22 years of tax breaks proposed for condo project

[Allan]

22 years of tax breaks proposed for condo project

Wednesday, January 12, 2005

By Jim Harger

The Grand Rapids Press

GRAND RAPIDS -- City commissioners are considering tax incentives that would generate 22 years of tax relief for a project aimed at converting the former West Middle School into as many as 140 condominiums.

Sitting in the shadow of the intersection of U.S. 131 and Int. 196, the project will need the tax breaks to get off the ground, according Susan Shannon, the city's Economic Development director.

"This is not a package we're going to do everyday. It's pretty complicated," Shannon said. "We realized this building was going to sit vacant for a long time. We wanted to bring it back to life."

Some of the tax breaks would help developer Jonathan Rooks pay for lead and asbestos abatement and make improvements, such as a rain garden to collect stormwater runoff.

The tax breaks also would create a $1 million escrow fund to subsidize low- and moderate-income buyers for his condominiums, which are expected to cost between $95,000 and $195,000.

Rooks bought the 93-year-old building from Grand Rapids Public Schools for $1.5 million last year. He plans to spend another $10 million to convert the 250,000-square-foot building into "Union Square."

First Ward Commissioner Roy Schmidt said he likes the city's proposed package.

"This is a good incentive for them to make this project work and improve the neighborhood," he said. City commissioners scheduled a Feb. 8 public hearing on the proposed tax breaks.

On Tuesday, city commissioners scheduled public hearings to create a Neighborhood Enterprise Zone for the project and to include it in the city's Brownfield Redevelopment Plan.

The Feb. 8 hearing will be at 7 p.m. at Ahavas Israel, 2727 Michigan St. NE.

Here's how the city's proposed tax breaks would work for Union Square:

The building has been part of a Renaissance Zone since 1997. That means its owners and occupants pay no state or local income or property taxes. The tax-free status would continue until 2009, when they would be phased out by 2011.

One of the proposals would include Union Square in a newly created Neighborhood Enterprise Zone (NEZ). That means all of the improvements to the building can be exempt from property taxes for up to 12 years.

Because the building already is tax-exempt, the NEZ abatements would not kick in until the building joins the tax rolls in 2009, when the Renaissance Zone benefits begin to expire. If the project gets its full 12-year tax abatement, Shannon said those tax breaks should last through 2017.

Shannon also wants to include the project in the city's Brownfield Redevelopment Plan. That means Rooks would be able to recapture his cost of removing asbestos and lead from the building's property tax bills.

That status would allow the project to capture up to $1.7 million in property taxes through 2027, according to Shannon's estimates.

[PghUSA]

Corporate welfare at its best!

[joeDowntown]

I don't know if I'd call it corporate welfare. It is a beautiful building that unfortunately was "engulfed" by US131 and I196. The expressways literally wrap the building on two sides.

You either get creative or settle on blight in the core city. This project will be a great addition to downtown, bringing less expensive (but with all of the loft amenities) condos to downtown, increasing the core density of downtown and breathing life into a tired old neighborhood.

Corporate welfare? I call it wise hedging. A building generating zero taxes for the city is a lose-lose situation. A vibrant neighborhood on the other hand...

Joe

[Allan]

I don't know that I'd call it corporate welfare either. I do think that 22 years of tax breaks is excessive, but it will help create a more vibrant neighborhood.

[PghUSA]

I don't know if I'd call it corporate welfare. It is a beautiful building that unfortunately was "engulfed" by US131 and I196. The expressways literally wrap the building on two sides.

You either get creative or settle on blight in the core city. This project will be a great addition to downtown, bringing less expensive (but with all of the loft amenities) condos to downtown, increasing the core density of downtown and breathing life into a tired old neighborhood.

Corporate welfare? I call it wise hedging. A building generating zero taxes for the city is a lose-lose situation. A vibrant neighborhood on the other hand...

Joe

<{POST_SNAPBACK}>

I agree with you on incentives and lowering the burden on productive companies/organizations/citizens but LOWER THE BURDEN equally to all, this handing out TAX WAIVERS to you but not you and you but not them smacks of tamany hall (sp). Why not do this more fairly for the whole city and let free market forces make it better in a vibrant and fair environment.

22 years is 2027 think about that for a moment where can I move where I don't have to pay property taxes or school taxes till 2028? Give me that deal and I'll fix up my own blighted building in Detroit, but then again you and I don't get that waiver. That's 22 years, think about that really that would be like buying a blighted motel on Miami Beach in 1982 and not having to pay taxes until today, would that have been a good deal for Miami Beach??? And MB was BLIGHTED back in 1982.

This really does smack of you wash my back I'll wash yours, Dan Marino was in college in 82 and is about to go in the Hall of Fame this year, and my multimillion dollar baby of an Art Deco hotel paid NOTHING into Miami Beach. Something very fishy going on here.

[joeDowntown]

That is one way to look at it, but look at what is happening in Detroit. They have a beautiful hotel that is getting torn down. Why? Because it has sat vacant for years and is "too expensive" to rehab due to the years of demolition by neglect.

I can see your point, but I have always liked the way city government in Grand Rapids has handled new projects through a private/public partnership. I always drove by this building thinking it was a shame that they strattled the expressways around it in the sixties. I thought there would be no chance that it would one day be returned to its former glory. If it takes a couple of major tax incentives that will help revitalize, I am more than happy to let developers dip into the pot a bit.

Joe