Mecosta County battery manufacturing facility to receive millions in financial incentives

January 4, 2023
MediaIntel.Asia

MECOST COUNTY — In October, the Michigan Economic Development Corporation and the Michigan Strategic Fund board approved a financial incentive package for Gotion, Inc. to bring an electric vehicle battery component manufacturing facility to Mecosta County.
The financial incentive package approved by the MSF board includes a $125 million performance-based Critical Industry Program Grant and a $50 million performance-based Strategic Site Readiness Program Grant, authorized through the Strategic Outreach and Attraction Fund Act, as well as a Michigan Designated Renaissance Zone valued at approximately $540 million.
Several criteria were taken into consideration in awarding the CIP and the SSRP grants including the economic importance of the project to the community and the potential for revitalization within the community, as well as community support for the project.
Other considerations included creation or retention of qualified jobs, defined as jobs the company creates and are performed by Michigan residents, as well as potential area-wide redevelopment, how the project addresses underserved markets and potential environmental impacts of the project.
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The MSF board also looked at any additional economic assistance or support provided by the state or federal government, private fund investments and the applicant’s need.
The grant awards are based on milestones the company is required to meet before any of the funds are disbursed.
Details of the grant terms provided by the MSF state the grant funds will be dispersed for “eligible expenses” in phases between December 2023 and March 2032.
Eligible expenses are defied as hard costs for site preparation, construction, infrastructure, development, machinery, equipment, tooling, computers, fixtures and other capital expenditures at the site.
CIP phase one disbursements, up to $95,000,000, will require an executed development agreement between the company and the local units of government and the purchase or transfer of land to the company.
Phase two disbursements, up to $30,000,000, will require an investment by the company of no less than $1,975,000,000 in connection with the project and creation of 1,500 qualified jobs.
Phase three, project completion disbursements, will require completion of all phase one and phase two milestones, as well as achievement of the overall investment and jobs commitment by the company.
The SSRP grant will award up to $50,000,000 for eligible activities, such as infrastructure improvements and site development, disbursed upon the company meeting certain milestones.
Up to $25,000,000 will be disbursed upon written agreements between the company and contractors to perform eligible activities, along with agreements with Big Rapids Charter Township, Green Charter Township and Mecosta County for transfer of land and a development agreement between the company and the local governmental entities.
An additional disbursement, up to $25,000,000, will require an itemization for actual expenditures for eligible activities and detailed descriptions of eligible activities to be completed.
Itemization of actual expenditures for eligible activities completed during the term of the grant and verification that 100 percent of the disbursed funds were used for eligible activities in connection with the project is required upon project completion.
Failure to meet these milestones or investment commitments, or company bankruptcy or insolvency, or project abandonment, will require the company to repay all or a portion of the grant disbursements.
Joshua Hunt, MEDC chief projects officer, noted previously that in addition to the incentives package being milestone-driven, it is also reimbursement-based.
“The company will be required to invest their own dollars before receiving any proportional reimbursement back.” Hunt said. “In addition, there are repayments that the company will be required to make if they do not create the jobs associated with the project.”
State funding for economic development
In December 2021, Gov. Gretchen Whitmer, in collaboration with the Michigan state legislature, labor leaders, economic development agencies and business groups, signed a package of economic incentives that would allow Michigan to compete for transformational projects that will bring long-term economic opportunity and security in the battery production industry.
The Michigan Strategic Fund Act authorized the Michigan Strategic Fund to provide incentives in the form of grants, loans and other economic assistance for the development of Michigan’s economy.
“Republicans and Democrats worked across the aisle to build up the state’s economic development toolkit and empower Michigan to compete for such projects,” Whitmer said in a news release announcing the Gotion incentive package. “The state is in a global competition for transformational projects involving companies that are aiming to invest billions of dollars and hire thousands of workers.
“Gotion’s new battery component manufacturing facility in Big Rapids is the largest economic development project ever in Northern Michigan,” she said. “The $2.3 billion investment is set to create 2,350 good-paying jobs and help us become the destination for EV and mobility companies. It is a great day for the Michigan economy, and we are winning because we are working together.”
The Renaissance Zone
The Michigan Renaissance Zone Act authorizes the MSF to designate renaissance zones. The MEDC received an application from Mecosta County for a 30 year Designated Renaissance Zone for Gotion, Inc., for a total of 523 acres in Mecosta County, including 115 acres in Big Rapids Township and 408 acres in Green Charter Township.
It is estimated that approximately $16.6 million will be abated annually in property taxes. The company requested approval to make a payment in lieu of taxes, or PILOT, to Big Rapids Township, Green Charter Township, or Mecosta County for reimbursement of the real property taxes abated by the renaissance zone designation.
Owners of property in the PILOT program make payments to the county and the city in lieu of taxes. These payments are exactly the same as the property taxes assessed when the pre-renovation property was accepted into the PILOT program and are revised as the county and/or city tax rates are changed.
In response to many residents questioning the tax abatements on the proposed renaissance zone property, County Administrator Paul Bullock said recently that currently, the Big Rapids Airport Industrial Park property is not producing any tax revenue because it is owned by a governmental entity and the Green Township land is zoned agricultural and, therefore, produces very little tax revenue.
“The taxes we collect on vacant or agricultural land will not compare to the taxes we will collect on housing developments, or business and commercial developments that will come into our community,” Bullock said. “It looks like a lot of money we are giving up, but it is money we are never going to get if the project doesn’t happen. If the project does happen, it will come from other sources as we see additional growth in the community.”
Company background
Gotion was founded in 1998 in China. In 2014 it was incorporated as a publicly traded company focused on research and development with facilities in California and Ohio. It currently has facilities in Europe, China, Germany and the United States.
Its products include lithium iron phosphate materials and batteries, ternary materials and batteries, power battery packs, battery management systems, and energy storage battery packs for use in electric vehicles.
Gotion also offers high-voltage electrical appliances, switcher equipment, electrical digital equipment, intelligent distribution network equipment, serialized transformers, circuit breakers, integrated charging piles, on board chargers and energy storage cabinets for use in thermal power, hydropower, nuclear power, wind power, metallurgy, railways and other industries.
Chuck Thelen, vice president for manufacturing operations for Gotion, Inc., said the Big Rapids facility will be a battery component manufacturing plant, making the two key components of the battery – the cathode and the anode.
“With over 2 million square feet under roof, it is a significant investment,” Thelen said. “We are one of the first cathode and anode suppliers in the U.S. and we will be selling the product outside of our company to many competitors.”
Brent Case, vice president of business attraction with The Right Place, said the location and the community have been prepared for an opportunity like this to utilize the infrastructure, locally trained talent pool and outstanding resources from the area for many years.
“We are well on our way to positioning the region at the center of West Michigan’s growing mobility and EV sector,” he said.
It is anticipated the influx of jobs will result in additional investments and redevelopment opportunities in the area. The project is expected to generate over $11.5 billion in new personal income, which will create the demand for additional service, tourism and hospitality enterprises, expanding the small business community.

This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform.



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