May 8 2013 12:00 AM

Lest we forget when Jackson National Life successfully argued its new headquarters was "obsolete" to lower its property tax payments. On Tuesday, a compromise was reached with the city.


As the local media drank up good jobs news last week like an alcoholic at a Christmas party, there’s been no mention of the fact that less than three years ago, Jackson National Life Insurance Co. fought the city for hundreds of thousands of dollars in property taxes.

In 2010, Jackson National — which announced a $100 million expansion and 1,000 new jobs last Tuesday — brought a case before the Michigan Tax Tribunal contesting the assessed value of its headquarters near the Okemos Road exit off of Interstate 96. The company claimed that two parcels — one of which includes the main, 300,000-square-foot office building it had custom built a decade earlier — were “functionally obsolete” and therefore it was paying too much in taxes on it. The city disagreed and, based on an appraisal, said the cash value of the property should increase.

The State Journal reported in March 2011 that the tribunal ordered a more than $1 million tax refund to the insurance company, $200,000 of which came from the city of Lansing. Officials with the city Assessor’s and Treasurer’s offices could not be reached to confirm those figures.

On Tuesday morning, Jackson National spokeswoman Melissa Hernandez said the company came to “an agreement on the value of the facility,” which included Mayor Virg Bernero’s signing a “satisfaction agreement.”

“For all intents and purposes, the matter is now closed,” Hernandez said. She declined to provide any more details about the agreement “as a matter of legal policy.”

But what are we to make of this now, particularly with the presumption that Jackson National is there to stay? Didn’t the company’s argument before the tax tribunal leave that prospect open? Last week, company President and CEO Mike Wells, joined by Gov. Rick Snyder and Bernero, announced a $100 million expansion at the site, bringing with it 1,000 new jobs. With that will come a renewed tax-sharing agreement with Alaiedon Township (the JNL property is on Lansing property in the township) and tax incentives, though we don’t know how much or for how long those will be. A variety of state grants and federal Community Development Block Grant money will also likely be part of the package. Of the company’s 4,300 employees nationwide, nearly half are in mid-Michigan.

“I don’t know what to make of it as a public official when corporations create wonderful buildings, create beautiful structures that benefit the community, and then they turn around when it comes time to pay taxes to the community,” said Ingham County Treasurer Eric Schertzing. “They seem willing to argue the beautiful structure they put a lot of money into isn’t worth very much.”

Essentially, Jackson National argued that its long, narrow headquarters was uniquely built for them and therefore would be a tougher sell to future buyers, if that were to happen. It also contested the value of a data center on a nearby parcel. According to tribunal testimony, brokers familiar with the property called the headquarters a “white elephant” because of its “design, style, size and lack of adaptability.” The company also argued that adverse economic conditions were playing a factor, as it contested assessments from the 2007, 2008 and 2009 tax years: “As unemployment goes up, the demand for office space goes down and purchasing power for spending within a region or community also diminishes, which has a definite influence on market value.”

Meanwhile, the city’s appraiser said the headquarters was worth more than the $48.4 million true cash value in 2009. The company thought it should have been $19.5 million, while the city thought it was $67.2 million. The tribunal found it had a true cash value of $37 million after the company’s petition.

The city’s appraiser, Raymond Bologna, cited at the time a “flexible” interior design with “open floor plans and use of modular work stations that are able to be quickly reconfigured. … The (building) finishes are above average to very good,” according to testimony.

Today, the 78-acre property has a taxable value of $10.9 million and an assessed value of $16.3 million. Last year Jackson National paid $1.25 million in property taxes, which is about $800,000 less than what it paid in 2008, according to county property records.

The tribunal sided with Jackson National, saying that the building would not be useful to a different buyer. Or: “The subject property’s configuration and design has functional obsolescence built into the design,” according to the judgment.

Bob Trezise, president and CEO of the Lansing Economic Area Partnership, said Jackson National didn’t have to expand in Lansing back in 2000. It could have done so in Colorado, bringing forward the oft-mentioned notion that Lansing must be competitive for business interests.

As for the perception created when arguing its property value: “I think that we’re in severe global competition. When we have a business like Jackson National that is impacting on a daily basis thousands of families and having the kind of dramatic economic impact they do on the entire region, I think we have to help them remain and be competitive. The ultimate benefits will be great to us as a community. Everything else will sort itself out and pay itself off.”

Schertzing called it a “contradiction” that the company announces it wants to bring employees to “live, work and play here, but oh by the way we don’t want to pay for services for the community in which we live, work and play.

“They provide jobs, which is critical of course. But why is paying taxes less important than paying wages?”