• Title: 2016 not 2017 Baseline Taxable Value Used in Lot 1 Brownfield Plan
  • Author: Eliot Singer
  • Date: 12/30/2017
  • Additional Categories: LOT #1, Recent Essays, Eliot Singer

2016 not 2017 Baseline Taxable Value Used in Lot 1 Brownfield Plan

Brownfield (and DDA) plans are required to set a baseline (a.k.a., initial) taxable value above which tax increment (increase in taxable value) can be diverted to subsidize a project or development authority. Property taxes continue to go to the taxing jurisdictions based on that initial taxable value, one of the complaints by critics of tax diversion being that initial value is not even adjusted for inflation.

Ballein Management (though a quit claim deed) deeded three private parcels on Grand River for the Center City/Lot 1 project to HB BM East Lansing on October 31, valued at $9 million. (HB BM is the limited liability company for the construction phase of the project.) This probably is an equity investment in the form of the properties. The $9 million market value is in line with what Ballein Management paid to acquire the two parcels it did not already own in 2016.

The total acreage for the three parcels is 0.676 acres. Lot 1, which is still listed under City of East Lansing Building Authority by both city assessment record and Ingham County Register of Deeds, despite the belated quit claim deed from the Building Authority to the City to allow for the city to lease it to HB BM, is 1.349 acres, which would be ~$18 million in market value, using the same ratio.

Lot 1 is being leased for $200,000 per yer, plus inflation adjustment; originally, the lease was supposed to be for $75,000; even after Council upped it to $200,000, the drafted agreement inserted $150,000, a detail that was caught by a careful citizen.

The taxable value for 2017 for the three parcels is $1,688,343. (This means assessed market value is $3,376,686, about 37.5% sale value.) The brownfield plan uses initial taxable value of $1,543,104, the 2016 figure. Using the 2017 taxable value would average about $12,000 per year more in taxes going to taxing jurisdictions and, over 30 years, would reduce tax increment revenue by around $360,000.

Even if the brownfield plan was drafted in 2016, by time it was brought to BRA and Council for approval, the 2017 taxable values were available. The brownfield spreadsheet was recalculated in 2017 after investigative reporting by ELi uncovered a much lower taxable value assigned by the city assessor than the one in the original brownfield plan, but the initial taxable value was left unchanged.

Eliot Singer