Tax breaks aimed at revitalizing downtown

March 31, 2008
Eric Gaertner
Chronicle Staff Writer

WHITEHALL -- A new program established by Whitehall officials may boost the ongoing downtown improvement project.

Based on a newly created Commercial Rehabilitation District, business owners in Whitehall's downtown will be able to make major improvements to their buildings on a tax-reduced basis. One of the first communities in the state to create such a district, the city is anticipating it will assist in the goals established in the Downtown Blueprint 2006 project designed to improve the downtown's viability and foot traffic.

The district, which mainly covers the central business area in Whitehall, will allow business owners to apply for tax exemptions on structural and aesthetic improvements that exceed 10 percent of the value of the building. The taxes, except for local school operating taxes and the state education tax, are exempt for the improvement only. The county is eligible to opt out of having its taxes being captured.

"I think it's going to give it a pretty good kick as far as doing investments," said City Manager Scott Huebler. "Depending on the size of the investment, they could save a lot of money. It's another tool we're trying to provide."

Ryan Briegel, one of the owners of Pitkin's Drug and Gift Shoppe, spoke in favor of the district during a public hearing last week. He was one of several business owners who attended the council meeting.

Briegel said anytime the council can reduce taxes for businesses it will help keep businesses open in the downtown and "hopefully attract some new ones as well."

Mayor Mac Hatch said the district has "created a stir" among business owners and interest seems high.

Before city officials can begin accepting applications from business owners, Muskegon County officials have 28 days to consider the establishment of the district. The county can halt its creation or allow it, but opt out of having its taxes being captured. Huebler said the city is sending a letter with the resolution asking for the county's support.

If it's approved, business owners can begin applying for the tax exemption on proposed improvements or those made within the last six months. Huebler expects that city officials will start accepting applications at the end of April. At that time, those interested can call city staff at 894-4048 or visit City Hall at 405 E. Colby.

Applications for the tax exemptions will include information concerning the dollar investment, value of property, jobs created and the time schedule for the work.

The city council will hold public hearings on the applications to consider the specifics and determine the length of the tax exemption, ranging from one to 10 years. If approved by the council, each improvement that is proposed for a tax exemption would be considered by the state tax commission.

Because it is a relatively new program in Michigan, city officials plan to work through various questions that arise. Huebler said the basic concept of the district is similar to tax abatements for industrial properties.

The 3-acre area, the minimum size needed to create a district, covers the central business district and a couple extensions to the south and east -- areas that possibly could be redeveloped. Huebler said the district lines were drawn to include the site of the former Pinhead's Gutters and Grub, 115 Lake, because of its potential. That building continues to be vacant.