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Commercial Rehabilitation and Political Half Truths

Regular Meeting of September 9, Agenda Item #8 (under Unfinished Business)
APPLICATION FOR COMMERCIAL REHABILITATION EXEMPTION CERTIFICATE: Paul F. Bohn, Fausone Bohn LLP Attorneys at Law, on behalf of Schoolcraft Lodge, Inc., re: for the expansion and rehabilitation of the property located at 31501 Schoolcraft Road, Livonia, MI 48150, in the Northeast ¼ of Section 27. (Commercial Rehabilitation District #4) Public Hearing held on August 21, 2019
A Commercial Rehabilitation Exemption Certificate is a tax incentive provided for under Michigan state law, and may be granted by any local government for the rehabilitation of commercial property. This incentive freezes the taxable value of the property for which the Certificate is approved for a period of 1 – 10 years as determined by City Council. The Certificates are approved by local government but are subject to final review and approval by the Michigan State Tax Commission.
This type of tax incentive is designed to help a developer who seeks to redevelop property that requires significant investment before new construction can begin. It is an important incentive for Livonia because most of the property available in our city for development was previously developed for another purpose and contains aging and functionally obsolete structures, this type of property is known as a “brownfield”. Many of our neighboring communities (such as Northville Township, Plymouth Township, Novi) still have a lot of “greenfield” space (i.e., property that has never been developed). Generally it is less expensive for developers to build on “greenfield” property rather than “brownfield,” especially on sites that no longer conform with federal, state, county or city building codes, or contain outdated, vacant buildings. Commercial Rehabilitation Exemption Certificates help Livonia attract new businesses and development that may otherwise be built on a “greenfield” site in a neighboring community.
At the September 9 Regular Meeting the Livonia City Council voted to approve a Commercial Rehabilitation Tax Exemption Certificate tax incentive for a period of 7 years for the construction of a new Staybridge Suites Hotel at this site (31501 Schoolcraft Road, which is on the south side of I-96 just west of Merriman). Staybridge Suites is an upscale, all-suite hotel brand that is attractive to business travelers and families. The new, Livonia Staybridge Suites will have about 100 rooms and a value of around $6.5 million dollars upon completion.
I supported the Commercial Rehabilitation Exemption Certificate incentive because over the longer term this hotel development will provide significantly increased tax revenue for Livonia, and after reviewing a great deal of data and extensive conversations with Livonia’s Economic Development Director and the property owners, I concluded that the owners would not have moved forward with the new hotel project without the incentive.
A September 13, an on-line Livonia Observer article stated that the value of the incentive over its seven-year period to the hotel developers will be approximately $675,000. That is the estimated total value of the incentive to the developers over all seven years. However, only about $270,500 of that benefit will come from the City of Livonia. remaining $405,000 comes from other taxing jurisdictions.
Tax incentives are complicated and complex, and the candidate who doesn't understand them indicated that the City was "giving away" $675,000 that could be used to fund public safety and other necessary city expenditures. The post also incorrectly gave the impression that the City is losing money on this development – nothing could be further from the truth. Livonia currently receives only $5,800 per year in property taxes for this site and would never receive significantly more than that without redevelopment of the property.
Beginning in the first year the new hotel is built and for the next six years, the City will continue to receive approximately $5,800 in property taxes. In approving this incentive, Council made sure that no existing tax revenue would be lost. It is also important to consider that during the period of the tax incentive hotel guests will be spending a lot of money in our city: buying gas from Livonia gas stations, eating at Livonia restaurants, shopping at Livonia stores, using business services from Livonia UPS and FedEx stores – generating money for Livonia businesses and workers. And no longer will 31501 Schoolcraft be an eyesore with a closed, outdated building and a crumbling parking lot, instead there will be a beautiful new Staybridge Suites hotel that will improve the appearance and economic vitality of our I96 corridor.
Beginning in the 8th year after construction of the new hotel, the City of Livonia will begin receiving approximately $45,151 in annual property taxes for this site, representing an annual increase in the tax paid for this property of about $38,640.
Comments the other candidate’s Facebook page mentioned that this new hotel will create more problems for the Livonia Police Department. The Livonia Police Department has NO objections to or concerns with the construction of a new, upscale hotel in this location.
Finally, the public is informed about every tax incentive that comes before City Council - and this incentive was NO different. Before a Commercial Rehabilitation Exemption Certificate can be issued, a Commercial Rehabilitation District must be created by City Council. There was a Public Hearing on May 22 regarding creation of the District, and Council voted to approve the District at its June 17 Regular Meeting. As noted previously, the Public Hearing for the Certificate (the actual tax incentive) was held on August 21 and voted on at the Council’s September 9 Regular Meeting. (At the August 21 Public Hearing I offered a resolution to reduce the period of the incentive from 10 years, the period the developer requested, to a period of only 7 years based upon the actual costs of redeveloping this "brownfield" site.) Public Hearing notifications are published in the local newspaper a minimum of 7 days before the Hearing, the dates and subject matter of upcoming Public Hearings are always announced at City Council meetings and they are published on the on-line City of Livonia calendar. No one from the public showed up to express opposition to or concern with either the creation of the Commercial Rehabilitation Exemption District or the approval of the Certificate. There were many opportunities for the public to weigh in on this tax incentive and no one did. I make myself available to every citizen of Livonia through email and phone, and I have heard from many citizens regarding many agenda items over the past 4 years; I did not receive a single call or email regarding this incentive.
I know this a very long post, but tax incentives are complex and I wanted to explain how a Commercial Rehabilitation Exemption Certificate works, why it is an important incentive for Livonia to use in drawing new, high quality investment and why I supported the incentive for this specific site. I look at the details of every tax incentive that comes before Council. You elected me to scrutinize how your money (tax dollars) are spent and ensure that they are spent wisely. I approved this incentive because it was critical to redeveloping a blighted site, improving the economic vitality of an important part of our city and over the longer-term it will bring significantly more tax revenue to the city.
As always, I encourage you to get in touch with me if you have any questions about this or any other action I have taken as a member of City Council. I never forget that I work for you.


Committee to Elect Kathleen McIntyre
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