City Faces Another Taxing Situation

April 18, 2005
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GRAND RAPIDS — City commissioners are likely to decide whether to amend the tax increment financing and development plan of the Downtown Development Authority on Tuesday, April 19, and either empower or erase a proposal that has drawn criticism from both the public and private sectors.

One aspect of the new plan has the DDA contributing $3 million for street work that would be done in conjunction with Alticor Inc. putting up its new downtown hotel near the intersection of Pearl Street and Campau Avenue.

The DDA would give $2 million to the work and then reimburse Alticor $3 million for public improvements the company makes during construction. The reimbursement dollars are included in the new plan.

Other hotel operators, though, have complained that the DDA is subsidizing the new hotel and giving Alticor an unfair competitive advantage. But DDA Executive Director Jay Fowler said last week that Alticor has shown it will cost an additional $11 million to build the 340-room hotel on the downtown property instead of other potential locations because the riverfront stretch along the west side of Campau Avenue that will hold the hotel and its parking ramp is a brownfield site.

Besides that, Fowler said the DDA has plans to make improvements to Campau Avenue.

“It was work we would have done anyway,” he said.

The state has offered Alticor roughly $6 million in tax credits. Added to the $5 million from the DDA, $2 million in cash and $3 million in reimbursements, Alticor would then be able recoup the additional costs of putting the hotel on the brownfield site. But Alticor can’t receive the tax credits or reimbursement revenue unless the DDA plan is amended, because local financial assistance to the project has to be at least 45 percent of the state credits’ value.

Fowler said Kent County also complained that the amended plan adds three years to the amount of time the DDA would have to capture taxes.

“Our view is, the work of downtown development isn’t done. We have more projects coming,” said Fowler.

Mayor George Heartwell, who also sits on the DDA, felt capturing those tax dollars was key to keep downtown developing. He said the DDA plays a bigger role in that development than other public units like Kent County.

“The county does very little in direct economic development. That is not a function of the county,” said Heartwell.

Fowler said the new hotel would give the DDA and the school system more property-tax dollars, the county more lodging-excise tax dollars, would make the city more attractive to meeting planners and would create several hundred construction jobs and 250 new permanent hotel jobs.

“We’ve tried to convince the City Commission that this was a good deal,” said Fowler.

Groundbreaking for the new hotel is planned for this summer. Marriott International will operate the Alticor-owned hotel, which expects to open in September 2007.    

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