Tuesday, January 4, 2011

Windsor Center - history and taxation issues

The Windsor Center is the former Middle School at
Iron River, Michigan. The building was built in 1929
and served, till recently, as a school. It became
surplussed because of a long term depopulation in
this part of the country.

I recommended demolition of this building. The
City of Iron River and the Iron County Economic
Development Corporation (EDC)thought it could be
made into some sort of community center along
with commercial rental properties. I was urging
that the citizens should be asked whether or not
this building should be reused as envisioned by
the few who seemed to think it a good idea.

However the powers that be plunged headlong into
creation of a consortium was that assembled to take
over the ownership and operation of the property as
a not-for-profit operation. The City of Iron River
and adjoining townships were asked to participate.
In the end, interest and participation was limited.

On March 31, 2010, the EDC held a meeting at the
Windsor Center. An excerpt from the local newspaper
had this to say:

"The tour followed a request from the Joint Public
Building Restoration Authority for financial support
from the EDC in funding an engineering feasibility
study to determine the “needs and wants” regarding
upgrading, renovating and remodeling the building.
U.P. Engineers agreed to conduct the study, at a
cost of $6,900.

"The EDC approved accepting a grant request from the
Building Authority."



By May, Second Wave Media reported:

"Development of the former West Iron County Middle
School into a thriving business and community center
is well underway, with new businesses moving in and
an engineering study planned for remodeling this month. "




At a City of Iron River open meeting on July 23, 2010, the
following activity appears in the minutes:

"Articles of Incorporation for the Windsor Recreation Authority
-Rick Commenator: The Joint Public Building Restoration
Administrative Board, which oversees the former WIC Middle
School building is in the process of forming a Windsor Recreation
Authority. The Authority will have the ability to seek millage to
operate, maintain and/or improve the public auditorium and
recreation facility. Commenator explained it is the objective of
the Authority to give voters the opportunity to voice their
approval or disapproval concerning the preservation of the
building by proposing a ½ mill for 5 or 10 years on the
November 2010 ballot. The three other participating
communities (Stambaugh, Bates, and Iron River Townships)
have adopted the Articles of Incorporation. Commenator
noted the WIC School District will not administer the
Recreation program next year."



In our opinion, that approval should have been sought at
the beginning, not so near the end that will result from
voter disapproval!

Last fall a flier was sent out offering educational
opportunities, entertainment, and commercial space
for rent. A request for millage was on the ballot in the
November 2010 election. All millage requests were
generally voted against in that election. The electorate
is quite obviously unwilling to pay additional property
taxes in order to support Windsor Center.

The results of the election have been posted on the Iron
County web page at:



And then the EDC announces:

"Two projects which will be taken off the EDC’s agenda
are the Crystal Manor/Crystal View Apartment project
and the Windsor Center support."



Now that the voters and the EDC have abandoned ship,
and the claim as made to the voters that Windsor Center
requires taxpayer support, what's going to happen to it?
Is the City of Iron River, along with participating three
townships, on the hook for whatever happens to the
property from now on?

Now to the issue that tweaked my interest in the Windsor
Center this time around.

The building has commercial, read "profit making"
businesses as tenants. The property is owned by a not
for profit entity. The rent for commercial space is,
in our opinion, artificially low considering the included
heat and utilities.

What is the tax status of the property. With all the
available vacant commercial properties in Iron County,
it seems that unfair competition is occurring if the
costs for commercial space rental fails to include
property and personal property taxes.

It seems to us that if tax abatements are sought by
the businesses leasing space at Windsor Center, each
of them ought to have gone through the process because
it appears that the building has been put to mixed
usage including retail space which is not subject to
tax abatements.

The process required to achieve tax exemptions is
nicely stated in plain English at:



The Midland MI text follows:

"The State of Michigan’s Public Act 198 of 1974 allows
local governments to grant tax abatements that reduce
both real and personal property taxes on new plants or
investments that rehabilitate obsolete facilities and
equipment. Historically, local governments in Midland
County have been pro-business, granting abatements
for the full twelve year period without terms for large
and small manufacturers.

"The abatement will reduce the amount of real and
personal property tax paid by the company for the
project by roughly 50 percent each or in the case of a
plant rehabilitation project, the obsolete SEV is frozen
and the investment on improvements is 100 percent
exempt from property taxes.

"Eligible businesses include industrial plants that
primarily manufacture or process goods or materials
by physical or chemical change. Related facilities of
Michigan manufacturers such as offices, engineering,
research and development, warehousing or parts
distribution are also eligible for exemption. Schools
are generally not affected due to the school foundation
grant. All or half of the State’s six mills for education
may be abated by the Michigan Economic Development
Corporation (MEDC) if the project warrants and is
approved by the MEDC.

"To receive tax abatement under P.A. 198, the eligible
business must complete a two-step process. The first
step is to file a written request with the local
municipality, before starting the project to be abated,
to establish an Industrial Development District or
Plant Rehabilitation District. After a public hearing,
the legislative body of the local municipality adopts a
resolution establishing the district.

"The second step for the business is then to file a
request with the local municipality to receive an
Industrial Facility Tax (IFT) Certificate, which
entitles the facility to exemption from ad valorem
real and/or personal property taxes for a period of
1 to 12 years. After a public hearing, the legislative
body of the local municipality adopts a resolution
granting the exemption. The approved application is
then submitted to the state of Michigan Tax
Commission and the Michigan Economic
Development Corporation for review and final
approval. Applications are due to the State Tax
Commission by October 31 to be eligible for
exemption in the following year. The State Tax
Commission is ultimately responsible for final
approval and issuance of certificates."

We will send Mr. Jeff Sabotta, the City of Iron River
assessor, a copy of this article with a request that he
provide us with the current tax status of the Windsor
Center since the tax status of that property is generally
unknown at this time.

We will publish his answer here as soon as it is received.

Bill Vajk

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