Ann Arbor moves closer to approving tax breaks for Barracuda Networks expansion downtown
The Ann Arbor City Council voted unanimously Thursday night in favor of establishing an industrial development district for a downtown office building at 317 Maynard St.
It's seen as the first step in providing a five-year, $85,150 tax abatement to lure Barracuda Networks to relocate and expand in downtown Ann Arbor and add 178 jobs.
"We don't often need to constantly offer tax incentives to retain and attract business," said Council Member Jane Lumm, an Independent from the 2nd Ward. "The city's tax incentive arrangements are both infrequent and selective, and I believe this proposal is one that's significant enough to be worthy of support."
Barracuda plans to lease the space at 317 Maynard St., which is located at the rear portion of the building that previously housed Borders and is owned by First Martin Corp. As the property owner, First Martin had to request the establishment of the district under Public Act 198 of 1974.
Barracuda Networks is poised for an $85,150 tax break to expand downtown.
Melanie Maxwell | AnnArbor.com
"Without us forming the district, they can't make an application for abatement, which goes to the state," Higgins said. "So that's all we're doing with this at this point in time. Once they submit that, it will come back to the budget committee, we'll review it there, and we'll bring back a recommendation to council."
Higgins said that likely will be in September.
"So what we're voting on tonight is really just the establishment of the district to allow them to move forward with the process," she said.
Lumm reiterated her support.
"I certainly support establishing this, and do think that the limited five-year abatement is justified, and that having them occupy a portion of the Borders building downtown — with the 178 new jobs that they've committed to the MEDC to create — is certainly an obviously positive development for downtown," she said.
Barracuda is based in Campbell, Calif. The private company creates network security devices, provides email and web filtering products and phone system solutions, and monitors network attacks from its Ann Arbor office on Depot Street. It has more than 1,000 employees globally.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
Val
Sat, Aug 11, 2012 : 8:42 p.m.
Tax break translates into higher taxes for the rest of us. Will the tax break mean that only Ann Arbor residents will get the jobs? Ah! No! So how does that help the city of Ann Arbor? How does it help the residents if they are getting a tax break? This is why property taxe are totally wrong. Taxes should be paid on income not value of property that some one else puts a value on. Did anybody's taxes go down during the housing crash. I doubt it. Oh! they went up because taxing entities on collected the whole millage where before they only collected a part of it i.e. library. Remember folks, you don't own your property the govenment does. Try not paying your property taxes because you lost your job or have medical bills. The penalty of none payment of property taxes is loss of home. No and's if's about it.
Joe Kidd
Fri, Aug 10, 2012 : 6:59 p.m.
Ryan please consider with articles like this one not only what tax break they will get in dollars, but also what they will pay in taxes with the abatement. I am presuming this is not an exemption and they will pay an amount that might sooth the irritations of some commentators here. I am as interested in what they will pay as I am of what they will not pay.
Veracity
Fri, Aug 10, 2012 : 2:16 p.m.
Apparently, businesses can essentially extort funds from the City by threatening to not put down stakes in local properties or threatening to pull up stakes and leave. Ann Arbor remains a desirable place to do business and does not need to function as if it has an inferiority complex. Furthermore, the City should not use payments as inducements when its finances are so tenuous.
Joe Kidd
Fri, Aug 10, 2012 : 6:53 p.m.
I do not understand your comments, "extort funds from the city," and ""the city should not use payments as inducements," when they are getting a tax abatement. They are paying less taxes, not getting funds. They are still paying taxes so the city still sees a gain in tax revenue. This is very common in areas where taxes are seen as high or anti business, and like Ms Lumm is quoted as saying, Ann Arbor does this infrequently and does it only when it is a significant benefit.
xmo
Fri, Aug 10, 2012 : 2:06 p.m.
I keep reading about the City of Ann Arbor as one of the TOP TEN places to live in the US! SO, why do we need to provide tax incentives to get companies to expand, locate or Re-locate here? Maybe we are being fed a bunch of manure by the National Media?
Joe Kidd
Fri, Aug 10, 2012 : 6:54 p.m.
Being in the top ten places to live does not equal top ten places to do business.
Brad
Fri, Aug 10, 2012 : 1:54 p.m.
To "lure" them? Haven't they already committed to the move? Or is this another back room "done deal" coming out in the days after the election?
mixmaster
Fri, Aug 10, 2012 : 1:40 p.m.
To Ms Higgins. I live in a district. It's called the City of Ann Ann Arbor. Where do I apply for my tax break?
mixmaster
Fri, Aug 10, 2012 : 1:32 p.m.
Let's see. More tax breaks for profitable businesses and higher taxes for the rest of us. That's just plain wrong! Didn't we learn anything from the Pfizer tax break debacle?
Joe Kidd
Fri, Aug 10, 2012 : 6:45 p.m.
I think a lower tax is better than no taxes at all if the abatement is a condition of them moving in. And an occupant paying less in tax is better than an empty building.
LXIX
Fri, Aug 10, 2012 : 12:50 p.m.
Just because Barracuda reads private email is no reason to roll out the red City Council carpet. Maybe the area landlords could un-double those obscene lease rates to attract more clients instead. Why not just give tax abatements to all Ann Arbor tech companies adding jobs?
LXIX
Fri, Aug 10, 2012 : 7:27 p.m.
Attend Meetings? Not for awhile. Been there done that.but do encourage all residents to do so at least once and watch CTN, read A2com, and email City Council (many there really do like voter input). I am lucky if my spe;ling is correct let alone give any coherent public oration. I'll wager that my little voice here along with others has an indirect impact.
Veracity
Fri, Aug 10, 2012 : 2:09 p.m.
With the liberalization of the definition of "Brownfield remediation", the DDA and the City are essentially doing just that. Consider the return of TIF payments planned for 618 South Main (to improve street amenities), Georgetown Mall (to rid of soil contamination and ugly buildings), Arbor Hills Crossing (to remove ugly buildings and for site development). Also the DDA gave Zingerman's $407,000 to help with its expansion which includes paying six figures for LEED certification, sidewalk work, Brownfield remediation involving a fire destroyed building, and signage. Expect that most new construction will be getting financial gifts from the DDA and the City even though both have tight budgets and could use the TIF revenue. No longer can Ann Arbor be criticized for being tough on developers.
Ron Granger
Fri, Aug 10, 2012 : 1:34 p.m.
Are you going to attend future council meetings to share your views?
yohan
Fri, Aug 10, 2012 : 11:46 a.m.
Is this a tax break for Barracuda or a tax break for Bill Martin?
mixmaster
Fri, Aug 10, 2012 : 1:33 p.m.
A question that deserves an honest answer that I doubt we'll get.
A2comments
Fri, Aug 10, 2012 : 10:55 a.m.
This needs to be CONDITIONAL. If they add the jobs, they get the credits. If they don't, they give the credits back.
Richard Carter
Fri, Aug 31, 2012 : 7:56 p.m.
Yep. remember Pfizer and its tax breaks!