At their March 20, 2023 meeting, the City Commission established an ad hoc committee to explore the framework regarding the potential establishment of Neighborhood Enterprise Zones and to make a recommendation to the City Commission.
The Neighborhood Enterprise Zone (NEZ) Act was established in 1992 and provides tax exemptions for the development and rehabilitation of residential housing located within eligible distressed communities, of which the City of Traverse City is identified as a qualified local unit of government.
A community will reduce the taxes on property for up to 15 years in designated areas to promote the revitalization of those neighborhoods.
- New Housing Development: The tax rate is half of the statewide average.
- Rehabilitated Housing Projects: The assessment is frozen at pre-improvement levels. This tax rate is established annually by the State of Michigan.
By resolution, the City Commission may designate one or more NEZs within the City. Eligible locations include the DDA District, Principal Shopping Districts, and areas zoned and primarily used for business. At a minimum, the land must be platted parcels, compact, and contiguous. The minimum number of parcels and maximum percent of acreage vary depending on the type of designation. The reduction of taxes on the property may be for 6-15 years in the designated areas.
The ad hoc committee will explore if NEZs could be used as a tool to incentivize affordable housing, similar to PILOT incentives, and Renaissance Zones that have been used in the City.
The City Commission’s 2022 adopted Goals and Objectives identified housing and homelessness as a strategic priority with a goal to increase opportunities for more diverse housing through public and private options.
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