Dit zal het bericht zijn wat AK Steel onderuit heeft gehaald. Een tegenvaller mbt de tax credits waarover AK Steel al jarenlang in de clinch lag met de Staat Ohio.
Er is nu een akkoord voor 20.4 miljoen USD (en ook nog met veel voorwaarden) en dat is veel minder dan wat ze wilden. Dacht dat de claim rond de 65 miljoen USD lag. Daar zal de teleurstelling vandaan komen.
Niet sectorbreed dus maar wel impact op alles en iedereen.
State agrees to transfer MEGA tax credits to AK Steel
Ohio steelmaker believed it acquired MEGA, brownfield tax credits in 2014 acquisition of Dearborn plant
By LINDSAY VANHULLE
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Michigan Economic Development Corp. Automotive More +
Photo by Severstal North America Ohio-based AK Steel Corp. bought this Dearborn steel plant in 2014 from Russian steelmaker OAO Severstal.
LANSING — The state on Tuesday agreed to transfer tax credits to an Ohio steelmaker that the company believes it inherited when it bought the former Rouge steel plant in Dearborn close to three years ago, a controversial decision that will allow the steelmaker to file its business taxes under an old tax code.
The Michigan Strategic Fund board, a unit of the Michigan Economic Development Corp., approved the transfer of job-retention tax credits under the defunct Michigan Economic Growth Authority program and brownfield tax credits to West Chester, Ohio-based AK Steel Corp.
Under the deal, AK Steel (NYSE: AKS) agreed to cap the value of the remaining MEGA tax credits at $20.4 million and shave six years off the time the company can claim the credits — reducing the state's liability by about $23 million, according to the MEDC.
The decision worked out by state economic development leaders and AK Steel is unprecedented, in part because Michigan's tax code prohibits companies that pay the state's new 6 percent corporate income tax, as AK Steel does, from claiming tax credits that were awarded under the old Michigan Business Tax.
AK Steel bought the Dearborn operations of Russian steelmaker OAO Severstal in 2014 for $707 million. It believed the tax credits originally awarded to Severstal would transfer as an asset purchased during the acquisition of Severstal.
The steelmaker will be allowed to file its business taxes under the Michigan Business Tax, Renee Filiatraut, the company's external affairs vice president, told reporters after the board's vote.
Gov. Rick Snyder's administration replaced the Michigan Business Tax with the flat corporate income tax shortly after taking office in 2011, though companies that were awarded tax credits under the old tax code can continue to file business taxes under the old system until the credits expire.
"Retaining the MBT credit is an important factor in AK Steel's ability to continue to invest and operate the state-of-the-art steelmaking facility … for many years to come," Filiatraut said.
To claim the credit, the company will have to retain at least 500 jobs at its Dearborn plant and at least 1,000 full-time jobs in Michigan, and pay an average weekly wage of $820, the MEDC said. It also will need to be in good standing with the state, including with the Michigan Department of Environmental Quality on environmental regulations and corrective actions.
Opposition to deal
Lawmakers from both parties and environmental groups, including the Michigan League of Conservation Voters, oppose the deal over AK Steel's environmental violations, the lack of transparency surrounding negotiations and the fact that the transfer extends the unpopular MEGA tax credit program after it was ended several years ago.
State obligations under the MEGA program swelled to more than $9 billion as the program expanded to allow companies to receive credits for retaining jobs during the recession. That has led to budget stress in recent years amid volatility in when companies redeemed the credits.
Republican state Reps. Martin Howrylak, of Troy, and Peter Lucido, of Shelby Township, and Democratic state Rep. Stephanie Chang, of Detroit, urged the strategic fund board to delay a decision until May until the proposal could be fully vetted in public.
"We remain concerned that this agreement with AK Steel will set a dangerous precedent by allowing a specific company to acquire a tax loophole without going through the legislative process to amend the tax code," the lawmakers wrote.
Lawmakers in the House and Senate last year tried to change the state's tax laws to allow a company to claim a credit that had been awarded to a company it acquired, but the measures didn't pass by the end of the legislative term in December.
Environmental issues
The company has received four environmental violation notices since Jan. 1, 2016, according to the DEQ. It received one in February for a December incident involving fallout from a large brown plume. AK Steel executives said the steelmaker has added environmental compliance employees in Dearborn and upgraded pollution control equipment to significantly reduce the number of air permit deviations since it took over Severstal.
Still, environmental groups are not happy.
“Instead of using this opportunity to pressure one of the state’s biggest violators of air quality standards to clean up its act, the Michigan Strategic Fund Board used a backroom deal to award $20 million in tax breaks to AK Steel, no strings attached," Lisa Wozniak, executive director of the Michigan League of Conservation Voters, said in a statement. “Negotiating this agreement without legislative, public or community engagement defies the basic principles of good governance.”
MEDC spokeswoman Emily Guerrant said the agency's legal liability stops at the decision to transfer the tax credit.
"We do have the ability and we have the obligation, we would argue, to transfer the MEGA credit from Severstal to AK Steel," Guerrant told Crain's. "We feel like we've done our diligence, we feel like we have the power to make the transfer and we feel like we're obligated to make the transfer."
She said the Michigan Department of Treasury, which would administer the credit, would have the responsibility to determine the tax code a company uses to file its business taxes.
Treasury spokesman Ron Leix declined to offer specific details about AK Steel, but said the department will process the credit if the strategic fund board grants a valid MEGA certificate.
Severstal in 2005 was awarded a 20-year MEGA tax credit to retain up to 2,041 jobs with a required capital investment of at least $162 million, according to the MEDC. Severstal received a $30 million brownfield tax credit in 2008 for a $245 million project in Dearborn.
Severstal bought the Dearborn plant out of bankruptcy from Rouge Steel Co. for $285 million in 2004. AK Steel has about 1,500 employees there today.
AK Steel has spent more than $30 million at the plant to expand a steel production line since it took over operations.