Home Trade association The SOAR fund takes off to secure large competitive projects

The SOAR fund takes off to secure large competitive projects

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VSThe creation of the Strategic Outreach and Attraction Reserve Fund gave Michigan a new tool to attract major economic development projects that business advocates say quickly changed the national perception of the state.

Lawmakers recently replenished funding for the SOAR fund, which has allowed Michigan to compete with other states for big business investment in jobs and facilities. The fund has been instrumental in securing new electric vehicle and battery factories.

“With the SOAR fund, Michigan is in a better position to attract some of these big projects that we’ve seen more recently go to other states,” said Wendy Block, vice president of corporate advocacy at the Michigan Chamber of Commerce. “We believe we need to be more competitive on these projects, many of which are creating these next-generation jobs for our state and even the nation. Whether it’s getting more competitive on EVs (electric vehicles), batteries, or in other areas, Michigan really needs to make strategic investments to position itself for the future.

In late 2021, the state Legislature and Governor Gretchen Whitmer created the SOAR fund with an appropriation of $1.1 billion.

Two weeks ago, state lawmakers injected an additional $846.1 million into the fund. The new funding was part of a $1.11 billion additional spending bill for the state’s current and new fiscal years that was worked out between lawmakers and Whitmer, who signed the legislation on October 4.

Of the $846.1 million that lawmakers appropriated, $613 million was new funding and $233 million remained from last year’s original allocation that would have gone back to the general fund. state unless re-authorized.

New funds from the SOAR Fund direct $250 million to the Michigan Strategic Site Readiness Program. The funding includes $25 million for grants to regional and local economic development organizations, $100 million for improving industrial project sites where a potential user has not been identified, $75 million for the evaluation and development of so-called “mega-strategic” sites and $50 million for the improvement of sites for a project planned by a specific user.

send a signal

SOAR’s funding replenishment sends a “signal to businesses across the country and around the world that Michigan is committed to supporting economic development,” said Jeff Donofrio, president and CEO of Business Leaders for Michigana round table of business leaders and university presidents.

“The message is the same whether you’re in California or Korea: Michigan is ready to compete on the world stage for world-class projects,” Donofrio said. “We have bolstered our economic development toolkit, invested more in local talent, and are actively working to create sites and development strategies across the state. This is an invitation for manufacturing, technology and R&D companies to join a state with a proud manufacturing heritage and the intelligence and experience to sustain 21st century success.

Since its creation, the SOAR Fund has supported research projects General Motors Co. and Ford Motor Co. for electric vehicle manufacturing in the state, and more recently battery plants in Big Rapids and Wayne County and a large agribusiness project in Muskegon and Ottawa counties.

Last week, the Michigan Strategic Fund Board approved support for Gotion Inc.The planned $2.36 billion investment for a battery plant near Big Rapids promises to create up to 2,350 new jobs. In Van Buren Township of Wayne County, based in Novi Our Next Energy Inc. plans to invest $1.6 billion in a new manufacturing plant to produce vehicle batteries that will create more than 2,100 jobs.

In West Michigan, the MSF board approved a $60 million SOAR fund grant to support a wastewater improvement project to accommodate $187 million in capital investment by five companies which will create 145 new jobs in Coopersville and Ravenna. The five companies — Fairlife LLC, Continental Dairy LLC, DeVries Meats Inc., Applegate Dairy LLCand Swanson Pickle Co. — now collectively employ nearly 560 people.

The SOAR fund gave the Michigan Economic Development Corp. an important new tool that has long been missing to compete with other states for major projects, said MEDC President and CEO Quentin Messer, Jr.

Without SOAR’s assistance, each of the battery plant projects would not have occurred in Michigan, according to Messer. The MEDC previously only had a business development grant program capped at $10 million per opportunity, a size “that would not have been enough for us to land these projects,” given their size and scope. capital intensity, he said.

“SOAR signaled an ability for the Michigan team to come together and play as a team in a bipartisan fashion to achieve results on both sides of the state, east and west, and none of those agreements would not have been concluded or about to be consummated without the presence of the SOAR Fund,” Messer said.

‘Awakening’

The legislative action to create SOAR follows Ford’s announcement in September 2021 that it was joining partner SK Innovation Co. to invest $11.4 billion and create 11,000 jobs in Tennessee and Kentucky to build facilities that manufacture both electric vehicles and batteries.

The Ford project has been a “bit of a wake-up call” for Michigan to better compete with other states to attract major projects, especially as the local auto industry becomes electrified, Mike Johnston said. , Executive Vice President of Government Affairs at Michigan Manufacturers Association.

At a time when Michigan must compete nationally and globally for business investment and jobs, including with states with lower labor costs, the SOAR Fund has clearly begun to make the difference, Johnston said. As the Ford project in Tennessee and Kentucky showed, other states will gladly offer lucrative incentive programs to entice automakers and their suppliers as the industry electrifies, he said. declared.

The creation of the SOAR Fund signaled to other states that “Michigan is in the game for transformational investments” after a “zigzag story about economic development incentives,” including the elimination of most incentives in 2011 in beginning of the government of the time. Rick Snyder’s administration, Johnston said.

“We are the center of the auto industry in America, and everyone wants what we have,” he said. “Michigan, being the center of the internal combustion engine, needs to make this transition to electric vehicles to keep our economy strong and the auto industry strong. So it’s critical that Michigan actively play for these kinds of transformational projects, these kinds of investments, if we’re going to protect Michigan’s economic future.

Talking to colleagues from manufacturing trade associations in other states, “They’re all like, ‘OK. Michigan is back in the game,” Johnston said. “And I think that makes them a little nervous.”

Similarly, Block in the Michigan House said the creation of the SOAR Fund “definitely put us on the map” nationally in competition for major projects.

“There are other states that are noticing that we’re doing it now too, and we’re doubling down,” she said. “We’re proving to others that we’re not just going to sit back and watch these businesses and jobs grow elsewhere.”

One of the key differences between SOAR and past state incentives is the legislative transparency and oversight enshrined in last year’s enabling legislation. The State House and Senate retain final funding authority for projects approved by the Michigan Strategic Fund Board.

Permanent funding

As lawmakers and the governor earmarked more money for the SOAR Fund this month, separate legislation has been advanced in Lansing that would provide a permanent source of funding.

Senate bills 981-983 that were passed by a Senate committee on Sept. 21 would capture and direct to the fund new tax and corporate and income tax revenues generated by SOAR-supported projects.

The Michigan House testified in support of the legislation, sponsored by Sen. Ken Horn, R-Frankenmuth.

“It’s another way of communicating to the world, ‘Look, we’re going to be invested in the future because we have a sustainable source of funding going forward,'” Johnston said. “Let’s catch the tax on those jobs and replenish the fund so we can continue to create more jobs for the future.”

Speaking last week in Grand Rapids after Michigan’s Strategic Fund Board approved the latest projects, Whitmer said the legislature may need to consider allocating additional funding to the SOAR Fund to support “many of the opportunities which are available to us”.

“We’re going to have to continue this conversation,” she said. “We are going to have a long-term strategy on how we maintain this ability to be competitive.”