Economic Development, Government, and Real Estate

Businesses voice DID concerns

Some property owners oppose a potential dilution of resources and others the cost for inclusion.

October 16, 2015
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The Grand Rapids City Commission held a public hearing regarding the necessity of a five-year special assessment for enhanced services in an expanded Downtown Improvement District during its regular meeting Oct. 13.

Bob Herr, board chair for the DID, said the board was established to fund special assessments for enhanced services for the district above and beyond what the city provides, and this year it is proposing to expand its boundaries.

“It certainly has been successful. We feel it has helped create value for the downtown stakeholders, people who work and live in the downtown area and, certainly, our visitors,” said Herr.

“This year we are proposing to expand our boundaries, particularly along the Bridge Street corridor where we have seen a lot of significant and active redevelopment over the last year or two.”

The proposal indicates that each property benefitting from the enhanced services within the expanded area would be assessed and/or charged annually during the five-year period based on features such as square footage of property area, street frontage in lineal feet, gross square feet of the building area, and square footage of the parking area.

The proposed enhancements for FY2016-FY2020 are comprised of sub-area snowmelt operations and area-wide services such as maintenance, beautification, public safety, marketing, communications, and economic development and administration services.

While a program for enhanced services has been in effect since 2001, a number of property owners in the expanded area expressed concerns about the special assessment. Concerns included that the fee for beautification may not enhance property value or commercial aspects, the area is not a retail sector and has little pedestrian traffic, and the tax ultimately may decrease their bottom line.

John Van Tongeren, of Ferris Coffee and Nut, said as a 91-year-old Grand Rapids-based company, it has invested millions of dollars into the city, adding that more than 90 employees out of 120 are taxpayers in the city.

“I am here to say we are not opposed, and in fact we welcome the planned development on the west side. Many say it was about time; we say it was just a matter of time,” said Van Tongeren.

“We want to be a part of that growth. However, we are opposed to our inclusion and the costs assigned to us by the DID with this initiative.”

Van Tongeren indicated the costs are too high, and Ferris will not gain any value from the services since it already employs food safety, property and facility beautification, and security teams. He also said the business is not able to absorb or pass on the costs when they weren’t informed of the extent of the tax until August.

“The calculation and allocation of this ‘special assessment’ to Ferris is inequitable and a penalty. I am all about solutions — and the solution in my mind is to put this back on the DID,” said Van Tongeren. “Find a way to reduce the cost by 30 percent and find a way to reasonably allocate costs to all those who gain value, not just taxable manufacturers in that area.”

In June 2015, the DID board released a report indicating most privately owned properties within the district would be assessed, and Michigan law provides an “exemption only for certain residential properties and government properties.” Government-owned units and specific tax-exempt properties are exempt by law but will be asked to contribute to the DID.

Pat Waring, member of the DID committee and an employee of Grand Valley State University, also spoke during the public hearing, indicating the university would be included in the expanded district.

“We have met as a board at Grand Valley and we are very pleased to be able to participate. Grand Valley is opting in, and I would like to say they have confirmed their affirmation of this enlarged district,” said Waring.

“I would like to thank the property owners of downtown Grand Rapids for contributing and the assessment that we have overseen for a period of 14 years. I believe it has translated into a livable, walkable community that is safe.”

Sam Cummings, managing partner at CWD Real Estate Investment, said as a downtown property manager, he is “certainly all for the services and all for the DID,” but he is concerned the budget will not support the significant enlargement of the proposed area.

“We volunteered and opted in for this program for quantifiable benefits and, as I understand, we are here to discuss the renewal of that for five years as well as the expansion of the boundary — and that is what has me concerned,” said Cummings. “I am concerned about the dilution of services I potentially get. The ’15-16 budget is less than $40,000 more than the ’14-15 budget, yet the area is significantly greater.”

The FY2016 through FY2020 budget was outlined in the 2015 DID Special Assessment report, and indicated total assessments and contributions to area-wide services for FY2016 was about $900,000, with a total DID assessment of $1.1 million; and for FY2017, area-wide services was $945,000, with a total DID assessment of more than $1.15 million.

“I want to acknowledge all the fine efforts of the DDA, DGRI and the DID, but I am just hoping perhaps we can slow down and do a more methodical approach,” said Cummings.

Kris Larson, president and CEO of DGRI, said as the administrative arm of the DID, he wanted to respond to some of the comments made during the hearing.

“The dilution of resources is a real challenge that we are dealing with right now. A recent interpretation of state statutes says we can no longer assess nonprofit earners. That was a very big hit to our budget moving forward, which means we are going to have to get even more lean than we already are as an organization,” said Larson. “We already return 91 percent of every dollar collected back into the form of services to help keep our downtown safe, clean, beautiful and well-marketed to help advance that revitalization.”

As a fast-growing community, both in terms of business and residential, Larson said the DID is a great tool with a proven track record to support future growth.

“The near west side is the downtown of the future. That is where a lot of this is going to be moving, and we have a proven tool with 15 years of success in helping to accelerate revitalization of our downtown that is borne on both public and private entities, including the DDA,” said Larson. “The DDA owns the large lots on the west side and the DDA will be a voluntary contributor to this process.”

A resolution for a vote on declaring the DID special assessment a necessity will be brought before the City Commission on Oct. 27, and if passed, city assessors will begin notifying property owners of their 2015 assessment, according to Scott Engerson, assessor for the city of Grand Rapids.

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