It’s great that NanoBio wants to expand in Ann Arbor. The impulse to encourage them to expand in town by lowering their taxes is understandable. The fly in the ointment is that this abatement further erodes our tax base, and leaves those without tax abatements to pick up the slack. If NanoBio won’t expand here without reduced taxes, it suggests that its principles find that our services-for-taxes bargain is not a value proposition (the alternative explanation is that they were just handed a needless freebie).

1) We need to find out what makes our standard tax-for-services value proposition unattractive, and take more systematic action to improve it if we want the city to not implode. Sooner or later, NanoBio will not be the only taxpayer deciding whether or not to vote with their feet. The time to fix our value proposition is now.

2) It is unfair to existing business taxpayers that more recent facilities may pay less than they do.

3) Is city council really qualified to pick economic winners, who receive tax abatements, and losers, who do not? This is not a dig at this council – I have not yet heard of a body of non-investors/non-entrepreneurs who could make accurate specific predictions about where “The Future” lies. Since many firms fail in their early years, apparently even investors & entrepreneurs have a hard time predicting winners and losers. What makes any city council qualified to pick economic winners and losers?

4) Rather than handing out city subsidies, we need to find out why firms will not locate or expand here without them, and address our root problems. Every firm has a life cycle. If our value proposition is no good, then as firms come and go in the normal course of life, firms passing from the local scene will not be replaced by new firms.

There is no magic. Tax abatements are not free: when one person’s/firm’s taxes go down, everyone else’s taxes have to go up, or their services received for current taxes have to go down, to pay for it. In that regard, tax abatements are much like Tax Increment Financing, or Tax Increment Capture: the entity receiving the benefit of the Tax Increment or Capture does so at the expense of all other taxpayers. Abatements (vs. realistic assessment of a municipality’s value proposition to taxpayers) are not a viable long-term economic development plan – and they are unfair.

NanoBio’s principles are not bad or evil for wanting their taxes reduced – it’s their job to do what they can to raise revenues, lower expenses, maximize profits, and give investors a return on their investment. The problem includes a) our tax rates; and b) the process by which we formulate public policy in Ann Arbor.

John Floyd
Republican for Council
5th Ward