Economic Development and Government

City officials give green light to CID, NEZ requests

Expanded Madison Square CID will now include 827 parcels.

April 15, 2016
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City commissioners have approved three requests supporting investment and development in Grand Rapids.

During the April 12 Committee of the Whole meeting, Grand Rapids officials approved a number of economic development initiatives designed to support local business districts and promote new capital improvements and projects throughout the city.

The three initiatives include resolutions approving an amendment to the existing Madison Square Corridor Improvement District and designate the area as a Qualified Development Area, a Neighborhood Enterprise Exemption Certificate for the Diamond Place redevelopment project located in the Michigan Street Corridor, and Neighborhood Enterprise Zone designation for the 1555 Wealthy St. SE mixed-use project.

The request to expand the existing Madison Square CID boundaries to include Boston Square, Division South, Franklin and Eastern, Seymour Square and Alger Heights business districts would increase the number of properties to 827 parcels, with more than 52 percent of total commercial ground floor square footage.

Commissioners originally heard the request made by the Madison Square CID Authority’s steering committee in October 2015 and scheduled a public hearing for December 2015.

Senita Lenear, commissioner for the city’s Third Ward, indicated the subcommittee working on the Madison Square CID proposal has engaged with newer business districts to ensure they are aware of what the amendment would mean for them.

“As a result, we have had a number of business districts that were dormant that have not been resurrected and they are engaged a little bit more. If nothing else, that is a really positive outcome,” said Lenear.

Third Ward commissioner David Allen said the amended boundaries will reset the value of properties within the area and allow the new Madison Square district to begin capturing tax-increment financing.

“The former Madison Square CID was one of the earliest formed CIDs and predated the crash of the market, so the valuation of the properties was very high. It consequently has had no income,” said Allen.

Allen said there have been a number of concerns voiced at the organizational and individual levels for the amended district.

“Commissioner Lenear and I have met with them extensively,” said Allen. “It is the hope of the planning committee and those that are working on this that, through some of the upcoming development we are going to see in this newly designated area, the tax capture could be fairly significant and some of those funds (could) be used to help startup businesses get access to capital and training. That is one way we can support African-American-owned businesses in these districts.”

The Madison Square CID Authority Board also requested the amended CID with its expanded boundaries be considered a “qualified development area” rather than a regular development area since it contains transit-oriented development, according to the city agenda. The board also added language that would exclude the district from capturing nearly 3.5 mills for the veteran, senior, jail and small library millage as a result of establishing the area as a QDA.

Madison Square’s new board is expected to include at least one member from each of the six business districts that have a business interest in property located in the QDA and at least one other resident member.

“We are going to take great care in choosing the representatives to make sure it fits with the spirit the subcommittee has asked for — that it is very representative of those business districts,” said Allen.

The commission also approved the 15-year NEZ Exemption Certificate application for the nearly $42 million, mixed-used, multi-income Diamond Place in the Midtown neighborhood. Since the project proposes affordable housing and will accommodate a Bus Rapid Transit installation stop onsite, it meets two city investment criteria and is eligible for the 15-year exemption.

“I’ve been pretty vocal about NEZs over the last several meetings. To me, based on my reading on the NEZ legislation, this is the perfect fit for that,” said Allen in reference to Diamond Place. “It is mixed income and it includes transit. These are very important developments to prove to the development world that it can be done and it can make financial sense. I’m excited to see this go forward.”

The NEZ exemption only applies to 35 market-rate residential units of the 160 total units, since 125 units are dedicated for income-restricted tenants and have received federal tax credit through the Low-Income Housing Tax Credit program.

Diamond Place LLC, which was established by Third Coast Development, plans to construct three multi-story, mixed-use buildings that will also have 23,000 square feet of ground floor commercial space. The project is expected to generate more than $25,600 annually in new city income taxes on the commercial and market-rate residential portion alone.

The final resolution approved by commissioners last week was a repeat item from the March 2016 meeting regarding the 12-unit, market rate and mixed-use building with 3,900 square feet of ground floor commercial space planned for 1555 Wealthy St. SE.

Kara Wood, economic development director for Grand Rapids, indicated the project was originally approved March 15, but staff realized the 60-day waiting period required between the notice of the public hearing and the establishment of the NEZ hadn’t been met at that time.

Although commissioners reaffirmed their unanimous support for the approximately $1.8 million project, Allen voiced concerns again for leveraging the NEZ tool for the particular development. During the March meeting, commissioners discussed revisiting the language and guidelines for NEZ incentives to align more closely with city-wide goals.

Wood said the Economic Development Department should have recommendations for commissioners in June as a follow-up on the NEZ discussion.

“I can’t say that a recommendation in June will be a change to the actual policy,” she said. “We will be having conversations with you to find out what your interests are and what our abilities are.”

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