City revises extension process

September 24, 2008
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In the midst of a tension-filled situation with Kent County over extending the time durations for existing Renaissance Zones, city commissioners made revisions to the application process for those requests last week.

The revised version contains a few more steps a property owner has to take to have an extension granted, and it also gives the county an earlier say in the process.

Deputy City Manager Eric DeLong said City Economic Development Director Kara Wood now will review an application to determine if it meets the city’s requirements for an extension. If it does, then Wood will take the application to Lansing to gauge the interest that the Michigan Economic Development Authority might have in granting an extension.

If the MEDC says the proposal meets its guidelines, then Wood will take the application to County Administrator and Controller Daryl Delabbio for review by the county board, which has to give its consent to an extension before the city and the state can authorize one. The county now has the authority to nix an extension. Public Act 116, which became state law at the end of April, gives the county that power.

DeLong also said if the MEDC shows an interest in lengthening a property’s time in the zone, an applicant then has to submit a $2,500 review fee to the city. If the county gives its consent to an application, then an applicant has to submit another $2,500 as a final application fee.

Then the city’s Economic Development Project Team will review the request and if it approves the application, a request then goes to commissioners for final city approval before being sent to the state for final ratification.

DeLong said one aspect that hasn’t changed is that a developer will have to enter into an agreement with the city that guarantees the amount of an investment that is to be made in the zone property and the number of new jobs the development will bring to the city.

Wood said that agreement requires a developer to supply the city with a letter of credit for an agreed-upon amount that the city would collect if the jobs don’t materialize or the declared investment isn’t made.

But 2nd Ward Commissioner David LaGrand wanted to know if the city has a system in place to monitor whether the jobs promised in a zone development are new to the city or if these are simply being shifted to the zoned property from other sites in the city.

“We do monitor those agreements,” said DeLong.

The city collects the income tax from the jobs created in the zone, while giving up its property-tax revenue. Grand Rapids exempts up to $500,000 a year in property taxes for all the zone’s parcels, a figure the city has held to since the zone was established.

The properties that may be eligible for time extensions are part of the city’s first Ren Zone that opened in January 1997. The zone has a 15-year life, but only a dozen of those years give property owners a full exemption to most city and state taxes.

Starting on Jan. 1, 2009, property owners in the zone will begin paying 25 percent of those taxes, then 50 percent in 2010, and 75 percent in 2011. The zone’s nearly tax-exempt status ends Jan. 1, 2012.

Six smaller non-adjacent zones make up the city’s initial Ren Zone, and the 2008 taxable value of all those properties total nearly $167 million.

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