Condo developer pushes for tax breaks

Mar 9, 2010 — The Herald-Palladium

Shawn McGrath

Mar. 9, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- ST. JOSEPH -- Apartment owners and the owners of new downtown condos could be in for tax breaks under a plan being considered by St. Joseph city commissioners.

Commissioners on Monday night unanimously voted to hold a public hearing in April to determine if they should create an economic development sector, which could lead to the tax breaks.

Officials with 508 Pleasant Street LLC, the company developing the former downtown YWCA property, asked the city in a letter earlier this month to consider creating a Neighborhood Enterprise Zone for most of the Downtown Development Authority area, Community Development Director John Hodgson said.

508 Pleasant Street bought the former YWCA and demolished it. 508 Pleasant Street plans to build a $20 million, seven-story, mixed-use building on the site. About 10,000 square feet of the site, called Lake Park Place, will house retail and other businesses on the first floor, and 30-35 condominiums on the upper floors. There will be underground parking.

"The (Neighborhood Enterprise Zone) designation is vital to the residential component of the project, which in turn is a vital component of the project as a whole," John Byl, attorney for 508 Pleasant Street, wrote in the letter to the city. "We believe that the residential units will significantly improve this area of the city. They are also consistent with the land-use plans of the city and the state.

"In short, the (Neighborhood Enterprise Zone) designation will facilitate redevelopment of this downtown site into a mixed-use project that will enhance this part of the city."

While they're in use in 23 Michigan communities, a Neighborhood Enterprise Zone would be a first for St. Joseph. The tax break could lead to other residential development and refurbishing of some downtown apartments.

"This is something new, something we haven't done before," Hodgson said. "So we're learning as we're going through here."

Owners of the condos, if the home is their primary residence, would pay about the equivalent of half their property taxes, Hodgson said.

The amount is "one-half of the previous year's state average principal residence millage," according to the Michigan Economic Development Corp.

In some cases, the tax break could apply to apartment owners if certain qualifications are met.

For Lake Park Place, each individual condo owner would have to appear before the City Commission to seek the tax break. Depending on the commission's decision, the tax break would last six to 15 years. Hodgson said it's too early to know exactly how much the tax break could total. The tax break would not apply if the units are second homes, he said.

"It's not even actually tied to our local tax rate. It's tied to the state average rate," Hodgson said. "They're very close right now, within a mill or two."

The land itself, and the businesses on the ground floor, would still be subject to the normal tax rate.

The City Commission must wait at least 45 days after they have notified other taxing agencies that could be affected by Neighborhood Enterprise Zone designation before holding the public hearing. The commission must wait 60 days after notifying the other agencies before it can vote on the issue. The boundaries of the proposed Neighborhood Enterprise Zone have not been set.

The move is to spur economic development, said City Manager Frank Walsh.

"The goal is to get developments that might not get off the ground and to get people living downtown," Walsh said. "Attracting new residents and attracting $20 million developments is a competitive business."

YWCA officials decided in April 2006 to sell the property, citing the cost of building upkeep. 508 Pleasant LLC closed on the property in July 2008.

The building was demolished in November.

smcgrath@TheH-P.com

Newstex ID: KRTB-1405-42718139