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Grosse Pointe City

October 3, 2012

City approves tax abatement for new development in, around Village

Specific projects would require separate approvals

By K. Michelle Moran
C & G Staff Writer

GROSSE POINTE CITY — The City is hoping to take advantage of a program officials feel could promote new development in and around the Village.

During a Sept. 17 City Council meeting, City Manager Peter Dame discussed the Commercial Rehabilitation Act, which officials initially looked at in January. Dame said it offers communities a way to encourage development by freezing property taxes on eligible projects.

As Dame explained to the council, after creation of the district, the City could freeze taxes on a property within those borders for one to 10 years, so that any new value from rehabilitation — but not the land itself — would be exempt from some property taxes. These do not include school taxes, he said. Because the property would still be taxed at its pre-rehabilitation, or current, value, Dame said the City wouldn’t lose any existing tax revenue.

The proposed district would include all parcels in the Village downtown  development authority, along with the Sunrise property and the transition area around the Village, Dame said. He said this could spark development that would ultimately increase the City’s tax base. The incentive could be applied to commercial or multi-family developments.

“This is intended to be an incentive to promote redevelopment of the Village that we believe would be desirable,” Dame said.

Annaliese Bajer, a Village property owner, spoke out against the proposal, saying it would take away funds from the DDA that are used for repairs and beautification in the Village.

“Besides, the city needs the funding,” Bajer said.

Mayor Dale Scrace said these are issues that had already been discussed at DDA board meetings. He said the program didn’t involve rezoning.

Dame said this program only gives officials the option to freeze taxes for new development in the area. The tax freeze isn’t mandatory, and he said whether or not to implement it for a project would be up to the council.

Scrace said Wayne County’s tax program, Transforming Underdeveloped Residential & Business Opportunities, or TURBO, is now expiring. According to the county’s website, that program — an element of the Wayne County Land Bank — was applied to brownfield redevelopment, rehabilitation or new construction, and it repaid property owners, developers and lessees for making “significant real estate investments in the county.” Dame said the TURBO program was “a much greater tax incentive” than the Commercial Rehabilitation Act, but because TURBO recently ended, “this is the only tax abatement program to spur development that we’re aware of.”

The council voted unanimously Sept. 17 in favor of a resolution creating the district to take advantage of the Commercial Rehabilitation Act.

Wayne County still needs to approve the district; it has 28 days after adoption to do so, according to Dame. A separate public hearing for a particular project seeking the exemption would need to be held, and if the exemption is approved by the City, it would then go before the State Tax Commission for approval, he said. The tax commission has 60 days to approve or deny the application. If a project isn’t finished as promised, the City can revoke the tax exemption, Dame said.

“I think it’s a great step in trying to initiate activity … (and) get people to pick our community as a place to do business,” City Council member Christopher Walsh said.

You can reach C & G Staff Writer K. Michelle Moran at kmoran@candgnews.com or at (586)498-1047.