Lansing City Council discusses institution of a tax abatement ordinance

by Julie Berg-Raymond

The Lansing City Council held a special meeting Monday, September 11 to discuss the institution of a tax abatement ordinance in Lansing. Main Street Lansing Executive Director Andrew Boddicker offered a presentation to the council that included general information about the meaning and functions of tax abatements, explained how instituting a tax abatement ordinance would benefit Lansing, and described a series of potential abatement levels the City could consider in the writing of the ordinance.

TAX ABATEMENT: WHAT IS IT, AND WHAT DOES IT DO?
A tax abatement is a reduction in the taxes due on a property for a specified amount of time. According to information offered in Boddicker’s presentation, “tax abatement is a tool that is used regularly by municipalities across the country to help achieve their objectives related to housing … This tool can be used to help us grow our housing stock, our population, and in the end, increase our tax revenue.”

The presentation included several examples of what a tax abatement ordinance can do, does, and does not do - among them: “It does not reduce the City’s tax revenue; it does stay with the property if it sells; it may incentivize a property owner to start work on developing or improving their property; it does not apply to the school tax levy; it does not apply to commercially zoned properties.”

Further, the presentation noted that a tax abatement ordinance “can be changed over time if the council deems it appropriate,” and that “it can be amended to include other tools like commercial tax abatement.” The presentation also noted that a tax abatement ordinance “shows City vestment for certain grants, workforce tax credits, and other State funding.”

OBJECTIVES
The presentation listed several objectives of the institution of a tax abatement ordinance in Lansing: 1) to “increase population 10% by 2030; 2) to “increase long-term, multi-occupancy units in Lansing and therefore, workforce housing”; 3) to “increase single-family housing stock in Lansing”; and 4) to “incentivize current property owners to invest in their property to increase curb appeal and quality of structure.”

ADDED RESPONSIBILITIES FOR THE CITY
Describing what would be added responsibilities to the City if a tax abatement ordinance were passed, Boddicker noted that the council would have to vote on each abatement; when approved, the city clerk would have to file the application with the county assessor. The county assessor would then apply the abatement to the property.

POTENTIAL ABATEMENT LEVELS
Emphasizing that these proposed levels are drafts, and that details are therefore open to discussion and alteration, Boddicker described a series of abatement levels the City could set in its ordinance.

Existing Residential: “The exterior rehabilitation, enhancement of curb appeal, historical preservation, facade improvements, electrical and safety infrastructure, energy saving measures by existing long-term residential properties, or creation of additional livable units within the property, are eligible for an exemption from taxation on 100% of value of the first $75,000 added by improvements for a period of five years.”

New Residential: “The construction of new primary, long-term single family-zoned residential housing by a qualified developer/property owner. All qualified real estate assessed as residential property is eligible to receive an exemption from taxation on 100% of actual value for a period of eight years if the property is historic in nature or deemed as blighted or a brownfield. (“A brownfield is a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant,” according to the website for the United States Environmental Protection Agency at epa.gov.) Greenfield (land that has yet to be developed) single-family zones may qualify for an exemption on taxation for the first $75,000 of value added for a period of up to five years.”

Multi-Residential: “The construction of new, long-term residential complexes, (qualifying as three or more units on a single-zoned lot) or new use of existing structures, such as historic buildings, churches, etc., by a qualified developer/property owner. All qualified real estate assessed as residential property is eligible to receive an exemption from taxation on 100% of actual value for up to eight years.”

Multi-Residential/Multi-Use: “The construction of new multi-residential, long-term living facilities and/or the rehabilitation of and additions to existing multi-residential facilities if such multi-residential property consists of at least 50 percent of the space used for residential purposes. All qualified real estate assessed as multi-residential property is eligible to receive an exemption from taxation on 100% of actual value of the first $75,000 added by the improvements for a period of five years.”

Concluding the presentation, Boddicker said, “this is the City doing the hard work to grow this community,” and noted that “it might take five to 10 years to see the impact.”