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Tax breaks lure development


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September 27, 2012
CITY OF GROSSE POINTE — Tax credits are being dangling in front of Village property owners to reward development.

Credits lasting one to 10 years are key elements behind the City of Grosse Pointe's downtown Village zone's recent designation as a rehabilitation district.


"The sole and only function of a rehabilitation district is to provide development incentive for adding to the tax base," said Peter Dame, city manager. "It can't add to your taxes. The only thing it can do is grant the (city) council the ability and option to grant a property owner a tax freeze of up to 10 years for value of any new development to their property."

The designation applies to the entire Village, as defined by the Downtown Development Authority. Also included is the transition district, encompassing the defunct Sunrise properties on St. Clair south of Kercheval to St. Paul.

The Sunrise site has sat unused since the housing bubble burst and Sunrise Assisted Living canceled plans to build a multi-story condominium.

"This is intended to be an incentive to promote redevelopment of the Village," Dame said.

A united city council approved the designation Monday, Sept. 17.

New tax credits follow a similar, former county program, according to Mayor Dale Scrace.

"That was a tool we had that we don't have," he said.

"That was a much greater tax incentive," Dame said. "Because that recently ended, this is the only other tax abatement program we're aware of for development."

As described by the Commercial Rehabilitation Act, the council's action allows tax freezes on existing property. Newly added value is exempt from certain property taxes.

"School taxes are not exempt," said Councilman John Stempfle.

Neither are taxes on the actual land.

Eligible projects can be commercial, multi-family or a combination of both.

Obtaining the tax incentive requires a two-step process.

"First, properties must be designated as eligible after a public hearing," Dame said. "Then, the property owner may apply for exemption. The city may use its discretion in deciding whether to grant the exemption and under what condition."


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