Rockford And Walker Capture Big Gains

May 14, 2007
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GRAND RAPIDS — When county commissioners enacted their Economic Development Participation policy last week, they left about $240 million more on the property-tax-revenue table that cities and townships can abate and capture in the coming years.

In 2006, these units abated more than $810 million and captured nearly $450 million for a total of $1.26 billion. The new county policy allows that figure to rise to $1.5 billion.

Just the new tax captures made by cities and townships last year grew by 14 percent from 2005 to $2.38 million. Grand Rapids had the largest monetary gain in 2006. Tax increment financing authorities, like the city’s Downtown Development Authority, had developments spring up that let the city’s districts capture almost $132,000 more last year than in 2005.

But in 2006 the cities of Walker and Rockford had the biggest yearly capture increases on a percentage basis. Walker’s capture rose by 29 percent, while Rockford’s grew by 32 percent — two numbers that signified strong investments made in both cities.

In Rockford, the growth came in the form of new downtown retail.

“Downtown Rockford is just booming right now. At a time when the economy is pretty stagnant all over, we are so fortunate to have the downtown doing as well as it is and the interest that people have in downtown,” said Rockford City Manager Michael Young.

A number of downtown properties have been purchased by private developers with the biggest transaction being the site of the Reds on the River restaurant. The city owned the parcel at 2 East Bridge St. on the bank of the Rogue River, which meant it wasn’t a revenue generator for Rockford until Reds bought it in 2005. The site, though, didn’t fully go on the property-tax roll until last year when Reds began serving.

“We also had some purchases of other properties downtown. We had a butcher shop called the Smoke House and somebody bought that building. It became uncapped and also saw a significant investment into it for retail purposes,” said Young.

“Then the Smoke House moved around the corner and bought another property, which became uncapped. They put a bunch of money into their business and brought that business up.”

Young said that tendency should continue this year. Reds bought an adjacent parcel and is developing it. An investor bought the American Legion Post on Courtland, a parcel that was exempt from property taxes, and is redeveloping the site. And Marinade’s Pizza Bistro, also on Courtland, is expanding and adding to the property’s value.

“All that is for the current year we’re in, which is the 2007 roll,” said Young. “We’re seeing this trend of investing in downtown Rockford continue, and it’s really nice to see.”

On top of the increase Rockford had in tax capture last year, the city’s state equalized value for commercial properties rose by almost 6 percent in 2006 to $42.7 million.

The tax-capture gain Walker had came from a mix of industrial and retail projects. City Manager Cathy Vander Meulen said new retail developments in the Standale DDA district, like a new Meijer’s store, restaurants and a few bank branches, raised property values there.

Vander Meulen said two brownfields on Turner Avenue also contributed to the increase. One is a recycling center owned by Padnos Iron & Metal. Just down the street from Padnos are three industrial buildings that Visser Brothers built on a once-contaminated site.

“Those are the three main tax-capture projects that we have, and between those three we’ve got close to $50 million in taxable value,” said Vander Meulen.

The DDA used its capture to make improvements to M-11 and to the sewer system west of Wilson Avenue. The board also built a new fire station in Standale. Tax captures from the brownfield sites went to Padnos and Visser Brothers to pay for the clean-ups the firms made to the properties. The Visser Brothers’ remediation work raised the property’s value to $4.3 million. Prior to that development, the site wasn’t worth nearly that much.

Although last year was a big tax-capture year for Walker, Vander Meulen doesn’t expect the hike to be quite as large this year.

“It’s doesn’t appear that between 2006 and 2007 there is going to be as big of an increase. We’re only looking at about a 5 percent overall increase,” she said.

The commercial SEV in Walker rose by over 7 percent last year to $250 million.

The policy county commissioners approved last week caps Kent’s share of property-tax revenue that can be abated and captured at 7 percent, or $1.5 billion, of the 2007 SEV. That figure leaves room under the cap of $240 million, based on the $1.26 billion that was exempted and captured in 2006.

If exemptions and captures top the 7 percent mark, then commissioners can suspend an agreement they made with a city or township to get back under the cap. Fiscal Services Director Robert White estimated it will take seven years for the county to reach the cap.

In 2006, the county lost $6.7 million in property-tax revenue to abatements and captures, up 8 percent from $6.2 million in 2005. Kent also makes an annual contribution to The Right Place. This year the county gave the area’s economic development agency $80,000, up 3 percent from last year.

TIFAs Make Some Pretty Big Catches

Various tax-increment financing authorities in the county captured nearly $2.4 million in property-tax revenue from economic improvements made to those districts last year, resulting in a 14 percent increase in the amount captured from 2005.

TIFAs capture the added property-tax revenue that a development brings to a parcel.

While TIFAs in Grand Rapids led the monetary surge by capturing almost $132,000 more in 2006 than 2005, those in Rockford, Walker, and Bryon and Cascade townships registered the largest percentage gains, as all were over 20 percent. Only Cedar Springs recorded a capture loss last year.

City/Township

2005 Capture

2006 Capture

Monetary Change

Percent Change

Grand Rapids

$1,221,146

$1,353,106

$131,960

11%

Cascade

$262,547

$318,193

$55,646

21%

Walker

$150,340

$194,539

$44,199

29%

Lowell

$73,796

$87,048

$13,072

18%

Rockford

$27,829

$36,768

$8,939

32%

Wyoming

$65,779

$74,336

$8,557

15%

Grandville

$91,467

$98,076

$6,609

7%

Byron

$24,942

$30,571

$5,629

23%

Sparta

$49,910

$55,337

$5,427

11%

Plainfield

$80,053

$85,178

$5,125

6%

Bowne

$28,986

$32,225

$3,239

11%

Tyrone
(Kent City)

$8,207

$8,385

$178

2%

Cedar Springs

$11,948

$8,424

($3,524)

(29%)

Totals

$2,097,130

$2,382,186

$285,056

14%

Source: Kent County Fiscal Services Department, May 2007

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