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Sterling Heights City Council approves continuing tax abatement for Chrysler plant

A Dodge Magnum cruises by SHAP
A Dodge Magnum cruises by SHAP
Photo by Steve Adair 1/25/10

Abatement continues incentives granted to Chrysler in effort to save assembly plant and its 1,200 jobs.

Recently, the Sterling Heights City Council approved Chrysler Group LLC's application for a tax abatement for the Sterling Heights Assembly Plant (SHAP).  As a result, the City will continue to collect approximately $2.6 million dollars in annual tax revenues from Chrysler Group LLC.  Per City Manager Mark VanderPool, the cost to the City of the abatement is $3.28 million, but there is a clause in the contract that would withdrawal the abatement should Chrysler Group LLC not agree to keep the plant open by February 2.  Currently, SHAP is scheduled to close on December 31, 2010.  Studies done by the City of Sterling Heights estimate the annual economic impact of the plant at approximately $300 million annually.

The abatement itself is for equipment and machinery contained within the plant as the real property (or real estate) is actually owned by Old Carco LLC, formerly known as Chrysler LLC.  As part of the turn around plan authored by Chrysler and approved by the White House, assets not desired by the "new" Chrysler - including SHAP - were essentially thrown into a new company comprising of "old" Chrysler's least desirable assets.

Despite these facts, City officials remain cautiously optimistic in their efforts to sway leaders at Chrysler Group LLC before February 2.  Per a statement released by Mayor Richard Notte, "This transfer places the Sterling Heights Assembly Plant in the best possible position for continued production of vehicles in the mid size class. Our goal all along has been to preserve the property taxes generated by this plant, as well as the 1,200 jobs located there. The City’s action accomplishes this goal."

When contacted for comment on SHAP's future, a Chrysler representative responded with the following, "At this time, the company’s position has not changed. While we continue to engage in dialogue with many parties regarding the possibility of maintaining production operations at SHAP, there are still many issues that must be addressed before the Company is able to consider such a possibility."

With less than ten days to go and despite a generous tax abatement, it still appears that SHAP's future, and its 1,200 jobs, are in doubt.


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