ADDITIONAL DEVELOPMENT INCENTIVE PROGRAMS
NEIGHBORHOOD ENTERPRISE ZONES (NEZ)
OBSOLETE PROPERTY REHABILITATION ACT (PA 146)
COMMERCIAL REDEVELOPMENT ACT (PA 255)
COMMERCIAL REHABILITATION ACT (PA 210)
The NEZ Program provides a reduction of future taxes for a period of 9-15 years on the improvements made to the residential component of an eligible building following its construction or rehabilitation. Two types of NEZ projects exist – “geographic” and “project-specific”. Geographic NEZ projects are those proposed in a previously established NEZ district in Grand Rapids. Project-specific NEZ proposals must be mixed-use, located in a commercial corridor and containing at least 10 residential units. The application process takes 2-5 months depending on the type of project. NEZ applications need to be approved by both the municipality and the State Tax Commission. Further, building permits cannot be pulled on a proposed NEZ project until the NEZ certificate application is received following establishment of a NEZ district, if applicable.
The OPRA Program provides a reduction of future taxes on improvements made for a period of 10-12 years following the rehabilitation of an eligible building. Eligible OPRA projects meet the following criteria: 1. Determination of functional obsolescence by the City Assessor 2. Commercial use (mixed-use or containing more than 10 rental units) 3. Investment of at least $30 per square foot 4. Project will rehabilitate an existing building, not construct a new building The application process takes 3-4 months. OPRA applications need to be approved by both the municipality and the State Tax Commission. Further, building permits cannot be pulled on a proposed OPRA project until the OPRA District is approved by the municipality.
The Commercial Redevelopment Act, (known as the Commercial Facilities Exemption), PA 255 of 1978, provides a tax incentive for the redevelopment of commercial property for the primary purpose and use of a commercial business enterprise. The property must be located within an established Commercial Redevelopment District. Exemptions are approved for a term of 1-12 years as determined by the local unit of government. For restored facilities, the property taxes are based upon the previous year’s (prior to restoration) taxable value and 100% of the mills levied. The taxable value is frozen for the duration of the certificate. For new or replacement facilities, the property taxes are based upon the current year’s taxable value and 50% of the mills levied. Applications are filed, reviewed, approved, and certificates are issued, by the local unit of government. Certificates are also filed with the State Tax Commission.
The Commercial Redevelopment Act, Public Act 210 of 2005, encourages the rehabilitation of commercial property by abating the property taxes generated from new investment for a period up to 10 years. As defined, commercial property is a qualified facility that includes a building or group of contiguous buildings of commercial property that is 15 years or older, of which the primary purpose is the operation of a commercial business enterprise or multifamily residential use. A qualified facility may also include vacant property or other commercial property which, within the immediately preceding 15 years, was commercial property. Types of commercial business enterprises include office, engineering, research and development, warehousing, parts distribution, retail sales, and other commercial activities. Multifamily residential is housing that consists of five or more units. Commercial property does not include property that is to be used as a professional sports stadium or a casino. Land and personal property are not eligible for abatement under this act.
27 DEVELOPMENT INCENTIVES
DEVELOPMENT INCENTIVES 28
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