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Plan spotlights engine plant for Fiat

June 16, 2009

State budget provision sets up new development opportunity zone in Kenosha

Officials say a tentative state budget provision offering up to $5 million in tax breaks to businesses that locate in Kenosha could help leverage the area’s efforts to woo automaker Fiat to purchase Chrysler’s Kenosha Engine Plant.

But the proposed Kenosha Development Opportunity Zone would also provide the city with valuable economic development opportunities, whether or not it were to help save the slated-to-close Chrysler plant.

“It would certainly be extremely helpful to us, regardless of the outcome of Chrysler,” said state Rep. Peter Barca, D-Kenosha.

Barca and Assembly Speaker Mike Sheridan, D-Janesville, worked to have opportunity zones for Kenosha and Janesville included in the Assembly budget plan that passed early Saturday. In order to become law, the zones must now survive the Senate’s review of the budget later this week, as well as Gov. Jim Doyle’s veto pen.

Both Kenosha and Janesville are bracing for a future without longstanding auto industry jobs.

Chrysler announced plans to close the Kenosha plant as part of the bankruptcy plan it filed April 30. But the plant received at least a temporary reprieve June 1, when bankruptcy paperwork indicated Chrysler buyer Fiat has the opportunity to make an offer to purchase the Kenosha plant anytime before July 31.

Some 580 hourly and 85 salaried employees worked in the plant at the time of the bankruptcy announcement. A few hundred took buyouts or early retirements in the ensuing weeks.

In Janesville, General Motors earlier this year shuttered a century-old assembly plant, putting more than 1,200 employees out of work. But GM recently made the plant one of three finalists in a race to produce a new small car line.

As passed by the Assembly, both the Kenosha and Janesville opportunity zones would allow businesses that locate and operate in the geographically defined area to claim a development zone environmental remediation and jobs tax credit and a capital investment credit. The zone could be continued for a second five years, if it is found to be successful, according to a Legislative Fiscal Bureau memo.

While $5 million is the maximum that could be awarded over five years, Barca said he was unaware of how the credits would be apportioned to individual businesses.

Barca also said he was not certain of how the zone would be mapped out or how large it would be. Kenosha County Executive Jim Kreuser said that would likely be determined as part of the state Department of Commerce’s promulgation process.

“The state has been extremely flexible and helpful in our discussions to date,” Kreuser said Monday. “I think this is one more avenue, another arrow in our quiver, we can use to help this out.”

The state and local governments in 2007 offered Chrysler $16.8 million in incentives to develop a new engine line at the Kenosha plant — an offer they say remains on the table for Fiat.

A similar development zone included in the 1999-2001 state budget provided Chrysler with $7 million in tax credits to aid a $624 million plant expansion that went online in 2002.

Kenosha Area Business Alliance President Todd Battle said a new economic development zone could help the area with its pitch to Fiat.

But Battle also said it could go beyond that pursuit, helping to alleviate Wisconsin’s reputation as a state that is generally not viewed as overly aggressive with economic development incentives.

Battle said such carrots can help tip the scale when communities are competing for a business’ interest.

“Business incentives should never be the first part of a discussion about a business location decision, and, unfortunately, sometimes you see that,” Battle said. “But when we’re working with a prospective company, what they’re trying to do is narrow down their options to two or three places where it would be best to locate their business.”

Article Link:Kenosha News | Plan spotlights engine plant for Fiat
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