(AP) — Toyota Motor Corp. has signed an $11 million deal to buy 690 acres from the state for a research and development center that is expected to add 400 new jobs, the automaker said yesterday.
Gov. Jennifer Granholm and Toyota vice president Akihiko Saito announced the agreement at the Toyota Technical Center in Ann Arbor, which is Toyota’s North American research and development center. The new facility will be located nearby in Washtenaw County’s York Township.
Toyota officials said they hope to close the deal and begin building the facility next spring. They expect the $150 million facility will employ 400 people by 2010. Granholm said it will create about 300 indirect jobs.
Michigan gave Toyota a single business tax credit worth $38.9 million over the next 20 years as an incentive, Granholm said. The state will get a net gain of $60 million in tax revenues from Toyota in that time, she said. Kentucky was among the states vying for the facility, she said.
“For me as governor of the state of Michigan, the greatest return on our investment are the 700 jobs, good jobs, high-paying jobs, that will be created by this investment,” Granholm said. The state estimates the Toyota employees will make an average of $1,588 a week.
The state also gave Toyota an adjacent, 10-acre parcel for $1 on the condition that Toyota will make the property into a public park, according to the state Department of Management and Budget.
Granholm said Toyota’s decision to build the center in Michigan reinforces the state’s position as a leader in automotive research and development. Granholm said the state has 200 automotive research and development facilities that employ 65,000 people.
“It sends a strong signal that Michigan is open for business from across the globe,” Granholm said.
Saito said the Toyota Technical Center, which employs 700 people, is outgrowing its Ann Arbor campus. The facility, which opened in the early 1990s, develops vehicles built for the North American market, such as the Avalon and Camry sedans.
Yasuhiko Ichihashi, president of Toyota Technical Center USA Inc., said Michigan was the best place for the company to expand. He also said the site, which used to house the Ypsilanti Regional Psychiatric Hospital, is large enough for Toyota to expand.
Granholm and state lawmakers conveyed the site to Toyota in September. An Oakland County developer, DPG-York LLC, sued, saying it outbid Toyota for the land. DPG-York had offered $25 million.
The Michigan Court of Appeals upheld the state’s action in February, saying the state had a right to consider other factors besides the price offered, including whether use of the property would attract skilled jobs.
DPG-York attorney Stephen McKenney questioned yesterday’s announcement, saying the legal case isn’t over because DPG-York has appealed to the Michigan Supreme Court.
“The governor’s announcement is far more political than it is legal,” attorney Stephen McKenney said.
But Granholm said she is confident because the Court of Appeals has upheld the deal. Toyota Technical Center general manager Bruce Brownlee said Toyota also believes the agreement will be upheld.
The Mackinac Center for Public Policy, a Midland-based think tank that supports free market policies, criticized the Toyota tax credit and others like it in a report yesterday.
The center said that over the last 10 years, the state has said such tax credits would create 35,821 jobs, but they have produced only 13,541. The center said Michigan would be better served by broad tax, regulatory and education reforms rather than targeted tax credits.
But Department of Management and Budget Director Mitch Irwin called the Toyota deal “a model partnership between government and private industry.”
“Our collective success will yield benefits for a generation to come: new jobs, a stronger tax base and a park for all to enjoy,” Irwin said.