TRAVERSE CITY — Tax breaks have long helped developers build affordable housing in Traverse City and elsewhere, and now the city’s Downtown Development Authority will consider a different kind again.
The DDA board will discuss whether neighborhood business zones are a tool to use for developers to build what authority CEO Jean Derenzy could be a variety of types of accommodation. It also comes with an assurance that rents remain affordable for the duration of the tax relief, which can extend up to 15 years.
These arrangements allow local governments to enter into tax agreements with housing developers that reduce the tax bills of new or renovated projects to half of an average rate the state determines each year, according to Michigan’s Treasury Department. This rate increases over the last three years of the agreement.
Not only do these agreements require local government approval, but the State Tax Commission must also sign them, according to the state Treasury Department.
Derenzy said the tax relief would only apply if the third party could provide oversight to ensure that rents remained genuinely affordable, as the developer and the city would agree to enter into such an agreement.
“It’s a tool the state has that we haven’t used in the DDA district,” she said, adding that the city has used it once before. “So is there an opportunity to review it and see if it’s time to try to achieve the goals of the city and the DDA with this tool?”
This is not the first time that the DDA has discussed such an idea. They talked about neighborhood economic zones in the spring of 2021 as a possibility for the Great Lakes Capital project at 309 West Front Street, as previously reported.
The developer contracted an apartment and retail building with underground parking between the building housing the 4Front Credit Union administrative center and the Boardman/Ottaway River – construction crews closed a West Front Street lane to make way for a crane on Wednesday.
The possibility of encouraging affordable housing, particularly on expensive or contaminated land, has piqued the curiosity of some city commissioners and DDA board members. But it also drew some resistance from both bodies from some members who viewed the program as a poor fit for the project or as a gift to its developers.
Derenzy said the discussion stems from Great Lakes Capital’s interest in a neighborhood economic zone, this time for an area that would include 124 West Front Street.
This is the vacant lot dug between the Record-Eagle and the Pine Street Bridge along the Boardman/Ottaway River.
Kevin Endres, plot listing agent and owner of Three West, said the company re-contracted the plot after letting a precedent expire.
Messages left with Great Lakes Capital were not returned Wednesday.
The company previously envisioned a mixed-use building with commercial space on the first floor and housing on the upper levels, as shown.
Derenzy said she wanted to look at neighborhood enterprise zones more holistically rather than focus on a single project, and board chairman Gabe Schneider agreed.
“I would say any specific project will have to be considered on its own merits, but as a tool I think we should be looking at neighborhood enterprise zones for all districts in our community to see if it’s the right one. solution, if it’s the right tool,” he said.
Schneider said he hopes to keep politics out of the discussion, or at least dominate it. He acknowledged that any issue involving tax money could lead to politics “sneaking through no matter what”, but he still sees the discussion of neighborhood enterprise zones as a great opportunity.
This is a particularly good time in light of the DDA’s ongoing strategic planning which examines not only how the authority is organized, but also how it is funded and what its priorities should be over the coming decades, said Schneider.
“Our whole community is doing great things, and we just have to make sure that we don’t close the doors on opportunities or tools because we’re afraid of potential political ramifications,” he said.