Allegan is retooling for tax incentives to help developers

By: 
Virginia Ransbottom, Staff Writer

Developers considering Allegan may have a new option for tax abatements as the city retools its economic development efforts.

Instead of offering abatements to developers through the Commercial Rehabilitation Act, city manager Joel Dye said switching to the Obsolete Property Rehabilitation Act would better fit Allegan’s needs.

OPRA would apply to commercial and mixed-use buildings on a case-by-case basis per obsolete parcel rather than in one designated area.

“This would include the old Rockwell sites, several second floors downtown, the Mill District, the old Elks Lodge and wherever property is obsolete,” Dye said. “It would give a break on all improvements and more flexibility.”

Through the CRA, incentives are for commercial use only and must be in the Commercial Redevelopment District.

Under OPRA, the governing body of a qualified local unit of government may designate districts consisting of one or more parcels or multiple properties. The Michigan Economic Development Corporation named Allegan a qualifying unit in 2012.

The new incentive would freeze existing taxable value on a designated facility for six to 12 years, which would allow a developer to make significant improvements to a building without increasing property taxes.

In addition, the state treasurer has the ability to exempt one-half of the school millage for up to six years on 25 projects per year.

Eligible projects must take place on an obsolete property and result in commercial or mixed-use building projects. An “obsolete” property is one that is contaminated, blighted or functionally obsolete. “Commerical” property also includes a building or group of contiguous buildings previously used for industrial purposes that will be converted to the operation of a commercial business enterprise or a multiple-unit dwelling or a dwelling unit in a multiple-purpose structure used for residential purposes.

The CRA incentive offers an abatement of up to 10 years on property taxes generated from new investment and the commercial property must be at least 15 years old.

Dye said OPRA paperwork is also easier for both the city and developers.

“What would you rather have—taxes paid on a vacant property or taxes paid on a property full of people?”

Pitching the idea to the city council on Monday, March 8, during a pre-session meeting, Dye asked the council for direction on whether to proceed with the change and was given the go ahead. The resolution that established the CRA would have to be rescinded if given approval.

Dye said Allegan’s EDC would also be reevaluating its Brownfield Development plan that is mostly focused on the waterfront. He said there is a misconception that brownfield means contaminated, although many other locations could be considered for future tax captures.

In a presentation to the EDC by Mark Seaman of Prism Science and Technology, Seaman said the city has taken the right steps by creating the Brownfield Redevelopment Authority board and by putting a tax increment financing tool in place; however, it is now up to the city to figure out how the tool should be utilized and marketed.

Virginia Ransbottom can be contacted at vransbottom@ allegannews.com or at (269) 673-5534.

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