Oxford Township officials are being asked to establish a commercial rehabilitation district that would allow the owner of the old Sea Ray boat plant to potentially receive a 10-year property tax abatement for the improvements he’s making to the 208,000-square-foot building.
‘I don’t want to get penalized for investing and growing the building,? said Christian Mills, owner of the Lake Orion-based Mills Real Estate Ventures.
The township board will address his request at the 7 p.m. Wednesday, Nov. 4 regular meeting at 300 Dunlap Rd.
Mills bought the old building, located at 925 N. Lapeer Rd., and the 19.74 acres it sits on in September 2014.
He’s been busy renovating it to become the Legacy Center: A Community in Motion. The plan is for it to be a multi-faceted, multi-generational facility containing a mixture of businesses geared toward fitness, family entertainment, team/individual sports, music, art, life skills and dining.
Mills is expecting the Legacy Center to draw about 15,000 to 20,000 families per month from a 60-mile radius.
Between purchasing the property and making improvements, Mills said his total investment in the project is going to be ‘well over $5 million,? but under $10 million.
‘It’s a high-risk proposition,? he said.
Mills was reluctant to provide an exact figure. ‘I still think that’s kind of a private thing,? he explained.
To help somewhat lessen his risk, Mills is asking the township to establish a commercial rehabilitation district on the Legacy site, which would then allow him to apply for a type of property tax abatement known as a commercial rehabilitation exemption certificate.
This would freeze the taxable value of the building and exempt any new investment from local taxes, such as those that support the township and county, for a period of up to 10 years.
The only exceptions would be the school district’s operating tax and the State Education Tax (SET). Both would still be levied in full on the new investment.
This type of abatement does not apply to land and personal property, only buildings.
Right now, Oxford Township non-homestead taxpayers pay a total of 52.8756 mills annually in local, county and state property taxes. One mill is equal to $1 for every $1,000 of a property’s taxable value.
If Mills were to receive the abatement, the taxable value of his building, as it existed prior to rehabilitation, would be frozen and he would still have to pay the full 52.8756 mills on it.
However, with regard to the increased value stemming from building improvements, Mills would only be required to pay the 17.9442-mill operating tax for the school district and 6-mill SET.
He would not have to pay the other 28.9314 mills, which includes 11.2412 mills in township taxes, 9.7902 in county taxes and 7.9 mills to retire the school district’s bond debt.
‘That money will be used to finish off other spaces in the building and for operations,? Mills said. ‘It will help with the development and construction.?
Right now, the Legacy Center’s building and land have a combined taxable value of approximately $2.5 million. Of that, approximately $500,000 is for the land and the rest is for the building.
According to the township treasurer’s office, the 2015 summer tax bill for the Legacy Center site was $103,354 and the 2015 winter bill is projected to be $30,525.
Of the $133,879 Mills is paying in taxes this year, $15,170 is the SET, $45,368 is the school district’s operating tax and the remaining $73,341 consists of township taxes, county taxes and the school debt payment.
Mills wished to make it clear he’s not trying to negatively impact the township’s current revenue stream by seeking this abatement.
‘The idea behind it isn’t to take away any existing tax dollars,? he said. ‘I don’t think we’re hurting the existing tax base in the community.?
He explained he’s simply trying to save some money on a high-dollar, high-risk project.
‘There’s a zillion dollars being put into the building and every penny counts,? Mills said. ‘Whenever you’re starting a venture, whether it’s $50,000 or $5 million, every penny is important.?
Mills will encounter staunch opposition to his request from Oxford Township Treasurer Joe Ferrari, ‘I’m against any type of abatement,? he said.
Ferrari firmly believes abatements don’t yield their promised benefits. He used the examples of Royal Oak Boring and Royal Oak Medical Devices to illustrate his point. The Oxford Village Council granted six-year and 12-year personal property tax abatements to these companies in 2011 and both have since left the community.
‘It never works out,? Ferrari said.
But Mills disagreed.
‘He has some examples of tax abatements that didn’t work, but there are thousands of tax abatements that have worked,? Mills said.
Mills noted he owns ‘a thriving manufacturing business? called Quantum Manufacturing, LLC on Indianwood Rd. in Orion Township. It’s now five years into a 12-year, 50-percent tax abatement.
‘We have almost 30 people employed,? he said. ‘If I close my doors tomorrow, (Ferrari’s) point would be it didn’t work. My point would be no, we employed people for five years and brought a lot of business to the community.?
Ferrari feels tax abatements create an ‘unlevel playing field? because government is choosing to subsidize certain companies and not others. ‘Basically, you give one business an advantage over another,? he said.
The treasurer also doesn’t like the idea of taking additional tax dollars that could be used to help fund the township parks and rec. dept., for example, and giving them to ‘a private developer to build a community center.?
The Legacy Center is going to be a ‘pay-to-play? facility for ‘those that can afford to go there,? Ferrari said, whereas parks and rec. amenities, such as playgrounds, are ‘available to everybody, regardless of income status.?
Ferrari believes the state’s unwillingness to exempt the SET and school district operating tax shows a lack of faith on its part.
‘You have to read between the lines there,? he said. ‘If the state was in favor of these commercial (rehabilitation) tax abatements, they’d allowed their taxes to be abated like they do with industrial (property).
