The Toledo-Lucas County Port Authority board of directors yesterday voted to shave $3 million off the cost of General Motors' bringing a six-speed transmission product line to Toledo.
The vote, which would allow the automotive company to escape sales tax on an estimated $100 million in construction costs for the $504 million project, amounts to a tax incentive.
Mayor Carty Finkbeiner, who stopped by the port board meeting, said GM should make a decision by next month whether to choose Toledo, Ypsilanti, Mich., or Mexico for the project.
"It is critical to Toledo," port board member Tom Palmer said. "We are in the hunt. It's a realistic opportunity."
Under the deal, the port authority technically would own the plant. But the agency would issue a note that GM would pay off.
GM would escape sales tax on the estimated $100 million project because the port authority is tax exempt as a government agency. But the agency would not be on the hook for anything, said port board member R. Michael Frank, who is chairman of the board's finance committee.
The new product line would require a $504-million investment, including a 400,000-square-foot building on the east side of the existing 1.8-million-square-foot powertrain plant at 1455 Alexis Rd.
The new product line is part of the company's shift from four-speed products to six speed. As the conversion occurs, fewer of the four-speed variety will be made in Toledo and elsewhere. So the project is more about keeping jobs than creating new ones.
Winning of the project, in conjunction with the 2004 Jeep plant expansion, would give Toledo an even higher profile in the automotive world, Mr. Finkbeiner said.
"We do have it all. We have to market it and package it," Mr. Finkbeiner said.
The Washington Local School District approved a 15-year property tax abatement for the project. Toledo City Council is expected to vote on the abatement Tuesday, which would save the automaker $34.3 million in taxes over 15 years, Jennifer Johnson, the city's senior attorney, said.
Posting an $8.6 billion loss for 2005, GM is not in a position to sell debt. So it would use its own cash to buy the note from the port authority, which would cover the construction costs.
"GM recognizes they cannot go on the market and finance this project," said Jerry Arkebauer, the port authority's vice president of finance. "It's a standard tool. We have used before."
The same process was used for the Owens Corning world headquarters building, which roughly involved about $70 million in construction costs, he said.
"We are here to provide GM an incentive," he said.