Sak Sees Firms' Construction Woes

January 11, 2005
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LANSING — About the time Z’s Restaurant & Bar owner Dean Juth and Elliot’s News owner Bill Bennett said small businesses should receive financial compensation when customer traffic is interrupted by publicly funded building projects, State Rep. Michael Sak told the Business Journal that he was looking into that exact issue.

“These have extreme financial implications (for these businesses) in the short term — and possibly long term, as well,” said Sak, a Grand Rapids Democrat who represents the 76th District.

Sak said he began discussing the matter about a month ago with the then-chairman of the House committee on tax policy, but didn’t push the issue any further as the chamber wasn’t taking up any new business during the lame duck session that ended Dec. 9.

“I was drafting legislation, but decided to wait until the new chairperson is named later this month when the new committee assignments come out,” said Sak.

Sak supported the brownfield designation Alticor Inc. got for the new downtown hotel it will build at the corner of

Campau Avenue
and
Pearl Street
, a status approved by the city and state that should be worth about $6 million to the company in tax credits.

In addition, the Downtown Development Authority is likely to formalize its $5 million pledge to make street improvements for the hotel this week. If board members do so, their action will bring public contributions to the project to $11 million.

Sak supports both public commitments. But at the same time, he said government has to recognize the financial losses that business owners like Juth and Bennett suffer through no fault of their own.

“Is there a possibility that we can tax credit these guys?” asked Sak.

Sak, who starts his second term this month, said he hasn’t come up with a compensation formula yet and is still in the stage of examining what other states do and have done in the past. He said he is also talking with officials from the Michigan Economic Development Corp. and the state’s Small Business Association to get their input into the issue.

“When a street is closed down, they’re getting no business whatsoever. So they fold,” said Sak. “So this is something that I am looking at.”

Sak said the state’s bleak financial situation will play a major role in whether he will be successful.

In the Dec. 27 edition of the Business Journal, Bennett and Juth said street construction is their biggest fear. Both also noted that state and local governments consistently help corporate entities with tax breaks and public money for projects, but neither has offered small businesses any financial assistance to offset losses they endure from these projects.

Bennett said sales dropped by at least 30 percent at Elliot’s News during a city-funded reconstruction of

Louis Street
that took nearly two years to complete. He said his business at
21 Ottawa Ave. NW
has been negatively affected by construction projects for the better part of a decade.

Juth is concerned that the street work on Campau, which also could take up to two years, will keep customers from reaching Z’s at 168 Louis Campau Promenade, just south of the hotel construction site. Then, he worries, they’ll never return.

“It seems like when they can help these big companies with tax relief,” said Juth, “they can help other businesses to make it less painful when they do these road construction things.”    

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