Pettibone tax abatement OK’d

BARAGA – The Pettibone Corporation, an industrial fixture in the Village of Baraga, is planning to ramp up production and increase hiring over the next several years, and the Baraga Village Council is willing to help.

Tuesday, the Village Council approved a 50 percent property tax abatement for six years, with the possible renewal for another five years, on more than $500,000 in planned property improvements and equipment purchases at Pettibone, contingent on the company following through with their plan to hire at least 26 new employees within two years of completing physical improvements.

“If we’re going to create 20 to 25 jobs we should do it,” said council member Paul Mayo prior to the vote.

Pettibone Director of Improvement Scott Raffaelli at the meeting had cited that number as the company’s projected job creation figure in the next four to five years, though the official tax abatement application shows expected job creation of 26 to 50 jobs within two years of the completion of plant improvements.

Pettibone builds heavy equipment for lifting and carrying a variety of loads.

Village Manager Roy Kemppainen said in an interview after the meeting the village would be tracking Pettibone’s hiring annually, and the formula for the tax abatement could shorten its length depending on the actual hires.

Kemppainen also assured council members during the meeting that the abatement could be rescinded at any time if Pettibone didn’t come through with its end of the bargain.

There will be a formal opportunity to review progress after six years, when the council will decide whether to renew the abatement.

Rafaelli told the council production and hiring increases had already begun at Pettibone. He said the company had hired several people recently and was continuing to hire.

“We have openings for more people right now,” he said, adding that while a few hires were for summer help, almost all future positions would be full-time.

Pettibone’s application for the abatement listed 73 current employees.

Rafaelli said physical improvements at Pettibone would include new machinery and renovations at the production plant and a new test track for the heavy machinery Pettibone builds on company-owned property adjacent to the plant.

The application lists $250,500 in building and land improvements and $287,000 machinery, equipment and fixtures, meaning Pettibone will receive the 50 percent abatement on a total of $537,500 in taxable valuable if all goes as planned.

A handout Kemppainen gave to the council showed this would add up to an annual tax savings of just over $16,000 per year for Pettibone. About $2,700 of that would have gone to the village, another $13,400 to schools and townships included in the millage. He said he sent letters to those entities explaining the situation, but none had come to the council meeting.

Kemppainen said the village hoped the short-term loss in tax dollars would be recouped by income created by Pettibone’s new employees and spinoff from their spending in the community. He said helping out a well-established local company was a good bet for the village.

“Pettibone has been in the area for many years, so there’s more of a comfort level that they would remain in the area,” he said. “A lot of times a new company will come in and be in and out.”

In other business, the council applied on behalf of the Baraga Lakeside Inn for forgiveness of an estimated $114,000 in interest the Lakeside has accrued on three Michigan Community Development Block Grant loans.

Kemppainen said the request was written to ensure the village was not taking on any responsibility for the loans regardless of the state’s decision.

The Keweenaw Bay Indian Community and the Lakeside’s ownership group have signed a letter of intent for the sale of the hotel to KBIC, which plans to redevelop it as a casino, with a final price for the sale to be determined based on findings of the Lakeside’s liability, and Kemppainen said during the meeting KBIC had asked the village to move on the issue by Thursday.

Bob Ross, a member of the Lakeside ownership group who attended the meeting, said he didn’t know how the village’s action and the pending state decision would affect negotiations.