By Meg Peters
Review Co-Editor
For the second consecutive meeting village council members postponed approving criteria for a tax abatement program that would offer current and future commercial developments in Lake Orion tax exemptions in return for significant investments downtown.
The program, governed under Public Act 255, was partially initiated by the purchase agreement between Lockharts BBQ and the village when owner Drew Ciora purchased 37 E. Flint St.’Lockharts future home and the village’s past home’for $525,000.
Under the purchase agreement the village was required to establish a commercial redevelopment district downtown and criteria for commercial businesses to earn a tax abatement certificate, and to consider one for Lockharts.
While the council fulfilled half the deed at the Feb. 23 council meeting, establishing Lockharts as the first district eligible for the certificate, some council members posed concerns for criteria, postponing a decision for further review. The same decision was made at the March 9 meeting for similar reasons, however, council felt more time was necessary to make the right decision for Lake Orion.
‘The only thing I ask is that council please email me with your comments and questions so I can prepare, and hopefully by next meeting we can wrap it up,? Village Manager Darwin McClary said.
McClary and Downtown Development Authority Director Suzanne Perrault were instrumental in researching and designing the criteria, with the intent to attract destination businesses to the downtown area.
‘It’s a great incentive for a limited amount of time,? Perrault said. ‘It would make us just as competitive as other communities in our area.?
The program is not for the small change pocket. Of the six levels of criteria, the first, second and third conditions garnered the most discussion at the’Monday’night meeting: ‘increase in local tax base?, ‘jobs retained? and ‘jobs created?.
If nothing is amended
To be eligible, a commercial development must increase the taxable value of its property by a minimum of $500,000 to earn one year of tax exemption. Up to 12 years can be attained by local businesses. ?
Tax incentives depend on whether the development is restorative, i.e. fixing up a historical building, or a replacement/new construction development, i.e. knocking down a building and rebuilding.
For restorative projects, a commercial property can acquire a 100 percent tax exemption from all local taxes, including education, township, county and village millages. This does not include exemption from taxes for the base value of the property.
‘If a commercial development is for new construction or a replacement, developments can attain a 50 percent tax abatement, where all taxing units would receive 50 percent of the associated millages, except for the schools, which would receive the full amount of their millages.
Apart from making a $500,000 investment, a commercial project must also create and or retain 10 full time jobs within the district.
To be eligible for consideration, a development must meet these criteria, however, they can earn some bonus points with the other four criteria.
By creating at least five housing units within the district as part of the commercial project, property can earn one year of tax exemption and up to three years.
The property being considered can also earn one year of tax exemption and up to three for the following uses and facilities: if it creates additional public parking in the district; if it creates outdoor dining options, if it establishes a new ‘destination? business, if it rehabilitates an ‘obsolete? building as defined by Public Act 255, if the new building supports the traditional historic Midwestern downtown character and architecture of the district, if new public art results, and if the projects imbibes walkability in the district, among other downtown features.
The final criteria states that in no case can a property gain more years of tax exemption than required by state law.
The issues
‘As an investor my gut reaction is this,? Council member Christian Mills said, who owns several properties downtown. ‘The reality is the majority of the revenue is coming from existing buildings, and you’re trying to incentivize the five percent available to the community.?
Mills, backed by council woman Shauna Brown, also felt a $500,000 taxable value increase was too steep, and would eradicate the majority of downtown businesses? eligibility to apply.
‘Just taking a walk downtown recently and realizing the types of businesses we have and properties available, I don’t think they would support ten full time employees. That’s Lockharts, that’s Sagebrush, that’s about it. It’s very limiting,? she said.
McClary said that was the point.
‘The goal of the program wasn’t meant to have 100 tax abatements downtown, it was meant to attract larger scale investment and put Lake Orion on the map, to make it attractive for people who want to come dine, shop and recreate for the growth of everyone else in the downtown area. If you open it up to too many people it would be defeating the purpose.?
Council members were requested to send their comments and suggestions by’Friday’in order to redevelop criteria as necessary to be approved at the next council meeting.