City Meijer next in line

July 24, 2009
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Grand Rapids city commissioners approved a brownfield plan last week for Meijer Inc. that will allow the retailer to capture $545,670 in local taxes for the company’s new store that will go up at the intersection of 28th Street and Kalamazoo Avenue SE.

Although staff at the Michigan Economic Development Corp. informally denied Meijer its request for tax-increment financing and tax credits earlier this year because the agency doesn’t provide incentives for big-box stores, the commission’s action lets the retailer collect the local taxes that amount to 47 percent of the $1.1 million that Meijer sought from the state.

Meijer can capture a portion of the millage revenue from the city, the Kent Intermediate School District, Grand Rapids Community College, the Interurban Transit Partnership, the Kent County corrections and senior millages and the county’s operating millage.

Reimbursements to Meijer will begin in 2011 and run through 2035.

The plan now goes to the city’s Brownfield Redevelopment Authority for approval. The company is expected to formally file its plan with the MEDC and the MEGA boards in an effort to gain the remaining tax-increment reimbursements from the state.

City Economic Development Director Kara Wood said the tax break allows Meijer to remain at the site and retain 275 jobs in the city. Meijer hopes to create up to 20 new full-time jobs that pay an average of $12.10 an hour through the project. The city hopes to receive $5,034 per year in new income-tax revenue from the project.

“We don’t have a formal agreement that will ensure that will happen. It’s not a requirement for this,” said Wood of the project’s new jobs.

Meijer plans to invest $15.6 million to build a new 156,000-square-foot store on the same southeast-side property that currently houses the retailer’s slightly larger store. Of that total amount, the eligible brownfield redevelopment investment is about $11.5 million.

The property qualified for brownfield status because there is a high concentration of petroleum hydrocarbons in the groundwater and soil.

“Meijer is not requesting any reimbursements for any environmental activities,” said Wood.

Wood said Meijer is liable for the contamination and has an approved remediation monitoring system in place for the existing conditions. She added that being a liable party does not prohibit a company from applying for brownfield incentives.

Meijer will demolish the current store and an adjacent house, remove lead and asbestos from the site and make public improvements to the property. The company will construct the new store according to LEED standards but will not seek certification.

Wood said the new Meijer store is expected to generate $278,364 in new state and local taxes each year. Nearly $48,000 of that total will go to the city.

Second Ward Commissioner David LaGrand tried to table the resolution by pointing out that approving it means Meijer can capture the yearly inflationary increase to the property tax, and he felt that action would erode the city’s tax base. Wood said changing the resolution to eliminate that element would significantly delay the reimbursement to Meijer and only let the firm collect about $250,000 over the maximum 30 years allowed under state law.

“I think we need to do whatever we can to keep them in our city and in our state,” said 2nd Ward Commissioner Rosalynn Bliss of Meijer and other businesses that come to the city.

The city commission also set Aug. 11 as the public hearing date for brownfield requests from Cherrystone LLC and the Irish Twins Group III LLC. Cherrystone wants to build an 82,000-square-foot, LEED-certified health center on Cherry Street SE between Sheldon and LaGrave avenues. The Irish Twins Group plans to renovate the former Imperial Metals factory at 801 Ionia Ave. NW into office space with an entertainment component and possibly add a 15,000-square-foot addition to the building.

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