Sakti3 Tax Abatement Delayed

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After a public hearing held at its May 7, 2012 meeting, the Ann Arbor city council delayed a tax abatement for Sakti3 – a battery technology spinoff from the University of Michigan. Sakti3 is led by UM professor Ann Marie Sastry. The postponement – until the council’s next meeting – came at the request of Marcia Higgins (Ward 4), who wanted the matter referred first to the council’s budget committee. Comments around the council table suggest that when it comes back on May 21, there’ll be support for the abatement.

According to the staff memo accompanying the resolution, the abatement would be on $151,433 of real property improvements and $1,374,861 of new personal property. According to a memo from city financial staff, the value of the tax incentive to Sakti3 over three years totals $36,000. The council had voted to set the public hearing on the tax abatement at its previous meeting, on April 16, 2012.

Reasons given in the staff memo for the abatement include the need for Sakti3 to expand and add new equipment for the continually changing alternative energy business and the expected addition of five new employees due to the firm’s expansion. The memo concludes that the retention and expansion of such operations is consistent with the economic development goals of the city of Ann Arbor and of Ann Arbor SPARK.

Previously, the council voted on March 21, 2011 to set a public hearing on the establishment of the industrial development district under which Sakti3 is applying for an abatement. And on April 4, 2011, the city council approved the establishment of that district.

The city is prohibited by state statute from abating taxes on any more than 5% of the total state equalized value of property in the city. Responding to an emailed query, city of Ann Arbor chief financial officer Tom Crawford wrote to The Chronicle that total SEV for the city for 2012 stands at $5,294,974,640, and the total SEV of abated property in 2012 is $8,935,974. That works out to 0.169% – well under 5%.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]