Banking & Finance, Economic Development, and Government

Opting out

County and GRCC opt out of tax capture for Westside Corridor Improvement District.

November 28, 2014
| By Pete Daly |
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Two taxing authorities that rely on property tax revenues — Kent County government and Grand Rapids Community College — opted out recently from Grand Rapids’ newest economic development initiative zone, the Westside Corridor Improvement District.

At the county Board of Commissioners meeting Nov. 20, only two of 19 members voted against the opt-out proposal: Commissioners Carol Hennessy and Jim Talen.

Per state law, a corridor improvement authority operates similarly to a downtown development authority, capturing a portion of some future tax revenue increases as the property values improve. As the funds materialize in future years, they can be used for capital improvements to encourage economic development through increased private investment.

Board Vice-Chair Jim Saalfeld, in defending his vote to opt out, said it is the county’s policy to routinely opt out of tax capture districts, which can be set up by municipalities.

“If we don’t do it now, we are in forever,” said Saalfeld.

According to County Administrator/Controller Daryl Delabbio, the city of Grand Rapids has estimated property values in the Westside CID could possibly grow by one-half of 1 percent a year. If that proves accurate, the incremental amount in the county millage revenue would total about $1.5 million over 30 years.

The Westside CID was authorized by city commissioners earlier this year and is overseen by the city of Grand Rapids Economic Development Department. It encompasses three neighborhood business districts west of the Grand River: West Fulton, Stockbridge and West Leonard, according to Johnny Brann Jr., chair of the Westside CID.

Brann is partners with his father in the Brann’s Steakhouse & Sports Grille on Leonard Street just west of U.S. 131. Other members of the Westside CID board are Michael Lomonaco, Tim Brom, Dan Grinwis, Walt Gutowski Jr., Dave Shaffer, Andrew Sisson, Erica VanEe and Lisa Haynes. Mark Lewis of the nonprofit Neighborhood Ventures is the recording secretary.

Both Shaffer and Gutowski are First Ward city commissioners. Gutowski’s business, Swift Printing, is close to but not located in the Westside CID. However, it is in the city’s Downtown Development Authority.

Brann said they don’t expect any of the captured tax increment to be a “useful” amount for 10 to 20 years.

As a start to improving the economic vitality of the Westside CID, they have formed a volunteer marketing committee to promote the area as a good place for business to invest in and for people to live.

“Another benefit to this isn’t just the (tax capture) money, but the collaboration of having all three business districts on the west side, all working together to create one strong branding message for the west side,” said Brann.

He said capital improvements that might come later as the funds become available could include sidewalk improvements and beautification projects, such as flower planters and newly planted trees in the public places.

“Anything to provide a walkable business district would be something that we have interest in,” said Brann.

Gutowski wants taxpayers to know that in a CID, as opposed to a Business Improvement District, the corridor improvement authority cannot levy an ad valorem tax on businesses.

His daughter previously organized the West Side Stride, a “pub run” that is the type of community activity for adults he said should be publicized to help promote the Westside CID. Meanwhile, the marketing committee is working on a logo and slogan for the marketing campaign to “celebrate the Westside.”

Gutowski said the “opt out” decision is the county board’s prerogative, and while he would have liked it if they had not done so, he respects that.

“We all have to work together and try to find that common ground,” he said.

According to the Michigan Economic Development Corp., the Corridor Improvement Authority Act of 2005 is designed to assist communities with funding improvements in commercial corridors outside of the main commercial or downtown areas. Any city, village or township can establish a CIA.

The CIA Act generally mirrors those of the Downtown Development Authority Act of 1975. Once created, a CIA may hire a director, establish a tax increment financing plan, levy special assessments and issue revenue bonds and notes. The corridor targeted for further development must be at least 51 percent first-floor commercial and in existence for 30 years. It must be zoned to allow for mixed-use and high-density residential, and the municipality must agree to expedite the local permitting and inspection process in the CIA and agree to modify its master plan to provide for walkable non-motorized connections, including sidewalks and streetscapes.

Gutowski noted that Westside is the largest CID in Grand Rapids.

There are now four in Grand Rapids, according to Kara Wood, director of Grand Rapids Economic Development. The most recent, prior to Westside, is the North Quarter. It was formed a couple of years ago and is located generally along Plainfield Avenue plus parts of nearby Monroe and Taylor avenues in the vicinity of Leonard Street.

The first CID was Madison Square in southeast Grand Rapids, along Madison Avenue and Hall Street where they intersect. Another is the Uptown CID, on the east side of the city including the Midtown, Fulton Heights, East Hills, Eastown, Madison area and Baxter neighborhoods.

As for the Westside CID, it is new so “there isn’t any money” for it to use, said Wood. It has been established “in hopes there is tax increment growth in the future.”

In fact, only one of the four existing CIDs in Grand Rapids is actually collecting any tax increment funds, “and that’s Uptown because they were put in place so long ago. All the other CIDs have a zero capture,” said Wood. Uptown, established more than 10 years ago, captured $4,000 last year, she said.

Marketing the district is the way to start, Wood said, because it can be done with volunteers.

“But it does drive significant returns,” she added, noting that when Uptown began, it started with a branding campaign to make people more aware of the businesses and attractions within the district, starting with restaurants.

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