Kent Faces Ren Zone Decision

September 13, 2008
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GRAND RAPIDS — County commissioners may or may not choose to enact a newly found power next week — namely, the ability to stop an extension of an existing Renaissance Zone.

“This will go to the board at the end of this month (Sept. 25) to meet the city’s timeline,” said Darryl Delabbio, county administrator and controller.

The city of Grand Rapids has three requests to extend the nearly tax-free zones, and those applications have to be in Lansing in a matter of weeks.

“The county must agree to that (extension) first before the city can put it into effect,” said Jay Fowler, Downtown Development Authority executive director.

The county has had the right to opt out of certain tax-increment financing plans, like boundary extensions of DDAs. But Public Act 116 of 2008 gives counties the authority to not just to opt out, but stop time extensions for existing zones. At a work session the county held last week on the issue, many commissioners felt the new state law puts them between a rock and a hard place.

“This bill puts the counties against the cities, and that’s not what we want,” said Harold Mast, county commissioner.

“It’s unfortunate that the law was built as it was, but it is what it is,” said Commissioner Dean Agee.

Commission Chairman Roger Morgan said he would rather have a law that would let the county recoup some of the property-tax and millage revenue it has lost to the zones since January 1997 than be forced into an all-or-nothing position on the 12-year extensions.

“It’s a mess,” he said.

True North Architecture, Construction and Investments has one of the requests. The firm wants to invest $1.9 million into a vacant, two-story structure on the city’s near west side at 607 Dewey Ave. NW. True North plans to renovate the structure, add a third floor and build a green roof that would feature solar panels and small wind turbines.

True North would relocate from Belmont and occupy the top floor, then lease the lower levels to other companies. But True North President Dan Henrickson said all bets might be off if the property’s Renaissance Zone isn’t extended.

“We probably will not be able to do the project because we’ve got tenants, including our own company, that need that Ren Zone extension for a lot of reasons. So every single tenant needs the Ren Zone extension or they will go somewhere else that has it,” he said.

The building True North wants to renovate is within a few blocks of the structures that Robert Israels revived and that now make up the John Widdicomb Trade Center and Israels Designs for Living campus. Four of the buildings are in the nearly tax-free zone.

City commissioners and the state gave Israels a zone extension for those buildings in December, a move that added a dozen more years to the three years remaining from the initial zone established in 1997. Not having to pay property taxes allows building owners to offer tenants lower rents.

Construction finished recently on one of the Israels-owned and zoned buildings — the South Widdicomb at 600 Fifth St. NW — and Israels General Manager David Israels said leasing activity has been better than good.

“We’ve got great usage for the South Widdicomb building, especially right now with Grand Rapids Community College going in, with Lake Michigan Credit Union going in, and the further expansion of Spectrum (Health) going on in there. So it’s been absolutely wonderful,” he said.

County commissioners learned in June that $7.3 million in county tax revenue was either captured or abated in 2007. The county lost $5.86 million in property-tax revenue, $1.05 million in correctional-millage revenue and $450,000 in senior-millage revenue last year — losses that were up by roughly 8 percent from a total of $6.7 million in 2006.

A policy county commissioners adopted in May 2007 limits the county’s participation in captures and abatements to 7 percent of its yearly tax roll. The figure was slightly over 6 percent at the end of last year. The policy also calls for commissioners to deny allowing new tax revenue to be captured by a governmental unit when a unit is exempting or capturing 10 percent of its taxable value. Grand Rapids was at 12.3 percent at the end of 2007, according to tax data filed by the city with the county.

Grand Rapids City Manager Kurt Kimball told the county that when the original Ren Zone runs out of time at the end of 2011, the city’s percentage of taxable value that is either exempted or abated will fall below the 10 percent limit.

“When fully restored to the tax roll in 2012, the percent of the tax roll exempted in the city of Grand Rapids will be 8.91 percent, down from the current 12.3 percent,” he said.

Kimball reported that $166.8 million in taxable value has been exempted in the city’s Ren Zone since its inception.

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