Pieces gathered for zone extensions

October 24, 2008
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Recent decisions made by Kent County and the city of Grand Rapids likely mean that a trio of projects slated for three properties in the city’s existing Renaissance Zone just may get the time extensions the developers have requested.

County commissioners agreed to amend their economic development participation policy last week, and that change allows them to OK the extensions without breaching the policy they’ve strictly adhered to since they established it in May 2007. That policy requires commissioners to reject any request from any city or township in the county that would capture or exempt county tax revenue if a unit of government has already captured and exempted 10 percent of its total tax roll. Grand Rapids stands at 12.3 percent this year.

The change lets board members consent to requests as long as an agreement is in place that guarantees the county’s lost property-tax revenue will be reimbursed during the time a city or township is over the county’s limit.

Mayor George Heartwell told the Business Journal the city would reimburse the county the tax dollars it will lose from the expansions and add that amount to the $500,000 tax-revenue limit that the city is willing to lose to the zone on an annual basis. The city established that limit in 1997, the year the zone became active.

The city, though, only has to reimburse the county until the percentage of taxes the city captures and abates falls below the county’s 10 percent limit. According to city projections, Grand Rapids should find itself under that threshold in 2011 — meaning the reimbursement to the county will last for two years, if the clock on the extensions starts ticking next year.

Although it’s difficult to know the exact amount the city would return to the county, a ballpark figure pegs the reimbursement at roughly $6,500 a year.

In the meantime, City Manager Kurt Kimball told the Business Journal the city has received an extension of its own from the state, one that gives city staff until the end of November to get the extension applications to the Michigan Economic Development Corp. for final state approval. Without that extension, the applications would have been due last week and the developers would have had to wait another year to apply.

Kimball also said the county would soon receive the inter-governmental documents on the extensions that county commissioners need to review before they can decide whether to extend the time duration of those properties. The parcels have been in the nearly tax-free zone since 1997 and extensions would keep those properties in it for another 12 years.

Kimball said the county board would make its decision regarding the extensions at its next meeting Nov. 20, which gives the city enough time to get the applications to Lansing. City commissioners have to vote on the extensions, too.

Public Act 116, which state lawmakers passed in April, gives counties the right to nix any extension for a Ren Zone property. And counties can do that by not taking any action on an extension request. In contrast, counties can “opt out” of new or expanding tax-increment financing authorities, like a downtown development authority or a SmartZone.

Doing so means an authority can’t capture county tax revenue, but opting out doesn’t stop one from starting or expanding. In a Ren Zone case, however, not gaining county consent means an extension can’t go forward.

True North Architecture, Construction and Investments, Via Design and Wealthy Street Historical Development LLC have proposed the projects on the different zoned parcels in the city. All three, though, have indicated that without the extensions, the projects wouldn’t be feasible. The nearly tax-free time on those properties expires at the end of 2011.

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