A news service for the people of Michigan from the Mackinac Center for Public Policy

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On Thursday, Michigan Capitol Confidential did a story about Mountain Valley Recycling opening two similar plants, one in Kentucky and one in Michigan.

The state of Kentucky’s economic development arm gave a $1 million in tax incentives to Mountain Valley Recycling for its 215,000 square-foot plant that was projected to create 360 jobs.

The Michigan Economic Development Corporation gave Mountain Valley Recycling a $5.1 million tax incentive for a 280,000 square foot facility in Sterling Heights that was projected to generate 396 jobs.

Michael Shore, MEDC spokesman, provided this response in an e-mail:

Thanks for the opportunity to address your concerns regarding the Michigan Economic Growth Authority agreement with Mountain Valley Recycling LLC to support its $29.5 million investment in its new facility in Sterling Heights.  The MEGA board offered a maximum total tax credit of $5.1 million to the company based on it creating 396 direct jobs over five years. REMI (Regional Economic Models, Inc.) estimates this will create an additional 907 indirect and spin-off jobs in the region.  Per REMI, the total 1,303 new jobs will generate more than $420 million in new personal income in Michigan, $36.2 million in total new revenue gain to the State, and after consideration of tax credits to the company, the State will gain some $31.1 million in net positive revenue impact.  

It is vitally important to keep in mind that MEGA incentives are performance-based and self-policing, which is to say that a failure by a company to meet the terms of its agreement means they will also not receive tax credits.  Further the tax credit awarded to Mountain Valley Recycling included an additional contingency for steep job creation by year three or future years of the credit would be lost. 

The MEGA agreement with Mountain Valley Recycling LLC is a win-win-win for Michigan, the company and Michigan residents who will gain new work opportunities. This business is new to Michigan and was won over competition from Arizona, Nevada and Oregon.  All of the above-described advantages, 1,303 new jobs, increased personal income and $31.1 million in net positive state revenue would have been lost if this project had gone elsewhere.

Best regards,

Mike

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