CID Get Nod Over BID

November 27, 2007
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GRAND RAPIDS — City commissioners recently picked CID over BID, favoring the Corridor Improvement District over the Business Improvement District.

Second Ward Commissioner Rick Tormala said Corridor Improvement Districts are better than Business Improvement Districts because once the latter is enacted, higher property assessments can raise taxes on non-commercial parcels, and Corridor Improvement Districts don’t do that.

“This does not do anything to the valuation of properties,” said Daniel Oegema, business advocate in the city’s Economic Development Office, of CIDs.

“This program captures the increment in relation to the increase of the property only,” he added.

Commissioners approved the city’s CID policy under PA 280, known as the Corridor Improvement Authority, which state lawmakers passed in 2005. The intention of the state act and the city policy is to prevent deterioration and encourage economic activity in urban commercial corridors like the city’s 20 neighborhood business districts.

“I think we need to give them every tool we can to help them revitalize the districts,” said Tormala, who leaves office at the end of December.

The law and policy are similar to those the state and city enacted decades ago to create the city’s Downtown Development Authority, which can use its tax-increment capture to improve buildings and upgrade streets, parks and infrastructure in its district. The hope is that Corridor Improvement Districts will do for neighborhood business districts what the DDA has done for downtown.

“We’ve got a thriving downtown, and I think this tool will give us thriving business districts,” said Baird Hawkins, a local businessman who helped shape the city’s policy.

Once a business district forms a governing body and gets city approval for a CID, it can capture the increase in a district’s tax base that comes from economic growth and invest that revenue in improvements to the corridor. A qualifying district must be located outside of downtown. The city’s policy allows commissioners to grant four CIDs each year.

The Steering Committee of the Creston Business District played an active role in forming the city’s policy, and Creston may be among the first to apply for a CID, especially since the commercial corridor went through a recent redesign.

City Administrative Analyst Haris Alibasic said business associations may have a lot of questions regarding CIDs, and the city has a list of six requirements that have to be met for a district to be awarded the designation.

“It’s a pretty new tool and hasn’t been used throughout the state,” he said.

Alibasic said the most important of those requirements is sustainability, meaning that the taxes a district captures have to be sufficient to sustain a district and finance all activities and improvements within it. Interested parties should contact the city’s Economic Development Office for more information.

“In these economic times,” said 2nd Ward Commissioner Rosalynn Bliss, “it’s important that we do something for our business districts.”

Despite having chosen the CID over the BID, the city hasn’t buried the BID. In fact, the city hopes that after a district establishes and uses a Corridor Improvement District, it will then consider creating a Business Improvement District, because doing that would give a business association a broader financial ability to make other investments.

“The BID, the Business Improvement District, gets established differently, and people then do pay an additional assessment based on an agreed-upon formula. Those districts can use their money for other items, in addition to the public infrastructure type of improvements. So you’ve got a wider range for the use of the funds,” said Oegema.

“A business association may want to do additional things that are not allowed under the CID and put a BID in place for those things later.”

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