Michigan approves amended tax incentives for Dow, AK Steel

A Michigan board approved restructured tax incentives Tuesday for Dow Chemical and AK Steel and capped the credits' value similarly to how it did in agreements with automakers in recent years, despite lawmakers' criticism of the new deal for the steelmaker.

State economic development and company officials said the deals were needed in light of Midland-based Dow's full takeover of Dow Corning and West Chester, Ohio-based AK Steel's purchase of the Russian company Severstal.

The decision to let AK Steel qualify for tax incentives that were originally given to Severstal, which has a facility in Dearborn, was slammed because legislation that would have authorized the transfer stalled in 2016.

"Moving this issue to a much less public, non-legislative arena without the process of community hearings and a public vote by elected bodies the way tax policy should be handled is extremely disappointing," Ellen Heinitz, legislative director for Democratic Rep. Stephanie Chang of Detroit, told the board. Chang has criticized AK Steel's pollution violations.

Environmental groups and some Republicans also complained.

"I am deeply disappointed in this decision," GOP Rep. Rob VerHeulen of Walker said in a statement. "The Michigan Strategic Fund Board should not have made this decision without the Legislature's involvement and oversight."

Renee Filiatraut, AK Steel's vice president of external affairs, said the company bought Severstal with the "full expectation" that it would receive its old Michigan Economic Growth Authority and brownfield incentives. The company agreed to shorten the length of the old agreement by six years and to cap the value of the credits at nearly $20.4 million — which the state estimates will save about $23 million.

AK Steel must retain at least 500 jobs at the Dearborn plant and 1,000 jobs in Michigan, paying an average weekly wage of $820. Filiatraut said the number of pollution violation notices has dropped substantially in the 2½ years of AK Steel ownership.

Dow's new deal allows it to count Dow Corning — of which it became the sole owner in 2016 — for job-creation and base employment purposes. Dow also will have an extra three years to create and keep 1,700 jobs.

The initial agreement was anticipated to lead to the construction of a new manufacturing facility and 1,700 new jobs company-wide. Dow completed the first phase of the facility but decided to stop making solar shingles.

Now, it will lose a renewable energy zone designation, and its maximum MEGA credit value is capped at nearly $61.4 million. Dow said it plans to invest $400 million in Michigan over the next 10 years.

"We're taking actions to position our sites here in Michigan to capture the growth in the manufacturing ... as we combine these two companies together," said Rich Wells, a Dow vice president and site director of Michigan operations.

Also Tuesday, the board OK'd a $15 million equity investment to begin the first phase of construction of the American Center for Mobility's autonomous vehicles test facility in Ypsilanti Township.


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