Earlier this month, the Lansing City Council approved an Obsolete Property Tax Rehabilitation Tax Abatement for Michigan State University Federal Credit Union‘s (MSUFCU) planned ninth branch, located in downtown Lansing at 104 South Washington Square.
The Obsolete Property Rehabilitation Act (OPRA, 2000 PA 146) provides tax incentives to encourage the redevelopment of older, underutilized, or obsolete buildings. The tax incentive is designed to facilitate redevelopment of older buildings which might be contaminated, blighted, or functionally obsolete. The existing taxable value on the facility in question is frozen for up to 12 years, allowing the developer to make significant improvements to a building without increasing the property taxes. The property taxes for the rehabilitated property are based on the previous year's (prior to rehabilitation) taxable value. This allows for abandoned, multi-story industrial buildings to be turned into commercial or residential rental units without increasing the property tax for up to 12 years.
While OPRA is nothing new, having been around since 2000, December 31, 2010 is the current deadline for granting these exceptions. The Senate passed HB 6203 on July 21, 2010, which will extend OPRA for another six years. The bill was presented to Governor Granholm on July 26. [Ed. This bill was signed on August 3, 2010 and effective starting August 4, 2010. The new deadline for approval is December 31, 2016.]
Opponents to the incentive suggested that banks have the finances for the renovation without the tax breaks. However, the new MSUFCU facility will bring an estimated 15 to 20 jobs downtown, which in turn bring the city income tax. Also, once the tax abatement period is up future taxes will go to the state Tax Increment Finance Authority fund for schools. MSUFCU plans to spend $3.5 million on the renovation. The three-story structure, expected to open in early 2011, will house the credit union on the first floor and various offices on the second.