Graphic Packaging’s Kalamazoo roots run deep. Our plant on Pitcher Street on the city’s North side has been in operation for more than 100 years, employing generations of Kalamazoo residents.
So, when the company was deciding in 2019 where to invest hundreds of millions of dollars to build a new, state-of-the-art coated recycled board (CRB) machine, Kalamazoo was at the top of the list. The only question was how state and local officials would react to the project, especially with a competing suitor to their south in Ohio.
Several years before we began making plans to make this investment, our company was purchasing properties surrounding the mill and cleaning them up. Under the brownfield redevelopment program, Graphic Packaging oversaw the demolition of buildings previously owned by the Checker Cab company, removing several dilapidated buildings and tons of debris that included asbestos and other hazardous materials. Graphic Packaging paid the full cost of the demolition upfront to complete the project. In return, the company receives reimbursement of some of those brownfield expenses from the increased property taxes it will pay as a result of its investment.
To help secure the project, Graphic Packaging considered economic development offers from the city and state. Tax abatements are common tools used by cities, counties and states to attract economic development projects and investments. The city and state offered tax incentives in 2019 and 2020 that help to offset a small percentage of Graphic Packaging’s total investment and reimburse a portion of the money the company spent to revitalize the surrounding area.
After careful consideration, the city of Kalamazoo approved a $1.6 million tax abatement, spread over 12 years, or an average of $133,333 per year. The abatement offsets a portion of the increased property taxes Graphic Packaging would have to pay over that period because of the increased value of the property.
Separately, the state’s Michigan Strategic Fund (MSF) approved a tax package to support the project, with two components:
- The MSF approved a 15-year state tax exemption valued at up to $7.3 million to offset taxes Graphic Packaging would have had to pay over 15 years on its new equipment.
- The MSF gave approval to the Kalamazoo County Brownfield Redevelopment Authority for the capture of future increased property taxes that will be paid by Graphic Packaging as a result of its investment. Those captured property taxes, valued at up to $21 million over 30 years, will be used to reimburse expenses incurred by Graphic to alleviate brownfield conditions and prepare the site for redevelopment.
Graphic Packaging, which operates eight mills nationwide in North America, also considered a competing bid from the state of Ohio. Graphic Packaging picked Kalamazoo for this project for a number of reasons.
Over the years, our company has been an active participant in and partner to local government, schools, civic organizations and more. Graphic Packaging’s CEO Mike Doss even attended college locally, earning both his Bachelor of Science and his MBA from Western Michigan University.
“One of the things that is really important to me and our company is for the city of Kalamazoo to understand just how committed we are to them,” Doss said in a recent video updating the status of the project that can be found here. “Investments like the one we are making right now …really ensure we will be here for another 100 years. It creates great jobs for the people in the city here and we have people in our company who really like to live in Kalamazoo.”
By the time the new machine is operational, we will have invested over $600 million to install a new coated recycled paperboard (CRB) paper machine and the buildings and other support technologies required for the expansion. The company is also updating the facility’s existing buildings and is investing approximately $4 million in new water cleaning technologies.
The new CRB machine and the Kalamazoo mill will be the most modern, efficient, and competitive CRB mill in North America. The investment will create more than 100 new jobs while also securing the future for about 525 jobs at the mills and our carton production plant and represents an economic impact to the community of more than $2.0 billion over the construction period. Once fully operational the annual additional community financial impact will be approximately $800 million.
With this investment, Kalamazoo will be the single largest producer of coated recycled board product in North America – a lasting testament to Graphic Packaging’s century-old history in the area, and the support we have received from state and local officials.