MEDC says 'unwarranted criticism' threatens economic development efforts

The Michigan Economic Development Corp. sought to counteract its critics this afternoon by asserting that the agency plays an effective role in boosting Michigan's economy.

"We are deeply concerned that the recent surge of unwarranted criticism leveled against the MEDC will undermine Michigan’s efforts and ability to attract business investment," MEDC's executive committee said in a statement issued to the Michigan Legislature and the media. "All states are in fierce competition for stable, well-paying jobs - across all sectors and industries. Political in-fighting is a clear warning to business that a state lacks a cohesive climate for economic development and a clear signal to invest elsewhere."

The statement, signed by the organization's 17 members, comes a month after the MEDC approved tax credits for a Flint company led by a convicted fraud artist. The tax credits were given because the firm, RASCO Corp., agreed to hire 765 workers over the next several years. The incentives were later rescinded after the executive's criminal background was revealed.

MEDC CEO Greg Main offered to quit because of the situation, but Gov. Jennifer Granholm declined to accept his resignation.

MEDC Executive Committee

Here's a list of the MEDC Executive Committee members who signed the letter:

Matthew P. Cullen (chair), president and COO of Rock Ventures
Phil Power, president of Ann Arbor-based Center for Michigan
David Cole, chairman of Ann Arbor-based Center for Automotive Research
John W. Brown, chairman of Stryker Corp.

JoAnn Crary, president of Saginaw Future Inc.
Haifa Fakhouri, CEO of Arab American and Chaldean Council
Steven Hamp, founder of Hamp Advisors
Paul Hillegonds, senior vice president for corporate affairs of DTE Energy
George W. Jackson Jr., CEO of Detroit Economic Growth Corp.
Birgit Klohs, president of The Right Place Inc.
F. Thomas Lewand, partner at Bodman LLP
Jeff Metts, president of Dowding Industries
Skip Pruss, director of the Michigan Department of Energy, Labor and Economic Growth
Irvin Reid, president emeritus of Wayne State University
Sandy Ring, vice president and general counsel of Hino Motors Manufacturing USA Inc.
Michael Staebler, partner at Pepper Hamilton LLP
Todd Wyett, CEO of Versa Development

"MEDC is not flawless, but it constantly strives to improve its programs, processes and economic development tools," the committee said in its letter today.

The MEDC is also facing criticism from Republican gubernatorial candidates who say the state's tax incentives strategy has been ineffective and costly to taxpayers.

For example, Republican gubernatorial candidate and Ann Arbor venture capitalist Rick Snyder, a former executive chairman of MEDC, has called for the agency to be reconfigured.

Groups like the Mackinac Center for Public Policy, a conservative research group based in Midland, have suggested the MEDC's Michigan Economic Growth Authority (MEGA) tax credits are not effective.

But another organization, the Upjohn Institute, issued a study asserting the MEGA credits had created some 18,000 jobs from 1996 to 2007.

MEDC's executive committee said the MEGA credits had been "particularly effective in enabling us to compete successfully against other states and countries," calling it "a performance-based incentive that a company cannot collect unless provably creating a required number of jobs."

For the Ann Arbor region, the MEGA tax credits have produced an uneven impact.

Companies like information technology security firm Barracuda Networks and medical devices firm Terumo have thus far surpassed hiring expectations since receiving MEGA credits tied to plans to expand in the Ann Arbor area.

By contrast, Google, which promised in 2006 to hire 1,000 workers by 2011, has "more than 250" employees at its Ann Arbor and Birmingham offices, Google's Mike Miller told AnnArbor.com today.

The fact that Google is behind the hiring pace it promised was the subject of a story published last week by Michigan Capitol Confidential, an affiliate of the Mackinac Center.

MEDC's executive committee said the state's economic development efforts are producing results.

"We have been through a devastating economic period for nearly a decade, which has taken a significant toll across the board. At the same time, Michigan - partially as a direct result of

MEDC CEO Greg Main

programs and policies developed and implemented by the MEDC-has been among the national leaders in high-tech, high-skilled, cutting edge, research and development driven job creation," the executive committee wrote. "These new jobs have not replaced lost jobs on a one to one basis, but they are setting the framework for substantial growth going forward."

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.

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