GAYLORD — Bagley Township officials agreed to apply for a state grant that could help pave the way for a $46.5 million redevelopment at Georgia-Pacific's shuttered Otsego County facility.

Township board members agreed to apply for $2.5 million from the state's Community Development Block Grant program to buy existing machinery and equipment, as well as make infrastructure improvements for roads and a rail line.

The board also approved a tax-free renaissance zone for the site.

The renaissance zone includes 355 acres that will remain tax-free for 15 years, although bonded millages would not be abated. Early estimates for the developers' tax savings is around $778,000 yearly, said Jason Woodcox, Bagley Township assessor.

The development will bring a wood pellet production facility, a hardwoods sawmill and a forestry supply company. The land sale will close on March 6 and investment in the wood pellet operation will begin immediately, said Roger Glawe, owner of the three companies set to move onto the idle industrial site.

"Since G-P left, there's been no real timber work," Glawe said. "This will create a timber center. The first year of production, which is 2010, we will generate about $48 million for the Gaylord and immediate region's economy."

A cellulose ethanol plant initially was part of redevelopment discussions, but is no longer part of the project, Glawe said.

Massachusetts-based Mascoma Corp. specializes in low-carbon cellulose biomass ethanol and showed interest in the former G-P site, but suspended plans after a feasibility study, said Jeff Ratcliffe, executive director of the local economic alliance.

Mascoma officials could not be reached for comment.

"It's the nature of business," Ratcliffe said. "We still have a great location for a bio-fuel plant."

Ratcliffe added that once the site becomes a forest products center again, it will be easier to lure other similar operations.

About 160 jobs will be created by the three companies, plus additional positions in logging, transportation and service shops are expected to increase.

"This is very good news," said both Randy Keen and Jerry Lambert in unison, following Thursday's public hearing.

The two are foresters from Gaylord. They said the loss of Georgia-Pacific left a void in good-paying jobs, and in forest management.

"This area has an overabundance of low-grade hardwoods and that's what they're going to use," Keen said.

"We need to keep moving wood. We're on a peninsula and we need every mill we can get," Lambert said.

About 30 people attended the public hearing, but no one spoke against or in favor of the project or the use of public dollars.

A large volume of heavy trucks is expected to return to the site, the reason grant funding for road improvements is an important incentive, Ratcliffe said.

Local officials also are set to apply for more than $1 million in grants from the Michigan Department of Transportation for road and rail work.

The companies have two years after grant approval to invest $46.5 million and create at least 160 new jobs, according to an additional agreement between developers and the township.

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