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Creative Plan With A Big Payoff
A pair of area communities appear on the verge of landing a really big fish – one of the biggest recreational retailers/tourism magnets of all, Cabela’s. And they’re using some clever financial public partnership strategies to make sure they get the cherished prize in the net for a project that could have and impact of at least $200 million on West Michigan.
Last week Wyoming City Council members wisely followed the lead of their comrades in Walker to approve a Public Act 425 agreement. The plan would allow tax increment financing for the proposed Orchard Park project by transferring jurisdiction for taxation of the 300-plus acres from Walker to Wyoming for up to 30 years. Wyoming’s tax rate is almost eight times the Walker rate of 1.36 mills. Wyoming also is a state designated “core city” – Walker is not – which means Wyoming can, under state brownfield regulations, use some of the tax revenue from the Orchard Park site to pay off long-term bonds that would finance the estimated $20 million in infrastructure and environmental cleanup.
The theory is that as the development is completed and retail stores – including Cabela’s – move in, those property values will increase dramatically, soon generating enough money to pay off the infrastructure bonds well before the end of the 30-year agreement. When the bonds are paid off, the agreement will automatically terminate, and taxing jurisdiction returns to Walker.
The plan is a win-win financial concept for both municipalities. Walker would continue to receive its normal tax revenue from the development site, and Wyoming would benefit by keeping a share of the extra revenue generated by the higher tax rate. And best of all, the Orchard Park property owners will pay for all of the infrastructure needs through their increased tax payments.
The Cabela’s store will boost the local economy and create new jobs, generating millions over the long run in new property taxes, sales taxes and local income tax revenues.
As development plans continue to formalize for the land located north of Interstate 96, from east of Bristol Avenue NW to Walker Avenue NW, commitments of financial and logistical considerations also are needed from the Michigan Economic Development Corporation and the Department of Environmental Quality in order to structure a suitable financial package for the development.
The financing partnership is a significant leap in the right direction – recognizing, but not being dependent upon, the traditional hindrances of artificial jurisdictional boundaries in favor of joint land-use and development planning that prioritizes the economy of an entire region.
Without the Public Act 425 agreement, Cabela’s was sure to pull up anchor and head for greener locales. Concerns are already being raised by retailers near the project area that customers will be drawn from their operations in favor of the new big kids on the block. Some credence must be given to the reality that Cabela’s and the accompanying business infusion and added employment it brings to an area, can benefit all parties to the good.
The onus for pulling this deal off still remains with the developer, Jim Bossenbroek of Northgate Holdings, and Cabela’s management, who must work out any remaining obstacles to locating the store here. Cabela’s is an economic development phenomenon with a sure-fire business model that puts it in the driver’s seat when it comes to dealing with prospective suitors across the nation.
Local and state economic developers must be sure to smooth this path while being sensitive to the interests of local residents and businesses. The balance is delicate, but Michigan’s economic future hinges on the ability for these creative partnerships to begin paying off.