Public hearing set as Ann Arbor considers $85K tax break for Barracuda Networks expansion
The Ann Arbor City Council will hold a public hearing on Aug. 9 to receive comments on a proposed tax break to facilitate the expansion of Barracuda Networks.
The company is planning to move into the former Borders book store location downtown and is hoping for establishment of an industrial development district, which would result in a five-year tax abatement from the city of Ann Arbor totaling $85,150.
The city's administration said the abatement is key to keeping Barracuda downtown, as the company has other options and could realistically expand elsewhere.
Barracuda Networks is looking to hire as it moves from its 12,000-square-foot office on Depot Street to 45,000 square feet in the former Borders building in downtown Ann Arbor.
Melanie Maxwell | AnnArbor.com
The Barracuda project has been in the works for a while, but it was kept confidential until the Michigan Economic Development Corporation's Michigan Strategic Fund board on June 27 approved a $1.2 million incentive to assist with the company's expansion.
That requires a move from the company's current location on Depot Street to space at 317 Maynard. Barracuda has 148 employees and has committed to the MEDC to add 178, according to an email City Administrator Steve Powers sent to council members.
Barracuda will lease the space at 317 Maynard St., which is located at the rear portion of the building that previously housed Borders and is owned by First Martin Corp.
City records show John Teeter of First Martin, an agent for 317 Maynard LLC, submitted paperwork to request the industrial development district's creation on June 1. State records show 317 Maynard LLC was formed by Bill Martin weeks earlier on March 16.
Under Public Act 198 of 1974, the City Council has the authority to establish industrial development districts in the city.
The establishment of an industrial development district would result in an abatement of about 40 percent of the taxes the company would have to pay for five years, or an estimated $85,150 savings. After the five-year period, the full taxes would be paid to the city.
Powers said First Martin is requesting the five-year abatement to help with the cost of renovating the space for the Barracuda expansion.
Barracuda is based in Campbell, Calif. The private company creates network security devices, provides email and web filtering products and phone system solutions, and monitors network attacks from its Ann Arbor office. It has more than 1,000 employees globally.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
15crown00
Fri, Jul 6, 2012 : 4:25 p.m.
they're not gonna do it if you don't pay so ante up.It's That Simple.
racerx
Fri, Jul 6, 2012 : 12:17 a.m.
Wasn't a tax break (and free parking) given to Google? Have they met their stated goal of 1,000 works mid-town yet?
LXIX
Thu, Jul 5, 2012 : 6:41 p.m.
Barracuda HQ City - Campbell California - requires business therein to be licensed and taxes each $500 per year ($300 industrial) and get a yearly fire code inspection to help pay for their fire department Can the Ann Arbor City Council spell Pfizer?
say it plain
Thu, Jul 5, 2012 : 5:14 p.m.
85K does seem a paltry sum. How could this possibly be "key" to anything that we hope will result in big numbers of new jobs!? It's just that businesses need to see that they can demand a ransom when they bless a city with their continued or expanded presence, right?! Got to be. Or else also some personal spending that couldn't be 'justified' elsewise. "Key" to the deal lol.
xmo
Thu, Jul 5, 2012 : 2:41 p.m.
I wonder if $85,000.00 is enough of a tax break? With renovations, new furniture, new employees and health care costs, maybe we should give them 1 million dollar tax break. Better yet, lets skip the tax altogether because we want them downtown!
Ron Granger
Thu, Jul 5, 2012 : 2:10 p.m.
@Brad: "It will attract other tech businesses downtown? Why?" Because the growing critical mass is making Ann Arbor a tech and startup business hub. It attracts professionals to the area. It is a reason for graduates to stay in the area. Other businesses will want to poach Barracuda employees. @Brad: "Did that happen when Google moved in and created their 1,000 (actually 300) jobs?" Yes. Maybe you haven't heard the news? Barracuda opened an office and it quickly grew to 148 employees. They are expanding to add 178 more. I think I may have read about it on AnnArbor.com. There has been a great deal of entrepreneurial development in A2 since google's advertising office opened here. It isn't because of google, but their office is a part of it. They sponsor events and allow the use of their space. They have contributed to the rapid growth of Ann Arbor's tech scene in an otherwise bleak economy. You know what would be really great? If google made the a2 office an engineering office. Barracuda's local growth makes that more likely. It's all about slowly building critical mass. Want to keep the graduating students in the area? They need great places to work. They need places to go when their startups fail. Places that can compete with Apple, Microsoft, Google, Amazon. I do not bin Barracuda, Proquest, etc in with that bunch, but they are working on it. Baby steps.
Tru2Blu76
Sun, Jul 8, 2012 : 5:48 p.m.
