- change ups
County could accept city’s offer this week
There is a good chance Kent County commissioners will ratify an economic development partnership agreement this week with the Economic Development Corp. of Grand Rapids.
The city of Grand Rapids is likely to establish a commercial rehabilitation district for LCL Development LLC, which has proposed to invest nearly $1.4 million into property it owns at 1625 Leonard St. NE.
LCL Development is part of Leppinks Inc., which operates several grocery stores in the area including the Save-A-Lot on Leonard Street. The store leased its location there for about 10 years, but LCL Development recently bought the site and is ready to make improvements to the property.
The firm is planning to invest $800,000 into the property and another $575,000 into equipment.
City Economic Development Director Kara Wood told members of the county’s Finance Committee last week that LCL Development meets the criteria for a commercial rehabilitation district, including the one that requires a minimum investment of $30 per square foot.
“This is an opportunity for the grocery store to get a bit of a tax break,” said Wood.
Should city commissioners approve the district, the value of the Save-A-Lot building would become frozen at its current level and the value of the improvement would be taxed at a reduced rate for the length of the 10-year exemption period. Both mean the business’s property tax bill wouldn’t reflect the site’s improved value and the county wouldn’t collect the higher tax revenue generated by the improvements to the site. The district’s exemption would not apply to the property.
However, Public Act 210, which authorizes the rehabilitation district, includes a provision that allows a county to reject the establishment of a district and continue to capture the tax revenue.
The county has a participation policy that limits its annual tax contribution to economic development to 7 percent of its total levy. The county’s current tax loss to such tax-exempted and abated projects is around $6.5 million annually.
Another part of the policy allows the county to refuse participation when the city or township that is granting an abatement or exemption has abated or exempted more than 10 percent of its tax roll, and Grand Rapids exceeds that figure.
So Wood offered the county a partnership deal for the Save-A-Lot district in which LCL Development will give the Economic Development Office the county’s share of its property-tax revenue for each year of the exemption period. EDO will then forward that payment to the county. The amount in question has been estimated at $2,000.
“We will be reimbursed for all of our operating property-tax loss,” said Darryl Delabbio, county administrator and controller.
The county’s Finance Committee accepted the agreement and recommended the full commission do the same on Thursday. The city’s Economic Development Corp. approved the request last week.
According to county property records, the Leonard Street site has a 2013 state equalized value of $947,300 and a taxable value of $868,988. LCL Development bought the property in July for $650,000.