Recently, a proposed deal in which a Best Western Plus Hotel and an Ace Hardware store would be built on property purchased from the city came close to collapse. City Officials were excited about the prospect of a new hotel, but were concerned about the offer price and the buyer’s insistence that an expensive relocation of power lines be done at city expense.
Though it seemed that the buyers were getting an unusually good deal, council voted 5 to 2 to proceed with plans to sell the property to the hotel/hardware store team.
Not long before the hotel plan was first announced, Emagine Entertainment announced their intentions to build an Emagine Theater in the Old Country Market building at 1335 E Michigan Ave. Now that deal could be in trouble.
Late last week, Michael Southern of Emagine Theaters requested that the city provide a special tax abatement for the project.
“This would be a tax incentive for the Emagine Theater, essentially saying that without it there’s a strong chance that it may not go through,” City Manager Todd Campbell said.
The request caught city officials by surprise. City Treasurer and Business Ambassador Micki Jo Bennett has spent the last few days trying to get up to speed on the legislation that allows the abatement. Mayor Brian Marl said he first heard about the request on Friday.
What the theater developer is requesting is to be able to obtain a Commercial Rehabilitation Exemption Certificate. To make this possible, the city first has to create a Commercial Rehabilitation District.
The certificate would freeze the taxable value of the building (but not the property) for a period up to ten years. But it’s complicated.
“Emagine would like us to try to work with them and get this through and submitted to the state tax commission by October 31 – nothing short of moving some mountains,” Bennett said.
The rules for the abatement are found in the Commercial Rehabilitation Act of 2005. To establish a rehabilitation district, the city would need to hold a public hearing and then send a request to the county - a request that they have 28 days to approve or deny.
Although the land area of the property controlled by Emagine is 1.24 acres, the law requires such districts to be a minimum of three acres. The city would have to determine whether to make the entire 16 acres of Saline Commons Shopping Center a Commercial Rehabilitation District or to cut out just a portion for that purpose.
The value of the building, the price it would be held at, is $1,118,000, about 40 percent of the value of the whole property. Taxes could still rise on the amount not frozen.
Council member Dean Girbach was concerned about the tone of the letter, which suggested that not getting this arrangement could be a deal breaker.
“It seems a little bit overboard,” he said.
Girbach said that while riding the hay wagon around the building while attending Sunday’s Harvest Time festival at the farm museum next door, he noticed a lot of construction activity is already taking place.
In fact, work has been underway there for several weeks and the entire interior of the former grocery store has been gutted. A foreman from the building contractor, Tower Construction Company, indicated on Tuesday that he was unaware of any potential work stoppage orders.
Marl supported the proposal and wants to attempt to meet the developer’s expectations. There was no objection from the rest of council, but they were still trying to digest the whole idea.
“I think this is a good innovative approach and something I’m supportive of,” Marl said.
It remains to be seen whether it will even be possible for city leaders and staff to accommodate the request.