needed. Messages left Tuesday morning were not immediately returned. 

The city has not yet revealed if it has accomplished a deal with the Morouns. Crown has not commented. 

Castaneda-Lopez questioned the urgency of approving the deals, saying it's "premature," considering other land agreements, tax abatements and an accompanying community benefits plan remain pending.

"I would feel disingenuous to the community to approve this without having everything all together to fully analyze in a comprehensive way," she said. "The pushback is that I feel it's incomplete to approve one piece in a piecemeal way without having all the comprehensive, different components of it."

Fiat Chrysler plans to invest $1.6 billion in expanding its Mack Avenue facilities with a new plant and investing $900 million to modernize its Jefferson North Assembly Plant.

Matt Walters, who is with the administration's jobs and economy team, noted the action on Tuesday does not execute any of the deals. Rather, it would just allow the city to begin moving forward with some of the land transactions in what's expected to be a complex deal.

"Nothing will be signed, no deals will be executed until everything is reviewed by this body," Walters said. 

Councilman James Tate, who chairs the council's planning and economic development committee, noted the "clock is ticking" and he's not against moving forward Tuesday on the initial land swaps.

The vote, he noted, indicates support of providing the tools to further the deal.

"I don't want to bind anyone to a deal based upon this vote," he said. "This was more providing the tools to complete the deal, but we're not even at that point. We still have other pieces to put together."

The Detroit Brownfield Redevelopment Authority, which also had to sign off on the land sales and transfers, approved the transactions on April 17.

The city had until Saturday to assemble land under terms the city and the automaker agreed upon in a memorandum of understanding announced in February.

The vote Tuesday brings the known land assembled to include 40 acres from the closure of St Jean Street, 40 acres from DTE Energy's old Conners Creek power plant site between Jefferson Avenue and the Detroit River and 14.45 acres of leased land from the Great Lakes Water Authority. Agreements have also been made for land from Hantz Farm and property owner Michael Kelly.

The automaker, the city and a neighborhood advisory council reached an agreement last week on a community benefits agreement after a series of community meetings. The benefits proposal is slated to go to a council subcommittee for review. 

That agreement provides Detroit residents first access to plant jobs as well as FCA’s investment of $13.8 million into workforce training, education, housing and neighborhood revitalization.