GM gets tax breaks, will keep RenCen headquarters

Robert Snell / The Detroit News

The state of Michigan quadrupled its offer to keep General Motors Co. from relocating about 2,000 employees from the Renaissance Center, and teamed with local officials to dangle tax breaks that could total $221 million.

The package helped convince GM on Friday to scrap plans to move about half of its work force out of the iconic riverfront complex as part of a broad facilities consolidation. GM also cited the high cost -- tens of millions of dollars -- and disruption of relocating workers to the Warren Tech Center as reasons to maintain a sizeable staffing level at the RenCen.

"We decided to spend that money on products and technology and relationships with customers," GM spokesman Tom Wilkinson said.

The sweetened offer ends a prolonged saga that threatened to sap tax revenue from Detroit, which is facing a roughly $300 million budget deficit, and leave GM with a half-empty world headquarters following thousands of job cuts during the company's financial crisis last year. It also ends a tug-of-war between the city and Warren, which was wooing GM to relocate as many workers as possible to the Macomb County community.

In December, GM trimmed the number of workers it vowed to keep at the RenCen to 2,000 from 2,500 despite the Michigan Economic Growth Authority offering a $50 million tax break. The authority has since upped the offer to as much as $200 million, according to a source, and GM will keep about 5,000 workers downtown.

"The state came up big," the source said.

Gov. Jennifer Granholm welcomed GM's decision, but did not provide details about the state's incentives.

"We have been fighting hard to keep as many jobs as possible in GM's iconic downtown riverfront headquarters, and believe our efforts played a vital role in the company's decision," she said.

Bing: Great news for city

Detroit Mayor Dave Bing has been involved in talks with elected officials and GM, and the city's Detroit Economic Growth Corp. and Downtown Development Authority are offering incentives that could range from $15 million to $21 million over a period of several years, the source said.

The city's tax package is tentative. The Downtown Development Authority could vote to approve the tax package within a month.

Bing hailed GM's decision as "great news for the city of Detroit," which collects more than $6 million in taxes from GM annually. "Retaining jobs is a top priority of my administration, and I appreciate their commitment to the city."

Wayne County Executive Robert Ficano also was involved in negotiations.

Workers at the RenCen will be consolidated onto a smaller number of floors and the vacant space marketed to potential new tenants, GM's John Blanchard, executive director of worldwide real estate, told employees in an internal e-mail obtained by The Detroit News.

Part of the city's tax package would include incentives that could lure tenants to the RenCen.

GM employees located at the Warren Tech Center and Pontiac Powertrain facility will stay there, but offices will be compressed to "most effectively utilize space," Blanchard wrote. And GM is re-evaluating plans to relocate workers at GM's Service Parts Operation near Flint.

"After a great deal of study, we believe that this plan will be the most effective in enabling GM to beat our business plan targets while maintaining a positive work environment," Blanchard wrote in the e-mail.

Indirect workers also stay

About 4,000 employees worked at the RenCen in December, but the 5,000 employees who will stay there include a number of consultants, accountants and other indirect workers. The News reported in October that GM had launched a formal review of its facilities in southeastern Michigan as it considered moving some operations out of the RenCen and consolidating workers spread among facilities in Pontiac, Warren and Grand Blanc.

Fourteen years ago, GM paid $75 million for the RenCen. The automaker later borrowed $500 million against it for a major remodeling and leased it back until May 2008, when it paid $626 million to take full ownership of the complex.

rsnell@detnews.com (313) 222-2028