Michigan Grants GM $221 Million In Tax Breaks To Keep 2,000 Employees at the Renaissance Center

Affectionately known as “RenCen,” the seven skyscraper (five from a single base, two joined by passageways) “city within a city” houses approximately 4,000 GM employees (5,000 if accountants, consultants, etc. are included). After a drawn-out zero-sum game between the cities of Warren and Detorit, GM has decided it will continue to operate out of the legendary riverfront complex.

In December, GM reduced the number of employees it committed to keep at the RenCen by 500, from 2,500 to 2,000. Upholding such a commitment would have consequently allowed The General to relocate approximately 2,000 of its own employees. The December decision was made despite a $50 million tax incentive package from the Michigan Economic Growth Authority. Jennifer Granholm, governor of the mitten state, remained tight-lipped on details of the incentives the state offered, but sources indicate that the initial offer has been quadrupled to $200 million.

Moreover, the city of Detroit, via the Detroit Economic Growth Corp. and the Downtown Development Authority, was allegedly offering breaks that ranged from $15 million to $21 million. The headlining $221 million figure comes from the latter estimate coupled with the state’s $200 million.

The increasingly generous incentives ultimately persuaded The General. On Friday, GM spokesperson Tom Wilkinson announced GM was killing its relocation plans.

RenCen Entrance

Governor Granholm responded, “We have been fighting hard to keep as many jobs as possible.” She emphasized the state’s role, further indicating, “[We] believe our efforts played a vital role in the company’s decision.” Detroit Mayor Dave Bing is also heralding the result as a victory.

But incentives were not the only reason for the decision. GM emphasized technological research and customer relationships in outlining the better uses it had for the tens of millions of dollars it would have cost to relocate workers to the Warren Technical Center facility. But GM is not entirely scrapping “broad facilities consolidation” plans. It announced plans to consolidate floors in order to rent blocks of vacant space in the complex, according to an internal e-mail obtained by the Detroit News. Observers speculate that some of the tax breaks from the city include incentives to induce tenants.

Most of the relocated workers would have moved to the Warren Technical Center. The announcement ends the zero sum game faced by the two cities. The victorious Detroit, which is currently running a $300 million budget deficit, obtains roughly $6 million of tax revenue each year from The General’s Detroit operations.

Sources: Detroit Free Press 1, Detroit Free Press 2, BusinesWeek, Detroit News, Examiner, UPI] Google+