MARQUETTE - The Marquette City Commission on Monday approved a pair of special property designations aimed at facilitating development to the west of the city's downtown area.
The commission first voted unanimously to approve plans for a brownfield development at 857 W. Washington St. The $31-million project, undertaken by Marquette's Veridea Group, will create a 125,000-square-foot commercial, retail and residential space.
The body then approved the creation of a commercial rehabilitation district for the properties at 500 and 502 W. Washington St. That district will provide the Marquette Food Co-op, which is planning to relocate to the recently purchased buildings, a five-year tax abatement on new investment.
The two buildings at 500 and 502 W. Washington St., seen here, will be used for the relocation of the Marquette Food Co-op. On Monday, the city commission agreed to designate the area as a commercial rehabilitation district, providing the co-op with a five-year tax abatement. (Journal photo by Kyle Whitney)
Under the designation, the taxable values of the properties are frozen at the previous year's level and new investment is exempted from local taxes. The school operating tax and the state education tax are still levied on new investment and land and personal property can't be abated.
City estimates indicate that the creation of a five-year commercial rehabilitation district will result in a total city operating millage tax abatement of $115,451.
Marquette Food Co-op General Manager Matt Gougeon told the commission the new designation would be important not only for the tax break involved, but because of the doors it could open for the funding of the co-op expansion.
"The Marquette Food Co-op really sees this as a public-private partnership in the further development of the west end of downtown," he said. "And this certificate of exemption ... is a lynchpin to further funding from the state of Michigan for this project."
Co-op officials are hoping to secure up to $1.2 million in state funding, including up to $1 million from the Michigan Economic Development Corporation's Community Revitalization Program. Gougeon said a requirement for the funding is a show of community investment and commitment. The establishment of the district must also be approved by the county and by the state tax commission before it becomes official.
Commissioner Jason Schneider made a motion to approve a three-year abatement, which was later amended to a five-year term. Commissioner David Saint-Onge cast the lone dissenting vote.
"I was ready to support three years. That was reasonable, a reasonable investment for us going forward," he said. "We as a community are not at liberty to give away (money). We give away a lot and we have to start paying the piper."
Gougeon said he expected the co-op to contribute to an economic boost on the west end of Washington Street. He said the business currently draws about 600 customers per day. After expansion, he estimated that number will climb to 1,000.
He also said that in its first year, the relocated co-op - with 9,000 square feet of retail space - would do about $7 million in sales. Within a few years, he said, it should be doing $10 million to $12 million annually.
The city commission's approval of a brownfield plan for the former Sara Lee bakery at 857 W. Washington St. may also assist in the economic revitalization of the west end of Washington.
As the building has been deemed "functionally obsolete" by the city assessor, the property is eligible for brownfield status.
The Brownfield Redevelopment Financing Act allows for the capture of incremental local and school property taxes from redeveloped properties to pay for environmental costs, infrastructure improvements, demolition and site preparation costs associated with those properties.
A plan would include the creation of a Tax Increment Financing district, which allows a municipality to freeze taxes at pre-development levels for a set period of time and then use the revenues from increased taxable value. Some of the capture would be directed to a city fund that can be used on brownfield sites throughout Marquette.
Veridea estimates it will spend more than $10 million on brownfield-eligible activities, including environmental remediation, lead and asbestos abatement, demolition, site preparation and infrastructure work, which would include two levels of underground parking.
Under the plan, the tax capture can run through 2036 and would net $17.6 million.
In the brownfield plan, Veridea estimates property taxes will total more than $1.3 million annually, after brownfield obligations are retired.
Marquette resident and business owner Daniel Torres voiced his support for both projects during the meeting.
"I like anything that makes the city a little bit more competitive with what's going on out on the highway," said Torres, who also sits on the city's Brownfield Redevelopment Authority.
Lois Ellis from the Lake Superior Community Partnership also supported both projects.
"These are wonderful opportunities and great enhancements for the city and I do believe that they can both be catalysts for further development in the city," she said.
Marquette Mayor John Kivela has similar hopes for the developments, which he said should send a message.
"It's an investment in our community and communities need to do that from time to time," Kivela said following the discussion of the Veridea project. "I think it sends a message to other people looking to develop that we're open for business in Marquette. We'll welcome your projects. We'll work with you and we'll do what we can to put good projects in this city."
Kyle Whitney can be reached at 906-228-2500, ext. 250.