BSD to increase annual assessments for office space

After not increasing its assessment rates on first floor retail or second floor and above space for at least a decade, the Birmingham Shopping District (BSD) Board of Directors voted on Thursday, October 4, to increase the rate for second floor space and above from $.196 per square foot in the central business district to $.346 per square foot, pending approval from the Birmingham City Commission.

Board member Steve Quintal was the only dissension.

The BSD was created after citizens lobbied in Lansing in 1991-1992 to get a Principal Shopping District (PSD), which was created by statute. Recently, it was rebranded as the “Birmingham Shopping District” for marketing purposes. The mission of the board is to provide leadership in marketing, advertising and promotion of the downtown retail district, ensuring the entire shopping district serves as a center for business, service, social, cultural and community activities.

For the last 10 years, the rates, set every three years, have been kept constant, at District 1 (the central business district), first floor, at just under 50 cents a square foot;, second floor and above, $.196; for District 1A, areas beyond the central business district, first floor, $.247; second floor and above, $.96.

“There was a strong retail focus when the PSD was created, but others have also benefitted, When the act was created in 1992, there was a cap of $10,000 per building,” Ingrid Tighe, executive director of the BSD, explained. “The cap has been raised every year with inflation and is currently at $15,517.”

Property owners are assessed, and usually pass on the assessments to retailers and businesses in their rents.

Tighe explained in a memo that four years ago the BSD started saving for the Old Woodward construction project, with the goal to have a fund balance of $600,000. Their goal is to save again for the two future downtown road construction projects – Maple in 2020, and S. Old Woodward in 2022.

The decision to increase the assessment on the second and high floors – in essence, on the office market – was made because it was felt retailers endured the greatest burden of the road construction project this past summer, and will continue to with the future projects, board member and retailer Richard Astrein said. “There will be two more tough phases,” he said.

Further, he said, “most of the burden on the parking system is because of office.”

At the BSD board's September meeting, a proposal to increase the assessments was met with concern by some board members, including Quintal, who represents landlord Ted Fuller and Central Park Properties on the board. At that meeting, according to minutes, he stated that it was a big increase for large companies and he was not comfortable with the assessment amount doubling.

At the October 4 meeting, Tighe proposed holding the first floor retail space assessment at the same level, and increasing the second floor and above, but 20 percent less than recommended in September, to $.346 for those in District 1, and to $.173 for those in District 1A, for a period of four years.

The board approved the request, with Quintal dissenting, and board member Judy Solomon absent.

The request will go before the Birmingham City Commission for approval on Monday, November 12.