LANSING – A major agreement to

change a standing Michigan Economic Growth Authority tax credit with Ford Motor

Company was unanimously approved by the Michigan Strategic Fund board on

Monday, and the state hopes the agreement will serve as the framework for

discussions with other companies on amending their MEGA agreements.

Talent and Economic Development Director

Steve Arwood, also chief executive officer of the Michigan Economic

Development Corporation, told reporters following the Strategic Fund meeting

that discussions are underway with about six companies on possible changes to their

MEGA agreements.

Arwood would not identify which

companies the state is holding discussions with. Nor would he say the agreement

with Ford would necessarily reduce the estimated $9.3 billion in costs the

state anticipates seeing from the MEGA agreements reached with a number of

companies during the last recession.

The agreement reached between the

state and Ford combines two current MEGA grants into one, limits the total

value of the credit to $2.1 billion, states that to see that total credit Ford

will have to invest another $3.1 billion in the state over the next 10 years

(in addition to $3.4 billion in investments the company has already made), and

requires Ford to give the state periodic forecasts of its estimated tax credits

earned.

Charlie Pryde, Ford’s Lansing

representative, said the company does not now have any plans on how, or if, it

would invest that additional $3.1 billion.

As part of the agreement, Ford will

also have to continue to keep as many as 40,200 jobs in the state to qualify for

the tax credit. Since the two initial MEGA grants were issued, Ford has nearly

36,000 jobs in Michigan related to the MEGA projects.

The total commitment of $2.3 billion

in tax credits means the company could earn less in tax breaks than the original

MEGA credits would have allowed, Pryde said. But the change allows for greater

predictability for the company in the coming years, he said.

Arwood said the change provides the

state with information it can use to plan the possible costs of the MEGA

credits.

The revenue impact of those credits

caused some alarm with the state earlier this year, and drove down some revenue

forecasts. Initially, the state had anticipated the credits would cost about

$4.4 billion. But after recalculating the credits, Arwood said the state saw

they could mean as much as $9.3 billion over the next several decades.

Arwood said the state has already

booked that potential revenue loss.

And he told reporters that he began

discussions with Ford hours after he made a presentation to the Legislature

last winter on the potential effects of the MEGA credits.

The state sees the agreement as

important not just because it will provide it with needed information on the

potential cost of the MEGA awards, but it will also mean Ford could invest

another $3.1 billion in the state.

Pryde told the Strategic Fund board,

“This is good for economic growth and jobs for Michigan.”

Last month, the House passed HB

4333* and HB

4334*, which could in theory block other agreements such as the

one with Ford. The bills prohibit any amendments to the current MEGA

agreements.

The Senate has not acted on the

bills, and Arwood said he would hope to have discussions with the companies now

underway completed and agreements reached before the bills get to Governor

Rick Snyder.

This story

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