GLADSTONE — A downstate-based business looking to purchase the DelFab building in Gladstone has requested the formation of a special district to exempt the company from paying ad valorem real and/or property taxes temporarily, an incentive for them to redevelop the site and bring 40 to 55 new jobs to Gladstone.

To qualify for the industrial property tax abatements they seek, AMI Industries, Inc. of Lewiston, Mich. — doing business as Aggressive Manufacturing Innovations — must get approval from the city of Gladstone to create either an Industrial Development District (IDD) or a Plant Rehabilitation District (PRD) for the property in question, according to Michigan Public Act 198 of 1974. They may then be granted an Industrial Facilities Exemption (IFE) certificate that could exempt the company from paying taxes for one to 12 years — the duration would be at the city’s discretion.

IDDs are for new projects; PRDs are for properties being redeveloped. AMI may be eligible for the latter, but in order to for a PRD to be established, it must be shown that at least half of the existing facilities are unusable.

“To qualify for rehabilitation, 50% of the building has to be considered obsolete. That is one part of the process,” said Gladstone City Assessor Janice Frizzell. “Eventually I’ll be getting in there and confirming that 50% is obsolete for what they need it for.”

The property that AMI Industries is in the process of acquiring is 103 N. 12th St. in Gladstone. Current taxes are approximately $27,000 per year, according to a staff report presented to the City Commission at Monday’s regular meeting.

DelFab still operates at the address; if AMI ends up purchasing the real estate, DelFab would become their lessee, said DelFab President Craig Westlund.

“AMI intends to install two new manufacturing processes, which will expand our product offerings and will supplement our current business,” wrote AMI Industries CEO Gary Vollmar in a letter to the Gladstone City Commission in which he requested the formation of the new district. “Additionally, many of AMI’s most recent customers are in the upper Midwest region. Gladstone/Escanaba area has a much larger population base to attract employees than some of our current facility locations.”

Gladstone City Manager Eric Buckman said that Vollmar had offered to attend Monday’s meeting, but since it was the first time the subject was reaching commissioners and no decision was being made, Vollmar will instead be asked to come up for a future meeting.

A district of this exact type has not been established in Gladstone before, but the concept is not unheard of. Commissioner Steve O’Driscoll asked whether it was similar to the tax abatement his Bramco Containers had been granted in the past; Frizzell responded that it was another type of tax abatement.

The purpose of the Industrial Facilities Tax, which AMI would pay instead of ad valorem taxes, is to give businesses a break from the strain of property taxes while they prepare their operations. After a period of time, a maximum of 12 years, taxes would be reimposed.

The idea is that the district may incentivize a company to make its home locally and create jobs in Gladstone — and, once the district expires, the established business would become a regular taxpayer

While the city would not collect certain funds from an industrial property owner during the time the district is in effect, it would gain the fees from utilities, use of which would increase.

The City Commission decided to set a public hearing for setting the district boundaries during the next regularly scheduled meeting on July 14. It is the first of several steps — should things progress, more specific terms would be determined later.