LANSING – A proposed film studio in suburban Grand Rapids that Governor Jennifer Granholm touted in her February State of the State speech as part of defending her economic record will no longer receive a state tax credit, bringing the project into serious doubt.

The Hangar42 film studio’s problems also have raised questions about the involvement in the tax credit process of Rep. Robert Dean (D-Grand Rapids), who met with Film Office Director Janet Lockwood and Joe Peters, one of the partners in the studio, to find out why the state had not yet approved the promised tax credits. The state provides up to a 42 percent refundable tax credit on film projects, the most generous tax break in the nation. Dean’s chief of staff, Noah Seifullah, also met with officials about the delay at Dean’s request.

The rub, as reported in The Grand Rapids Press, is that Seifullah is an occasional business partner of the man, Jack Buchanan Jr., who owns the abandoned Lear plant where the studio would be located. Dean said Wednesday that he saw no conflict of interest and noted that Seifullah does not have a stake in Hangar42. The article also reported that the $40 million that the investment group behind the studio offered to pay for the facility is more than four times the list price of the property last year. The state tax credit is based on how much is paid for the facility.

The state rejected the tax credit earlier this week, Dean told Gongwer News Service, because of another issue with the studio’s application, not because of the change in property values referenced by the Grand Rapids Press article. A Film Office spokesperson said the agency could not comment on the status of the tax break, saying officials there have been told by the departments of Attorney General and Treasury that tax laws forbid revealing whether or not the state awarded a tax break and a message left with the spokesperson for Hangar42 was not returned.

However, Granholm apparently had no problem touting the state’s support of Hangar42 in her State of the State speech this year. She cited Hangar42 in her February speech as she listed off a series of companies recruited to the state through incentive programs.

“And these are just some of the ones we’ve helped with the economic tools you have approved,” she said in the speech.

Granholm’s mention of the project in the speech was followed by a news release the next day from the Hangar42 investors.

“Following on the heels of an announcement in Gov. Granholm’s State of the State Address last night, Hangar42 Studios … today officially announces the opening of its nearly 500,000-square-foot full-service film production studio in Grand Rapids,” the release said. “Hangar42 Studios is Michigan’s first fully-financed major film studio to open utilizing the infrastructure credit as part of the Michigan Film Credit and is a major milestone in the continued development of the state’s film industry.”

The release also thanked Dean and Rep. Dave Hildenbrand (R-Lowell) for helping to bring the project to fruition.

Dean said his interest in the project stems from his announcement for office five years ago, which was in front of the old Lear plant. He said one of his goals has been to get that facility filled and back on the tax rolls.

After hearing from people involved in the studio and film business about the delay in final approval for the tax credit, Dean said he asked for a meeting with the Michigan Film Office.

“Anytime persons complain in terms of the process it’s my job to ensure the process is fair and open,” Dean said.

Asked whether he thinks it was a mistake to get involved in the studio tax credit because of his chief of staff’s relationship with the building’s owner, Dean said he did not. His aide, Seifullah, has never worked for or been paid by Buchanan, so Dean said he didn’t see an issue there.

Dean said he also had talked with Joe Peters, an investor in the studio, and not Buchanan.

Ken Droz, a Film Office spokesperson, said officials still consider Hangar42 a viable enterprise even as he said he could not comment on whether Hangar42 was getting a tax credit.

Of Dean’s concerns about how long it took the Film Office to process the application, Droz said, “Too long is one person’s opinion, but the state did its due diligence in the whole process in vetting every application we get. We may ask for information and it may or may not be provided to us.”

Dean is running for the 29th Senate District and faces a tough Democratic primary against David LaGrand, the party’s 2006 nominee for the seat. LaGrand declined to comment on the situation.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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