Berkley council approves tax abatement, brownfield resolutions for La Salette School development

By: Mike Koury | Woodward Talk | Published November 20, 2020

 On Nov. 16, the Berkley City Council approved two resolutions relating to a redevelopment project at the former Our Lady of La Salette School.

On Nov. 16, the Berkley City Council approved two resolutions relating to a redevelopment project at the former Our Lady of La Salette School.

File photo by Mile Koury

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BERKLEY — The Berkley City Council approved two resolutions related to the project at the former Our Lady of La Salette School at its Nov. 16 meeting.

The first resolution was to establish a commercial rehabilitation district at the site of the school, located at 2219 Coolidge Highway, which is being renovated into a 54-unit apartment complex that contains studio, one-bedroom and two-bedroom units.

The resolution would allow for an abatement of property taxes for the development within this district, according to City Manager Matt Baumgarten.

“This would be a tool that would allow a developer to take an existing historic structure within the community and invest the types of monies that (it) needs to make it a viable, new structure from the outside in,” he said. “That would include giving them the opportunity to address a couple of environmental issues when used together with the brownfield redevelopment act.”

The second resolution involved the city approving a brownfield plan and having it reviewed by the Oakland County Brownfield Redevelopment Authority. The OCBRA would collect an administration fee of $5,000 per year for the length of the brownfield plan. The administration fee is determined by the size and complexity of the project. The OCBRA also captures and collects 100% of the eligible costs for the brownfield project, which are placed in the OCBRA’s revolving loan fund for future remediation projects.

The city of Berkley approved the renovation of the former school in December 2019. The developer originally hoped to begin the project this past spring.

Tom Herbst, of developer 2219 Coolidge LLC, stated that once they decided to renovate the former school for their project and retain the existing structure, they ran into issues with the decades-old building.

“There were environmental issues — specifically asbestos cleanup and things of that nature — that caused this project going the renovation route to become more costly than it would if it was new construction,” he said.

Herbst said the two resolutions together will help offset some of the additional costs they’re incurring to renovate the building.

The commercial rehabilitation tax abatement, which comes from Public Act 210 of 2005, essentially freezes the taxable value of the property, according to Ryan Higuchi, of PM Environmental, who assisted 2219 Coolidge LLC on the proposal. The developer requested a 10-year abatement.

“Over that 10 years, the taxable value that’d be collected from the local taxes and the local millages would remain the same, despite the improvements on the building and the property itself,’ Higuchi said.

The council voted to approve both resolutions 6-1, with Councilman Dennis Hennen casting the dissenting voice. He felt studies he had researched showed that incentives like tax abatements don’t work.

“Any increases of economic development rarely offset the amount of tax given away,” he said. “I know the application says this project won’t go forward without the abatement. I can’t know that for sure, but I’m skeptical that they would’ve spent four years and untold numbers of dollars to acquire this property, get the approvals they have gotten and get to this point only to pull out now. … I have no fault to the developer for seeking to take every tax advantage available to them, but I can’t in good conscience ask everyone else in the city to help foot the bill on this.”

Mayor Dan Terbrack said this is not the first time Berkley has approved something like this, but noted it’s the first in over a decade. While the city approved the two resolutions, the mayor felt the city needs to have a more formalized policy on what does qualify for these types of things and what does not.

“I don’t necessarily think these things are going away. These are obviously not things that the city has come up with. Public Act 210 was not passed just in the city of Berkley here, and if I am looking at it as a developer, I mean, I certainly would look at all the potential ways that I could help the development that I was trying to create,” he said. “I certainly don’t fault anybody for looking at creative ways to try to enhance not only the project, and our role is to weigh whether or not the benefits here outweigh the potential non-benefits at least over a 10-year period through the city, and it’s certainly not something that is ever an easy decision.”

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