Saginaw City Council on Monday, Aug. 25, extended tax incentives to developers who plan to renovate commercial properties in Saginaw’s downtown and Old Town districts.
City Council voted Aug. 11 to approve Obsolete Property Rehabilitation Act districts for properties along Michigan and Court streets in Old Town, and on North Washington in downtown Saginaw. The second step in the process, approval of the OPRA certificates themselves, was taken by City Council Monday.
One of the projects seeks to renovate a trio of historic buildings on the northeast corner of the Court/North Michigan intersection in Old Town Saginaw. The other will involve the development of the Johnson Building at 110 and 112 N. Washington downtown, the former location of the French Quarters restaurant and the future home of Rita’s Southern Soul Cafe.
Rita Johnson spoke about the latter project Monday night, telling city leaders that her restaurant will create about 30 new jobs and “provide a needed service in downtown Saginaw.”
“Rita’s Southern Soul Cafe will be opening soon,” Johnson said.
Rita’s Southern Soul Cafe OPRA application
Ann Arbor Builders Owner Alex de Parry, one of the investors in the Old Town project, talked about the former project during City Council’s Aug. 11 meeting.
Old Town project OPRA applications
The OPRA certificate essentially freezes the value of a property at its current level and keeps it there for up to a 12-year period. That means, for that time period, the owners will not pay the higher taxes that result as the property value increases after renovations.
During the Aug. 11 meeting, Tom Miller Jr. from Saginaw Future explained to city leaders why the tax incentive both encourages development in the community and is good for Saginaw’s bottom line.
“Obsolete Property Rehabilitation Act districts, or OPRAs, provide a tax incentive to encourage the redevelopment of buildings that are contaminated, blighted or functionally obsolete,” Miller said. “The goal is to rehabilitate older buildings into viable commercial and mixed-use projects.”
The added benefit to Saginaw is that, with the city’s hard dollar cap on property tax receipts, placing properties onto a separate tax roll like the one created with an OPRA district actually results in more dollars in the city’s coffers.
All members present at Monday night’s meeting voted in favor of granting the OPRA districts. No members of the public at either meeting spoke out against the proposed tax incentives.
“It’s a no-brainer,” Councilman Larry Coulouris said. “If we didn’t do an OPRA, what would happen? It would sit there, and it would rot. This way, we would actually get some taxes off it.”
Some members of City Council questioned the OPRA process, calling for more transparency from the businesses and property owners seeking tax abatements and asking how the city could encourage developers to use local laborers and hire local employees.
Councilman Michael Balls said he would like the city to look into ways it could ensure new and expanding business interests provide as much benefit to Saginaw as possible.
“It bothers me to see people come here, work here, get paid here and then take the money and run back out of town,” Balls said.
Councilman Demond Tibbs said he would just like to hear more from the businesses and developers.
“I would like to know more about these businesses,” Tibbs said. “Just to give us an opportunity to know these companies that are becoming corporate citizens in our community.”
Saginaw City Council on Monday also voted in favor of the creation of an Industrial Development District at 1300 Leon Scott Street in Saginaw.
The property is owned by K-Property Leasing and houses Alfe Heat Treating’s Saginaw facility. Mark Berkey, an industrial engineer for Alfe, explained to City Council what the company does.
“We are taking automobile parts, and we are hardening them,” Berkey said.
The company plans to build a new heat furnace inside the facility, at a cost of nearly $4.6 million, that will add six employees to the staff of 11.
Alfe Heat Treating IDD initial request
Miller explained that approval of an Industrial Development District certificate is also a two-step process, with the first step approval of the district and the second approval of the certificate itself. If City Council eventually approves an Industrial Development District certificate for the property, he said, it would mean 50 percent abatement of personal property taxes on that purchase for up to 12 years.
Since voter approval of Michigan’s Proposal 1 in August means the elimination of personal property tax in 2016, Miller said the abatement would likely only apply to abatement of taxes for the company for the 2015 tax year.
He also explained that because of the city’s tax cap approval of an Industrial Development District, like an OPRA, places non-abated taxes on a separate tax roll and results in more money for the city than would be otherwise collected.