City Incentivises Garden Fresh Expansion

(Crystal A. Proxmire, 9/27/2011)

In the complicated world of small business financing, there were many things that Grarden Fresh Salsa owner Jack Aronson could have done to help fund the company’s expansion.  He could have approached the government with grant requests.  Or he could have applied for special low interest loans.

Another option before Aronson was to sell the family-run business for $100 million to a major food manufacturing corporation that would have closed the doors to the facilities in Ferndale and moved the operation to Virginia.

He could even save money by consolidating the entire operation into one processing plant in a location outside of Ferndale.

But instead when Aronson had the opportunity to take on larger contracts for his salsa, chip and hummus products, he worked with the City to find property in his hometown that would meet his needs.

When he got the chance to be one of the first in the nation with special high pressure processing machines that allow for longer shelf life without preservatives, at an investment of $11 million in equipment, Aronson took it.  And he asked the City to give him a break on the extra $3.2 million in taxes he would be assessed over the next twelve years, which is mainly due to the personal property taxes on the equipment.  The personal property tax accounts for 80% of the increased tax burden, meaning that he’s continuing to pay based on the assessed value of the new equipment even though that is traditionally much higher than actual value.

In addition to company growth, the Garden Fresh expansion to 1220 E. 9 Mile and 1505 E. 9 Mile will allow Aronson to hire 75 to 100 new workers, repurpose older buildings, improving the look of E. 9 Mile Road, and adding $1.6 million in taxes over the next dozen years that would not otherwise be collected.

At the Sept. 26, 2011 Ferndale City Council meeting there were three public hearings pertaining to the tax abatement.  In a room full of supportive faces, including former Police Chief Mike Kitchen,  just two residents expressed concerns about giving a company tax breaks in a time when the city could use any income it gets.

But support for Garden Fresh, as one of the City’s largest employers, was strong.  Mayor Dave Coulter explained further that the tax abatement is one of the many ways that cities are able to compete to bring investment into their community.  “This is a selective and strategic tool that we use,” he said.

Progressive Metals, Better Form, and Search Optics have received tax incentives for choosing to invest in Ferndale.  Coulter stressed that the tax break being offered Garden Fresh was only on the increasing portion of taxes due to the new growth, and it would not affect the amount of taxes the company already pays.  Economic Development Director Derek Delacourt assured residents that if Garden Fresh does not meet the criteria for the break, such us by failing to provide the jobs they claim, that the City would have the option of going after them for the tax liability.

Aronson said “The love and support in this community is amazing.  I could move someplace else, and it probably makes the most sense financially, but I am committed to this town.” Garden Fresh’s new expansion represents a $13 million investment in Ferndale, on top of $25 million that has been invested over the years.  Aronson is well-known for his community philanthropy in Ferndale and beyond.

City Council approved the abatement 4-0, with Councilperson Mike Lennon recusing himself because he works for Garden Fresh.