County Reviews Its Legislative Priorities

February 20, 2008
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GRAND RAPIDS — One of the key legislative issues Kent County officials plan to keep a close eye on this year is the nearly $600 million effort to remake Cobo Hall and transfer the ownership of Detroit’s convention center to a new regional authority.

Three bills were recently introduced in the state House to get that attempt started. Two have been referred to the House Regulatory Committee. The third is in the chamber’s Tax Policy Committee. That bill, HB 5692, would make Cobo Hall a tax-free zone for personal items sold at shows held in the building. As the legislation stands right now, Cobo would be the state’s only publicly owned convention center to have the designation that eliminates the 6 percent sales tax on purchases.

Becky Bechler of Public Affairs Associates, the county’s lobbyist, told members of the county Legislative Committee last week that a stab will be taken to also make DeVos Place a tax-free zone should Cobo become one. But there isn’t a guarantee the local convention center would get the same status, at least not right away.

“It’s a dialogue that will not move very quickly,” she said.

The county is concerned that if DeVos Place doesn’t receive the same treatment as Cobo Hall, the big consumer shows that are held here may head to the Motor City where the big-ticket items will cost less because the goods won’t be taxed. The county is on the line to pay much of the DeVos Place construction cost with revenue from the lodging excise tax, a tab that runs about $5 million a year now and will go up in coming years.

Kent officials are also concerned the county could lose its portion of the liquor-excise tax because part of the Cobo financing plan may extend or increase that building’s $16 million annual share of the overall receipts from 2016 through 2023. The county is supposed to get $3.2 million from the levy, but Kent didn’t get a nickel last year when lawmakers kept all the counties’ shares to help balance the general fund.

A third concern the county has is that state funding for other programs might be cut, because Gov. Jennifer Granholm has said Lansing will assist the Cobo initiative with $150 million. So far, the governor said she would support a restructuring of city and county debt for that amount.

But the state’s regular bond insurer, Ambac Financial Group, recently had its rating downgraded to Double A by Fitch Ratings after the firm piled up losses by insuring mortgage securities that went sour. Other municipal bond insurers are in the same boat. A lower insurer rating for a refinancing project will likely result in a higher interest rate for the offering.

The bandied-about total cost for the Cobo Hall project is $595 million. Of that amount, $323 million would go for construction, $142 million for an operating endowment, $110 million for the building’s debt, and $20 million to buy Cobo from Detroit and put it in the hands of an authority.

As for some other issues, the county would like to see lawmakers:

**Extend full Medicaid coverage to eligible inmates in the county jail. Under current law, inmates are only covered under Medicaid if they’re admitted to a hospital. The county spends about $5 million on health care each year for inmates.

**Give counties the right to opt out of brownfields and SmartZones and a Downtown Development Authority when a term is extended.

**Put a cap on how much property-tax revenue Tax Increment Financing Authorities and DDAs can capture.

**Help fund a new outdoor performance amphitheater the Convention and Arena Authority wants to build in county-owned Millennium Park.

County Commissioner Dean Agee, who chairs the Legislative Committee, said county board members are not taking a political position on all the state legislative issues they’re watching.

For instance, they’re closely tracking the type of action legislators will take in reaction to the home mortgage crisis because property taxes are the county’s largest single source of revenue. But they aren’t commenting on what that action should be.

“We’re not,” said Agee. “We’re just watching how it potentially affects the county.”

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