CORUNNA — City officials are working to provide tax incentives for those interested in redeveloping the downtown.
On Aug. 5, the city council will conduct a public hearing as it works to establish a Commercial Redevelopment District that would encompass all of downtown. The public hearing was initially set for July 15.
“We wanted to table it in order to send out notifications to everyone in the district and to the county,” City Assessor Merilee Lawson said. “We want them to have plenty of time to digest it.”
If the district is implemented, those with obsolete commercial property would be able to apply for a property tax abatement for up to 10 years.
The Michigan Economic Development Corporation defines obsolete commercial property as “property impaired due to changes in design, construction, technology, or improved production processes, or damaged due to fire, natural disaster, or general neglect.”
Lawson said this is something the city has been working toward for about a year.
“It’s a matter of getting more and more people to invest in your downtown, to shop in your downtown. I mean, when you’ve got buildings that are vacant and empty and storefronts that look bad and roofs that are caving in… that doesn’t behoove people to want to come down and shop in your town,” Lawson said. “In the long run, it is not cost effective generally to invest the amount of money that it would take to fix Arnold Dunchock’s property, for example, so what you try to do is attract people who are interested.”
The establishment of a redevelopment district falls under Michigan’s Commercial Redevelopment Act. Once a city or village establishes a district, property owners with obsolete or vacant land within the boundaries can apply for property tax abatements.
There are three types of facilities, according to the redevelopment act: replacement facilities, restored facilities and new facilities.
n A replacement facility is defined as commercial property that substitutes obsolete property.
n A restored facility constitutes making improvements to an existing commercial property.
n A new facility encompasses all other commercial property within a district.
If an individual property owner’s application is approved, they will receive a commercial facilities exemption certificate.
According to Lawson, all applications must go through the city council for approval. If accepted, they must also gain approval from the state.
Under the exemption certificate, property owners would receive a tax abatement, meaning their property taxes would essentially be frozen at the current assessed value prior to their renovations for up to a decade. The precise length of the abatement depends opon the individual application, Lawson said.
For the length of Industrial Facilities Tax (IFT) abatements, the city uses a chart to evaluate individual applications line by line; the number of jobs that would be created as a result of the renovations, for example, are taken into account when deciding how long to set the abatement for, Lawson said.
Lawson added she is in the process of tweaking the IFT chart for potential redevelopment applications.
For restored facilities, property taxes are based on the taxable value of the property from the previous year, before renovations, combined with all the mills levied on the property. For new or replacement facilities, property taxes are based upon the current year’s taxable value and half of the mills levied.
The taxable value of the property is frozen for the length of the exemption certificate.
Lawson said the idea behind establishing a redevelopment district came with Dunchock’s decrepit buildings in mind.
“We feel like if there was ever a property that was a fit for this, it’s that property,” Lawson said. “The truth of the matter is if it hadn’t been for Michael Luongo, it would have been bulldozed down. I don’t know how we could have ever saved it, the amount of money we would have to put in it would have been just crazy, and structurally it was basically all but gone. He’s resurrected that thing one board at a time.”
The establishment of a commercial redevelopment district would serve as an extension of Corunna’s Downtown Development Authority (DDA), according to Lawson.
“DDA’s are not about making money. They’re about making things happen, they’re about being able to use tools that the normal person could not afford to do to revitalize and keep your downtown moving forward and up,” Lawson said.
“The values of the entire downtown are all affected when we have decrepit buildings like that, so when the sales studies come through every year and you don’t have anything selling, or when you do have something that sells but it’s selling less because people don’t want to invest in a building next to buildings that are falling down, overall your values start going down,” Lawson said.
“The taxpayers are a huge winner in this one, because the amount of tax dollars commercial property owners are going to save is minor compared to what value it’s going to add to the downtown.”