Construction, Government, and Real Estate

City may amend NEZ ordinance

Proposed change seen as a benefit for housing developers.

October 25, 2013
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Grand Rapids city commissioners will consider making an amendment to the Neighborhood Enterprise Zones ordinance in a few weeks, a change they feel might drive more housing construction into areas of the city that need it the most.

“This is a good next step for us and is very helpful for development,” said Commissioner Dave Shaffer.

Amending the city’s ordinance would match the change made to the state law that created and governs the NEZ. The updated statute provides a tax incentive for new construction, substantial rehabs of existing structures, and, in some cases, the new construction of market-rate apartment buildings.

“The purpose of the legislation is to improve the housing stock in distressed or declining urban areas where little or no new construction is occurring and where housing is in need of repair,” said Haris Alibasic of the city’s office of energy and sustainability.

“To date, the NEZs have been used effectively to advance city strategies for homeownership, economic development, mixed-income development, sustainability, infill and elimination of blight.”

The city has established five Neighborhood Enterprise Zones over the past several years.

Alibasic said developers could collect the tax incentive for a period of six to 15 years.

City Economic Development Director Kara Wood said NEZ-qualified developers could save up to 28 percent on their property-tax bills under an amended ordinance, which could make finding the proper financing for a project a bit easier.

“The banks understand the reduction of taxes. There is a lot more certainty with this program, and the savings are significant,” she said.

A unique aspect of an amended ordinance is commissioners could designate a Neighborhood Enterprise Zone for a sector that had fewer than 10 blighted properties, which has been a stumbling block in past years. In fact, Alibasic said one blighted parcel could give a developer NEZ status.

Commissioners will consider the amendment change Nov. 12. If approved, the city would establish an application fee based on the number of rental apartments in a project.

“We want to have price points so everyone can participate,” said Commissioner Ruth Kelly.

Copies of the proposed ordinance are available at the City Clerk’s office on the second floor of City Hall at 300 Monroe Ave. NW.

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