Tax Abatement Committee

TAX ABATEMENT COMMITTEE CITY HALL – ROOM 302 A 10 N. DIVISION BATTLE CREEK, MICHIGAN February 6, 2018 1:00 PM Present: Mayor Behnke and Commissioners Baldwin and Simmons. Absent: Comm. David Walters Staff: Rebecca Fleury, Ted Dearing, Steven Hudson, Jill Steele, Christine Zuzga, Vicki Houser Call to Order: Mayor Behnke called the meeting to order at 1:05 p.m. Nomination of Commission Chair: Mayor Behnke, supported by Comm. Simmons, made a motion to nominate Commissioner Baldwin as Chair. All yes, none opposed. Motion approved. Approval of Minutes: A motion was made by Mayor Behnke, supported by Comm. Simmons, to approve the minutes of the April 21, 2015 Tax Abatement Committee. All yes, none opposed. Motion carried. Public Comment : None. Committee Discussion: 1. Proposed change to City IFT Guidelines Ted Dearing, Assistant City Manager, discussed the City’s Obsolete Property Rehabilitation Abatement guidelines, stating the requirements for investment and job creation can be a hindrance to mixed-use or strictly residential projects. Mr. Dearing stated staff was not proposing the amount of required investment change, asking the Committee to consider waiving the job creation requirement for mixed-use and residential properties that are eligible for OPRA consideration and appropriately approved by Planning and Zoning. Mr. Dearing stated adding residential in the downtown area was the same as job creation by creating the critical mass and buying power, stating it was important to waive the jobs creation component. Comm. Simmons noted some developers might not already have a business identified. Mr. Dearing noted many businesses in the downtown area would like to improve the residential areas above the commercial property. Comm. Baldwin recommended the Committee also allow a similar OPRA in office districts, noting residential is not allowed in office districts. Comm. Baldwin stated this could incentivize a potential business and their employee. Comm. Baldwin expressed concern with delays while rezoning was approved. Ms. Zuzga stated the Planning Commission would consider overlays of all the different districts for mixed- use. Ms. Zuzga stated staff would work with individual property owners on conditional rezoning, variance or special use permit requests, stating they wanted to eliminate the steps needed for rezoning. Mr. Hudson confirmed a building in an office-zoned area would be included under the State’s commercial definition. Comm. Baldwin questioned if the downtown businesses would actually need to invest $100,000 to renovate their upper floors into residential units. Mr. Dearing expressed his belief that due to the condition of downtown properties, the investment levels would not be a barrier. Mr. Dearing also stated some projects would be subsidized with CDBG funds. Ms. Zuzga agreed, stating her research expects each unit to require a minimum of $85,000. Ms. Zuzga confirmed the City has never allowed mixed-use except in the downtown area. Mr. Hudson noted some properties were grandfathered, such as North Avenue and Old Lakeview areas. 1 Mr. Dearing stated staff’s recommendation was to adopt the revised guidelines for mixed-use properties for OPRA eligibility, specifically that the investment was still required, but the job creation was not required. Mr. Dearing confirmed both requirements were still in place for commercial projects. Ms. Zuzga stated Summit Builders have approval to rehab Southwest Junior High School, who indicated they had a $1.5 million gap, stating this type of program would work with this project. Ms. Zuzga stated the developer had not determined if the project would include retail or office businesses. Comm. Baldwin requested the chart contain all of the information, not requiring the viewer to refer to a different grid, so that it would be easier to understand. Comm. Simmons asked if a developer could demolish a property and build new, and still qualify for an OPRA. Mr. Hudson stated the developer could demolish all but one wall to qualify for an OPRA. Mr. Hudson discussed the requirements for extensions of the tax abatement, noting it would require the additional specified amount of investment on the project and job creation, noting that 12 years is the maximum abatement term. A motion was made by Comm. Simmons, supported by Mayor Behnke, that the Tax Abatement Committee recommend the changes to the guidelines of the Obsolete Property Rehabilitation Act regarding mixed -use properties with residential units. All yes, none opposed. Motion approved. Comm. Baldwin asked if there were other areas within the City that may be eligible for other types of tax abatements. Mr. Hudson stated the Neighborhood Enterprise Zone abatement would apply to single family and multi- family residential properties. Mr. Hudson also noted the Commission approved a resolution to remove personal property abatements, but that applicants may qualify for the Eligible Manufacturing Personal Property (EMPP) abatement. Mr. Hudson stated all of the abatements on the list were active, but may not be available, providing an example that Personal Property was no longer available due to changes in the state law. Mr. Hudson also noted Renaissance Zones have been phased out, but that some still exist and new ones may not be created. Comm. Simmons asked if there were abatements for small businesses that will be investing less than $100,000, stating he would like to know of tools for smaller businesses. Mr. Hudson stated he was not aware of any State incentive programs for individual business owners, noting the City programs require a $100,000 investment, which was reduced from $200,000 in 2004. Mr. Hudson stated the projects would need to meet the State minimum investment requirements, noting the City could make the requirements stricter, not less strict than the State requirements. Comm. Baldwin recommended staff research loans, gifts or incentives to encourage small business investment, stating they may need mentors more than cash. Mr. Dearing noted staff has been working with local banks to use their CRA funds, stating they would not be tax abatements. Mr. Dearing informed the Committee that there have also been discussions with WKKF about possible incentives for small business. Mr. Dearing stated the EDF staff have been mentoring small business owners, noting there are programs available through BC Vision. Mr. Dearing also confirmed Valerie Byrnes, a member of the EDF team, is a certified SCORE member. Mr. Hudson agreed to update the available abatement chart, and Mr. Dearing stated they would like the recommendation placed on the February 20, 2018 Commission agenda. Mr. Hudson asked if the Commercial Rehabilitation abatement, that has identical language as the OPRA, have similar changes made to the City’s requirements, noting the current guidelines have a maximum 10- year term. Mr. Hudson provided an example of the Hinman development at the old PNC drive through building on Capital Avenue SW. Comm. Baldwin requested Mr. Hudson provide information on current number of abatement certificates. Comm. Baldwin also expressed concern the application fee may be a burden for some small businesses. Mr. Dearing noted the city may absorb the cost to establish a district if it is a burden to the investor. Mr. Dearing stated staff would conduct additional research on the Commercial Rehabilitation and Commercial Redevelopment Act requirements. 2 Adjournment: The meeting was adjourned at 1:40 PM. 3