Assessment increases approved for office spaces

After not increasing its assessment rates on first floor retail or second floor and above space for at least a decade, Birmingham city commissioners unanimously approved on Monday, October 29, a requested rate increase from the Birmingham Shopping District (BSD) for second floor space and above, while maintaining first floor retail space at its current rates.

“We're here to present you with a multi-year assessment,” said BSD board president Geoff Hockman. “The board has approved this.”

BSD Executive Director Ingrid Tighe explained 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” due to its marketing emphasis. 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, “But this year we're coming for a four-year assessment,” Tighe said, 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.

Tighe said the retail occupancy in the city's downtown is currently at 96 percent, and the office occupancy is at 89 percent.

“We looked at how assessments have been done for the last 25 years, and what we need for the next four years,” she explained, in terms of budget planning for marketing, events and upcoming construction. During the recent road construction project in downtown Birmingham, the Pave the Way project “was a 100 percent success,” she said, with over $1 million in Birmingham Bucks spent and redeemed and 15,300 parking valet users.

“We want to do the same for the next two construction cycles (in 2020 and 2022).”

In increasing only the second floor assessments, she said the board had two objectives. “We kept the first floor retail the same because they carried the burden during the construction. The second floor and above benefit from our marketing efforts, events, flowers and snow removal.”

She said they want to keep a healthy fund balance in place to fund construction events through the next two cycles, in the neighborhood of about $500,000.

As to a question regarding whether residential space in the downtown could be assessed, she said they looked into it, and learned that state law prohibits it.

“Could the (district) zones be enlarged?” commissioner Pierre Boutros asked.

“That would take longer term planning,” Tighe responded. “Once you expand the assessment, you have to provide the services.”

“May I suggest you study that,” he said.

Commissioner Rackeline Hoff was concerned that the increases were 70 percent in zone one and 80 percent in zone two. City manager Joe Valentine explained that there had been no increases at all in the last 10 years, and the business community had been notified. Assessments are given to building owners who typically pass them on in rent.

Commissioners approved the BSD assessments 7-0.