‘What they’re saying is if the locals want to give up their money, go ahead and do it, but (they are) not going to do that. Evidently, they must not have full buy-in like they do with industrial (abatements) . . . At least with industrial (abatements), everybody shares in the burden.?
Ferrari also opposes tax abatements because they’re not something that’s available to residential property owners.
‘We’ve got people building new houses all the time,? he said. ‘I’m sure they would love to say, ‘I’m not going to come on the (tax) roll for another seven years. Keep me at vacant land (value) for seven years, then I’ll come on at full value.??
Despite his opposition to abatements, Ferrari said he’s not opposed to the Legacy Center project and wishes Mills nothing but success.
‘I hope he does great,? he said.
But whether Mills succeeds or fails, Ferrari believes it should be on his own dime.
‘I just don’t think our taxpayers should pay for it,? he said. ‘If he takes the risk (and) he makes a lot of money, fantastic. That’s what private business is for. You go out there, you stick your neck out, you do well, you reap all the rewards.?
On the other end of the spectrum is township Trustee Jack Curtis, who chairs the Economic Development Subcommittee. He favors giving Mills an abatement.
‘I would vote for it,? Curtis said.
Curtis pointed out the abatement would not affect the amount of tax money the township is currently collecting.
‘We’re not losing the revenue from the original building,? he said. ‘We’re just not garnering tax revenue from the improvements.?
He believes the benefits the Legacy Center is going to offer the community far outweigh the township not being able to collect the additional tax dollars for a while.
In his mind, the benefits are having a building that’s been ‘an eyesore? for many years transformed into a ‘good-looking, safe, modern facility? that’s going to provide ‘quality services? for the public and local employment opportunities for everyone, particularly young people attending high school and college.
‘There aren’t a lot of jobs for young people in this community,? Curtis said.
According to Mills, it’s estimated the Legacy Center will generate 300 to 400 jobs.
But Ferrari said ‘they’re not the type of jobs that you give abatements for.? In his mind, abatements are for high-paying jobs with benefits in fields like research-and-development.
‘At least then you can understand it,? he said. ‘These aren’t going to be those type of jobs.?
Ferrari also noted some of the jobs at the Legacy Center will be ‘transfer jobs,? not new jobs. He was referring to existing township businesses, like Building Your Temple, that are moving into the center.
Curtis pointed out the township government, with its reserves of approximately $2.2 million, is by no means in dire financial straits, so it’s not like this extra tax revenue is desperately needed.
‘Let’s not get greedy here,? he said. ‘If you’ve got a ham under one arm, don’t cry because you don’t have a loaf of bread to make a sandwich. You’re still getting tax revenue from the building, just not the improvements.?
‘You can raise taxes on everybody and they’ll leave,? Curtis added. ‘But if you offer an opportunity to exempt them for improvements, all you’re doing is making the community better and creating jobs. Don’t worry about what you could have had, worry about what you’ve got.?
Township Supervisor Bill Dunn said he’s willing to keep an open mind about granting an abatement, but right off the bat, he isn’t a fan of the proposed 10-year time frame or exempting 100 percent of township taxes on the new investment.
‘That’s too long and too much money,? he said. ‘It might be all right if it was a 50 percent (abatement), but not 100 percent. You can’t change (the percentage under state law), but you’ve got some wiggle room on the number of years. Ten is the maximum. It doesn’t have to be 10.?
Mills told this reporter he is willing to negotiate the number of years. ‘Life’s a constant negotiation,? he wrote in a text message.
Some township officials that would be impacted by the proposed abatement have not formulated an opinion because they hadn’t heard about it until this reporter contacted them.
‘I wouldn’t want to give an opinion either way because I just don’t know enough about the whole scope of it,? said Bryan Cloutier, director of the Oxford Public Library, which collects 1.3872 mills annually for operations.
‘Generally speaking, I’m not a real large advocate for tax abatements, but that doesn’t mean if they make a valid argument that I wouldn’t support them somehow,? he added. ‘I’d be curious to learn more now that I know (about Legacy’s request).?
Oxford Fire Chief Pete Scholz, whose department collects 3.4727 mills annually for operations, also wants more information before passing judgment.
‘On the one hand, as long as I’m getting what I’ve got right now (in tax revenue), as long as we’re not losing anything, it makes it palatable,? he said.
But Scholz wants to know more about how the building’s change in use is going to impact the fire department’s overall call volume, particularly when it comes to medical runs.
If Mills? vision is realized, there’s going to be a dramatically higher number of people in that building at any given time, using it for different purposes, mostly related to exercise and sports, which have a greater risk of injury associated with them.
‘There’s a possibility of us running up there more,? he said. ‘I would want to make sure that it’s not going to be overloading us (without) getting anything for it.?
Scholz noted Mills? improvements to the building are making life a little easier for the fire department. Prior to becoming the Legacy Center, he said the old Sea Ray plant’s ‘deplorable? condition caused a ‘huge number of false alarms in the last five years.? Firefighters were forced to respond anywhere from once a week to two or three times in a single day, according to Scholz.
‘The alarm system was in such bad shape,? the chief said. ‘It had deteriorated to that point, like the rest of the building.?