So you claim that giving breaks to a corporation is the best way to increase job opportunities for the rest of us poor (highly educated and skilled) fools. We should be so grateful that companies mover here because they have the choice to move where the self-made victims would given them more tax breaks?? Your logic sucks: it's not a credit to you that you favor this national extortion scheme.
Ron Granger
Thu, Jul 5, 2012 : 12:51 p.m.
$85K is a paltry sum in comparison to the benefits of their relocating downtown and the additional jobs. It is a volume of high income jobs that can make or break small nearby businesses. These aren't just some jobs. This is a large "tech anchor" that will attract other tech businesses. It, and the other businesses that will likely follow, give people who choose to live in the area a place to go if their gig falls apart. Pittsfield would gladly have this business. And everyone could clog the roads driving to Pittsfield every day.
Tru2Blu76
Sun, Jul 8, 2012 : 5:45 p.m.
Promoting this "competition for paying extortion favors" isn't the way this country is supposed to go. Whoever got this idea started around the country ought to be tarred and feathered or worse. Make ending this race to the bottom extortion racket an election issue, no excuses accepted.
Brad
Thu, Jul 5, 2012 : 2:44 p.m.
@sig - are you familiar with the difference between correlation and causation? You really think Barracuda moved downtown to be near a Google advertising (i.e., non-tech) office? Assumes facts not in evidence as far as I know. As far as the fullness of the glass, it's easily measured. My subjective perception of its fullness is immaterial. One person's "doom and gloom" is another person's unwillingness to uncritically accept all the cheerleading.
Ron Granger
Thu, Jul 5, 2012 : 2:12 p.m.
Apparently the glass is half empty, sigdiamond.
sigdiamond
Thu, Jul 5, 2012 : 1:55 p.m.
Brad, are you actually arguing that Google didn't attract other tech businesses downtown in response to a story about a tech business moving downtown?
Brad
Thu, Jul 5, 2012 : 1:16 p.m.
It will attract other tech businesses downtown? Why? Did that happen when Google moved in and created their 1,000 (actually 300) jobs?
Brad
Thu, Jul 5, 2012 : 12:43 p.m.
"The city's administration said the abatement is key to keeping Barracuda downtown" And last week they said it was the parking (discounted, of course) that was the key. And what will they give away with next week's "key"?
YpsiLivin
Thu, Jul 5, 2012 : 12:34 p.m.
Offering a tax break is a mistake, and the city shouldn't be conned into believing that Barracuda Networks will go elsewhere if one isn't forthcoming. Bill Martin should be required to disclose the lease price to Barracuda WITH the tax break and WITHOUT. I bet Barracuda will pay the same regardless. Why should the taxpayers foot the bill for renovations to the building? This is not a public works project; it's a private business venture. Since the landlord pays taxes on the building, whether it's rented or not, there's no reason to grant this request. Paying taxes is part of doing business. If Bill Martin isn't familiar with that, he shouldn't be in business.
say it plain
Thu, Jul 5, 2012 : 7:36 p.m.
Exactly... If the city doesn't require disclosure of the lease price with and without the tax break, Council shouldn't even *consider* granting this request! And yes, as @yohan above states, the title of this article is misleading...
Kk Ichikawa
Thu, Jul 5, 2012 : 12:14 p.m.
...and if they fail in their commitment to add 178 employees??? Is there a time frame as to when those employees will be added?
Joel A. Levitt
Thu, Jul 5, 2012 : 1:52 p.m.
OK, enact this tax break provided that a debt is simultaneously established that Martin must repay if these new additional employees are not hired within two years.
Albert Howard
Thu, Jul 5, 2012 : 10:58 a.m.
See you Aug. 9 at 7 p.m. w/ 3 min. worth
yohan
Thu, Jul 5, 2012 : 10:25 a.m.
The title of this story is misleading. This is a $85,000 tax break for BILL MARTIN, not for Barracuda Networks.
PSJ
Sun, Jul 15, 2012 : 4 p.m.
If Martin's lease to Barracuda is "triple net," which is customary in downtown Ann Arbor, then the tenant pays the real estate taxes and would benefit from the tax break.
a2gretta
Fri, Jul 6, 2012 : 2:04 p.m.
Thank you. The point of the article is in the next-to-last paragraph....? Ryan, can you clarify? Is it a domino effect: Barracuda won't move unless Martin's company makes renovations to the former Border's building, and the company won't do the renovations unless Ann Arbor gives it a tax break, and getting the tax break means establishing an industrial development district and the tax consequences of that apply to other companies moving into the district as well, the cost of which is unknown at this time? Mind you, I am not necessarily against this; I just want to understand.