Blair Bowman is the owner of Suburban Collection Showplace, a convention center located in Novi. He is also the registered agent listed for Boco Enterprises, which is the exclusive contractor for event services at the convention center.

Both companies received generous property tax breaks, offered by the city of Novi, known as “abatements.” The two companies affiliated with Bowman have received four of the 11 tax abatements Novi has approved since 1986, according to information received in response to a Freedom of Information Act request. Those four abatements span the years 2001 to 2016.

A number of state laws authorize local property tax abatements for different kinds of property. They generally cut an owner’s property tax bills in half for a specified number of years, which can mean hundreds of thousands of dollars over time. It’s a benefit that just a handful of the estimated 3,000 businesses in Novi enjoy.

While local tax abatements rarely receive much publicity, they are a form of corporate welfare that let politicians on local governing bodies choose which business owners will receive preferential treatment.

Some tax abatements are big news. In 2001, Ann Arbor approved a 12-year abatement on a Pfizer drug company expansion in which the pharmaceutical giant was going to invest up to $800 million. In January 2007, Pfizer announced it was closing its Ann Arbor facilities. The millions in additional tax revenues the city envisioned never materialized.

According to city documents, Suburban Collection Showcase warranted the abatement because of the impact it would have on tax revenues. City staffers estimated that a 2016 expansion by the convention center would net an additional $65,000 in tax revenues in the first year $129,000 in the 13th year. The city collected $33 million in property taxes in 2016.

It’s not unusual for business owners who have large property investments to have cordial relationships with the elected local officials who have authority over many phases of a project. For example, the process of getting city approval on a zoning matter can take months or even years and entail many meetings between government officials and a development company’s managers and owners.

It is also not unusual for business owners to make political contributions to elected officials who under state law have the power to approve or deny local tax abatements.

Bowman has regularly contributed the re-election campaigns of Novi Mayor Bob Gatt. Campaign finance records show that Bowman gave a total of $1,900 to four of Gatt’s election campaigns from 2010 to 2015. These are considered modest sums in this area.

And Gatt awarded Bowman the “Mayor’s Business Ambassador Award” in a 2013 Novi Chamber of Commerce event. That award was described as a special award personally selected by Gatt.

Bowman and Gatt didn’t respond to emails seeking comment.

It is not illegal for developers to contribute to the political campaigns of politicians who vote on their tax deals.

Michael LaFaive, a fiscal policy analyst for the Mackinac Center for Public Policy, said an appearance of a conflict of interest is one of the problems with local tax abatements.

LaFaive pointed out that while companies say they won’t locate within a city without a tax abatement, that is sometimes a bluff.

Novi’s policy on abatements states that a business must prove that it can provide “exceptional economic benefits” as a result of the abatement. And, the policy adds, “The company must demonstrate it would not locate or expand in the city if tax abatement was not available.”

Owens-Corning Automotive said in 2001 it would locate a new divisional headquarters in Novi. Economic development officials with the state of Michigan offered state tax incentives but made them contingent on Novi also granting special treatment, reflecting a common pattern of requiring local government action. Novi’s leaders refused and the state assistance fell through. Owens-Corning Automotive still made its headquarters in Novi, however, and it is still located there.

LaFaive said tax abatements are also not effective at growing the economy or creating jobs.

“They don’t create new wealth so much as transfer it. Lost revenues must be replaced somehow. That can mean higher taxes for everyone else, or fewer public services,” LaFaive said.

LaFaive said government officials do not have a special gift that enables them to know which businesses will thrive.

“There is the politics of it all,” LaFaive added. “It does not strain credulity to suggest that some of these abatement transactions are driven as much by a public relations opportunity as a wise economic development investment.”

Editor’s note: Pete Auger, city manager for the city of Novi, Michigan, explains his employer’s policy on tax abatements.

The State of Michigan offers very few tools for local units of government to use for economic development. The City of Novi utilizes those tools to attract, retain and grow businesses in our community.

It might be nice if there was a utopia where everyone played with the same rule book, but in the real world we compete with other regions, states and countries as a premiere place to locate and grow businesses. We have competed against places that give away land, cash incentives and build out infrastructure in order to attract some of these same companies. Corporate decision makers and individual owners weigh all the information when making decisions on where to locate for the next twenty years. Tax incentives are one of the tools the State Legislature has given us to help us compete with the other states and nations. Our abatements are small in nature compared to what companies are receiving around the world, but coupled with the other important community items we focus on it keeps us at the table in attracting and retaining jobs.

The City of Novi does not go around seeking businesses to give abatements to. The businesses given them actively approached the City, completed an application and met State and local criteria for an abatement.

In totality, our City council has done a great job setting up a community where we are financially stable, one of only twelve AAA Bond rated municipalities in the state. The four K-12 public school districts and one catholic school are all performing well in their endeavors.

We have over 1,200 acres of parkland and continue to expand our non-motorized routes. Our Novi Parks, Recreation and Cultural Services Department earned National Accreditation, becoming one of only 155 accredited agencies nationwide. Likewise, Novi’s Police Department just received accreditation from the Commission on Accreditation for Law Enforcement Agencies (CALEA). This is known as the “gold standard” in law enforcement accreditation, less than four percent of law enforcement agencies in the country have earned this prestigious honor, including just nine others in Michigan.

I could go on and on about programs, services, and location which paint the entire Novi picture. Like every successful organization we will continue to improve on what we do and how we do it. Economic Development is a part of our continued efforts to be one of the premier communities that continue to attract high paying jobs and business investments.