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Work proceeds on MJR Theatre complex in Troy

October 1, 2013

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The Kmart store at Maple and Livernois is demolished to make way for the MJR Troy Grand Cinema 16.

The City Council will consider a plan to help a developer pay to clean up the site of the former Kmart store to make way for a new theater complex under Brownfield guidelines.

The city of Troy established the Troy Brownfield Redevelopment Authority as part of the state Brownfield Redevelopment Financing Act to promote revitalization of environmentally distressed and blighted areas.

Troy City Assessor Nino Licari determined that the vacant Kmart store site was functionally obsolete.

Tearing down the store to remediate the site involves removing fluorescent light tubes, PCB ballasts, mercury vapor bulbs and mercury switches, fire extinguishers, CFC refrigerants, hydraulic lifts,  and asbestos.

“It’s a very important project for Troy and the community,” Mark Miller, director of economic and community development, told the council when he introduced the plan as an agenda item at the Sept. 23 meeting.

Currently, there is $552,000 in Troy’s local site remediation revolving loan fund. If the council approves the Brownfield Redevelopment plan for the MJR project, tax increment revenue would be used to repay the city’s revolving loan fund for expenses estimated not to exceed $498,079. Tax increment financing guidelines allow municipalities to capture property tax revenues generated through new development.

Estimated tax value of the finished 74,000-square-foot MJR Theatre project is expected to be $4.5 million. If council approves the plan, the Troy Brownfield Redevelopment Authority would capture the tax increment revenues for five years, and for possibly five more years after that, depending on the council’s action.

MJR would initially pay for cleanup expenses eligible under Brownfield guidelines and submit an invoice to the city of Troy. The city would pay MJR for those expenses from the revolving loan fund. Under the plan, those expenses would be repaid to the revolving loan fund through the tax increment capture of the new theater complex.

State law determines what cleanup expenses are eligible under Brownfield guidelines. Licari explained that after the city approves the plan, the state closely reviews expenses for approval.

The state doesn’t always accept all of the expenses in the plan, he said. 

“However, that rarely happens, as both the environmental engineer who works for the developer and the city know what is and isn’t eligible.”

“It’s the first time we’ve used the revolving loan fund,” said Troy City Attorney Lori Grigg Bluhm. “It’s been out there for a few years.”

Councilman Doug Tietz asked if the city were taking a risk “up-fronting the money.”

Bluhm said the city had negotiated a guarantee from MJR that the company would pay the loan back in the event that the tax increment capture did not cover the loan.

The money currently in the revolving loan fund came from the tax increment finance capture of excess taxable value at the Mid Town Square Brownfield, the site of the Ford Tractor Plant at Maple and Coolidge.

Under that agreement, the city captured revenues for five years after the loan was repaid to the developer, Grand Sakwa, creating a revolving fund balance of more than $2 million. In the economic downturn, the city disbursed all but $500,000 from the fund back to original taxing authorities whose millages were captured during the five-year period, Licari said.

The MJR Troy Grand Cinema 16 will be 74,000 square feet, with 16 screens, including an Epic Studio: a 480-seat auditorium with an 80-by-48-foot screen, overstuffed leather-like lounge chairs, 56-inch spacing and a Dolby Atmos sound system. Also, new asphalt and sidewalks will be constructed.

The council will hold a second public hearing on the matter Oct. 7.

Mike Mihalich, CEO and MJR founder, thanked the council for the opportunity to participate in the program. He described the theater complex as “state of the art.”

He said that if plans proceed on schedule, the 3,200-seat, 16-screen theater complex would be finished next spring.

The Troy Planning Commission approved a preliminary site plan for the theater complex at its June 9 meeting. The groundbreaking ceremony for the complex is planned for Oct. 3.

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