In anticipation of the upcoming study session on the Severstal money and city hall issue, it would make sense to get a little background on the relationship and history between Severstal Steel and the City of Dearborn.
At the outset, I want to be clear that this issue is not about making Severstal out to be a bad company. People have expressed their concerns to me that the attention on this issue could harm the current relationship or future possibilities of donations or agreements between this and other companies and Dearborn. That is certainly not my intent. I have tried to be careful to emphasize this issue is about the decisions our city leaders make when they have the ability to direct money, and shed light on the process of that decision in this instance, not pass judgment on the company behind the money. If anything, I hope this helps to facilitate greater opportunities between Dearborn and its community partners because there will be greater communication and resident input as we move forward.
So, here is a brief overview on the history of Severstal in Dearborn, which helps inform us on the history of the agreements in question. If you have any additional facts or insight, please feel free to share!
Severstal North America (Severstal NA) is a wholly-owned subsidiary of Russian-based OAO Severstal. Severstal is a vertically integrated steel and steel related mining company. Its North America corporate headquarters is in Dearborn, and they also have a new electric arc furnace operation in Columbus, Mississippi. In addition, they have three joint ventures in the U.S.; Mount Stain Carbon, LLC in West Virginia, Double Eagle Steel Coating Company in Dearborn, MI, and Spartan Steel Coating, LLC in Monroe, MI.
The Dearborn facilities are located at the Rouge Complex. It was acquired in 2004 by OAO Severstal and later renamed Severstal Dearborn. At that time, Severstal challenged the taxable value of the Rouge property, and initiated an appeal. The City of Dearborn disagreed with the appeal, and both parties came to an agreement on the valuation of the property (Agreement 1 2005). This was the same agreement that created a profit sharing plan, as well as support from the City of Dearborn for an application for State Industrial Facilities Exemption Certificates (Agreement 2 – 2005). Since then, Severstal completed a $1.5 billion dollar expansion to update and modernize the steel production capabilities at Severstal Dearborn, as well as increase jobs. The company received tax credits from the Michigan Economic Growth Authority, including a $10 million Brownfield tax credit. It’s completed upgrades were celebrated by all of Michigan in 2012.
Severstal Dearborn has been an active and involved community partner. In 2011, it raised $15,000 for new playground equipment in Dearborn, which created a new playscape at Morningside Park. Recently, Severstal was named Business of the Year by the Dearborn Chamber of Commerce, and Severstal employees raised $2,200 for the annual Mutt Strut event for the Dearborn Animal Shelter, and turned around and donated 7,000 pounds of food for the shelter food drive.
In 2009, Severstal and the City of Dearborn agreed to release the earlier 2005 agreement, in a new Contribution Agreement (Contribution Agreement 2009). This provided for Severstal to pay $8.5 million to Dearborn to build a convention center. The agreement terminated in 2010 when no work on the center had begun. Recently, Dearborn indicated that Severstal wanted to make an $8.5 million donation to Dearborn to use to move its City Hall. This leads us to where we are today, and to questions about the flexibility of how this money can be spent. Many questions have been raised about the status of the 2005 agreement after the 2009 agreement terminated, and the policy considerations behind approving the City Hall project at all.
So, I hope we can agree that these questions would be raised regardless of who is writing the check. It’s not about name-calling, spreading lies, or damaging anyone’s reputation. It’s always been about open communication, public involvement, and ensuring the best decisions are made for the future of Dearborn.
I believe everyone involved has Dearborn’s best interests at heart, and we are lucky to have companies like Severstal to help us achieve our potential.
Check back tomorrow for a post on some of the more specific questions on these agreements and a discussion on what our options might be, to help with the conversation at the study session. The study session is Thursday, June 20th at 6pm in Council Chambers at Dearborn City Hall. Please feel free to join my group on Facebook or comment here with any questions or comments you have.