Traverse City Downtown Development Authority (DDA) board members will discuss the possibility Friday of creating neighborhood enterprise zones (NEZs) in downtown Traverse City. An NEZ is a state tool that allows communities to create a defined zone where property tax reductions are available in exchange for developers constructing or rehabilitating residential housing. DDA CEO Jean Derenzy says NEZs could provide opportunities to build more rental apartments downtown targeted to the “missing middle” salary range of local workers.
NEZs first came up for discussion last year, when real estate firm Great Lakes Capital expressed interest in establishing such a zone for a 91-unit apartment complex planned for 309 West Front Street along the Boardman River. The topic was planned to go to city commissioners for input, but was pulled to allow staff more time to prepare and ultimately tabled. Great Lakes Capital moved on with other funding options, but is now interested in exploring an NEZ again for a possible development at 124 West Front Street (the vacant lot next to J&S Hamburg, pictured).
NEZs are established for a period of 6 to 15 years and can be designated in more than one spot in the city. They must contain at least 10 platted parcels of land, which need to be compact and contiguous. Under state NEZ rules, each individual property owner within the zone must apply for the tax exemption if interested. It is not automatically granted to owners and only applies to the residential housing portion of developments, not the land or any commercial components. A typical NEZ might see taxes reduced by 53 percent in years one through 12 and then by 11 percent in year 13, seven percent in year 14, and four percent in year 15, with the exemption eliminated thereafter.
In last year’s discussion of an NEZ at 309 West Front Street, Great Lakes Capital was seeking up to a 15-year tax exemption in exchange for building year-round rental housing, with 12 of the 91 apartments – or 14 percent – restricted to 80 percent of the area median income (AMI) level. That was a $45,400 income level for a single-person household in 2021, or a maximum rent of $1,135 per month. Derenzy says NEZs provide an “opportunity to establish a public-private partnership that would secure rental apartments with a mixed-income level from 60 percent to 120 percent of the AMI.” The DDA previously looked at utilizing tax increment financing (TIF) to build mixed-income rental apartments at 80-120 percent AMI. “The NEZ program is another approach to achieve the same goal,” according to Derenzy.
“Within the DDA district, an agreement would be entered into between the DDA, city and developer to ensure that the program is followed and agreements relating to target housing identified are met,” Derenzy wrote in a memo to board members. “In addition, there are other elements within the agreement that could be required, from meeting enhanced mobility goals to green infrastructure goals.” Derenzy tells The Ticker she wants DDA board feedback this week – followed by city commission feedback in August – on the concept of using NEZs, the “pros and cons” of the program, and the locations where such zones might be used downtown to encourage rental housing, such as on West Front Street, Union Street, and State Street. “It’s a tool we’ve not really utilized in the DDA district, and is something we would like to consider,” she says. “I see potential for areas where it could be used to bring in more of the missing middle apartments.”
So on Friday’s meeting agenda…
> DDA board members will consider approving a new parking agreement with Commongrounds, the mixed-use development under construction at the intersection of Eighth Street and Boardman Avenue. The agreement will establish 12-16 public metered parking spaces at the development, which will be enforced by DDA parking staff. The DDA will invest approximately $5,500 from its parking fund to install the smart meters, but is expected to recoup those costs in a year through parking revenues. Revenues will be split 70/30 between Commongrounds and the parking fund, with all violation fees going to the parking fund. “Entering into a lease for shared parking that will service customers of the building aligns with our objective to establish partnerships with private property owners to increase utilization through public parking,” DDA Transportation Mobility Director Nicole VanNess wrote in a memo to board members. Commongrounds is expected to open this case.
> DDA board members will consider approving contracts to improve wayfinding/ signage and trash services downtown. Approximately $37,000 will be split among two companies, Valley City Sign and Corbin Design, to refurbish and replace six large wayfinding signs downtown, as well as to update the pedestrian kiosk map and merchant directory to reflect new businesses that have opened. Twelve new specialized signs will also be installed to increase awareness of businesses on Park, Cass, and Union streets.
DDA board members will also consider splitting costs with the City of Traverse City to cover a $95,000 contract with GFL for trash collection and disposal downtown, with the DDA covering $68,000. Historically, trash collection at downtown’s 108 bins has been handled by city park staff, but continued increases in visitor traffic has overburdened staff, who are having to go through at least once a day seven days a week – and sometimes twice daily – from May through October to keep up with the trash, according to Derenzy. The one-year contract with GFL is an “interim” solution while awaiting a report from consulting group Progressive Urban Management Associates, which is evaluating the DDA’s “ability to deliver on current maintenance and operational services downtown, including street sweeping, snow removal, patching of streets, clean and maintaining storm water infrastructure, mowing, weeding, police enforcement, etc.,” Derenzy wrote in a memo.
> Dave Mengebier, president and CEO of the Grand Traverse Regional Community Foundation, will present an overview of the Community Development Coalition, a group of nearly 30 local organizations that have banded together to foster (and measure) progress on issues in three main areas: economic, social, and environmental. DDA staff are among the participants in the project. “Through the leadership of the Community Development Coalition, a strategic, unified approach has been developed for requesting and asking for ARPA (American Rescue Plan Act) federal dollars,” according to Derenzy. “Dave will provide an overview of where this process is at and approaches being developed.”
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