City mulls tax breaks for local manufacturers

Assembly to review ordinance next month

Posted: Thursday, August 23, 2001

Karl Mielke is one of three employees at Alaska Bullet Works, a Juneau business that has been manufacturing high-performance bullets since the early 1990s.

A city ordinance designed to assist small manufacturers is set to expire in December, and Mielke said he'd like to see it continue. The city's property tax exemptions are good for manufacturers, especially during startup when cash flow can be tight, he said.

"It's very beneficial. It helps new businesses starting up," he said. "We did well in our startup ... but even our best estimate didn't cover everything."

The company's bullets are used to hunt big game around the world. Although no one is making money on the operation yet, Mielke said Alaska Bullet Works would like to boost its share of the market.

"We're a pretty small player. About 25 billion bullets are manufactured in the U.S. each year. If we could get one-tenth of 1 percent, it would be enormous," Mielke said. "We're planning a capital expansion and would like to bring new equipment to town."

The city's ordinance dates to 1992 and provides exemptions for real property and personal property used for manufacturing, according to Finance Director Craig Duncan.

Four Juneau manufacturers took advantage of the provisions in 2001, accounting for $51,300 in tax exempted, Duncan said. One manufacturer, Alaskan Brewing Co., accounted for most of the exemption. About 70 Juneau businesses are registered with the city as doing some type of manufacturing, although not all may qualify for assistance, he said.

The exemptions apply to businesses that generate sales outside Juneau or reduce imports, Duncan said. To be eligible, such a business must employ between two and 50 people full-time and can't be home-based.

The Assembly's Planning and Policy Committee heard a report about the subject this week and will review the ordinance in detail next month. Assembly members met with manufacturers and toured the Alaska Brewing plant earlier this summer.

Manufacturing helps diversify the local economy and keeps money in town, according to Alaskan Brewing co-owner Geoff Larson.

Juneau manufacturers process fish, build cabinets, roast coffee, brew beer, make concrete products and produce building supplies. Still, 2 percent of Juneau employees work for manufacturers, compared to the state's 6 percent average, Larson said.

"Is there room to grow? Yes. No question," he told the committee.

Larson said the ordinance gives manufacturers a chance to defray the costs of investing in new equipment, an important factor for capital-intensive industry. Eliminating the sunset provisions in the code would help, he added.

"Manufacturing is such a diverse set of industries that are totally unrelated. I'm really excited about the opportunity Juneau has to nurture manufacturing," he said.

Assembly member and committee chairman Jim Powell said the city could eliminate the ordinance's five-year sunset provision, do away with the employee cap or review the amount of exemption allowed. The city also needs to get the word out about the program, he said.

"It's the right thing to do to diversify our economy and build a strong manufacturing base," Powell said.

Zoning is another issue, he added, suggesting that the committee send a message to the Juneau Planning Commission and city staff members that Juneau needs more industrial zoned areas for manufacturers.

Joanna Markell can be reached at joannam@juneauempire.com.



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