Kalamazoo city leaders approve tax break zone for small housing development
Developers as they look to make four new apartments in downtown Kalamazoo.
Overlooking east Michigan Avenue sits the vacant second floor of Hiemstra Optical. High ceilings highlight the 1860s construction. Torn-up walls bear the scars of decades gone by. Developers Brian and Carmen Harris hope to turn the space into one-bedroom apartments.
'Bring more people down to the downtown area because the more people that are living and working and, you know, going to the different restaurants and shops and things, the better our downtown will be,' said Brian Harris.
He said the couple was drawn to the property because of its high ceilings, large windows and being right next to the Bates Ally, a popular outdoor destination. Harris said they quickly found out that rehabilitating the space would be costly.
'This is our first project of this size and scope and especially with it being an extremely old historic building in downtown. We thought it was going to be a lot cheaper. Once we started getting construction bids, we realized there's no way that we're going to be able to afford this. And so, you know, we started poking around at the different options that we had because we still obviously wanted this dream to become a reality,' said Harris.
The developer said they applied for a Neighborhood Enterprise Zone. According to city documents, the couple applied back in December.
'That'll help basically freeze our property taxes. Which definitely helps a lot with the ability to just pay for the project, to be frank,' said Harris.
City planning officials said the state of Michigan created NEZs to provide a tax exemption area to stir up development, either for housing or rehabilitation work like the Harris' project. The status lasts for five years.
'After the zone is created, if you apply for a permit to build a new residential unit, you can get a certificate which qualifies for a tax exemption, anywhere from nine to 15 years,' said Bobby Durkee, assistant city planner for the City of Kalamazoo.
City officials said the zone was extended to cover the buildings around Bates Ally — between east Michigan Avenue and east South Street as well as Portage Street and east Edward Street to the west and east of the block respectively. Along east Michigan Avenue are several historical buildings with some hosting shops and restaurants like Green Top Tavern. Some storefronts are vacant. In the middle are three surface parking lots. In the southwest corner of the block sits Okun Brothers Shoes. The zone was extended to fit the state's minimum requirements for an NEZ.
Durkee said while the project is for a small section of the block, a NEZ was suggested because it fits the city's policy for one. He said the policy gives both small developers and larger groups a chance to bring projects to the city. While only four new apartments are expected on the block for now, there is hope more will come.
'Between construction costs and challenges of redeveloping 150-year-old blocks of the city and you know, hoping to incentivize it. That's why this block was selected. It's in the center of town, and we're seeing some interest in it, but there's potential for more,' said Durkee.
Harris said there has been some discussion with neighboring building owners.
'There's definitely been rumors from other building owners and some of our neighbors and developers saying, you know, just 'Hey, let me know how that works out for you,'' said Harris.
The couple said they are waiting for some more approvals from the city before starting the rehabilitation process.
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