Tax exemptions save small businesses thousands

Home City News Tax exemptions save small businesses thousands
Tax exemptions save small businesses thousands
An image of downtown Hillsdale. Facebook/Courtesy
An image of downtown Hillsdale.
Facebook/Courtesy

Hillsdale’s property tax exemption programs will save businesses hundreds of thousands of dollars over the next decade.

These programs are designed to encourage development of buildings that are unoccupied or wearing down.

“We want, overall, for Hillsdale to become more attractive for new businesses to relocate,” said Kimberly Thomas, Hillsdale City Assessor.

In October, the Assessing Department hosted a class to educate citizens and government employees about the qualifications, application process, and benefits of property tax exemptions. Thomas said she hoped the class would teach employees how to properly apply exemptions and the public how to fully take advantage of the opportunities that these programs offer.

Property tax exemptions, such as the Commercial Rehabilitation Act and the Obsolete Property Rehabilitation Act, have contributed to some of the major business start-ups and renovations happening in Hillsdale.

When the Hillsdale Market House changed to the Hometown Hotspot, it received property tax relief for the renovations. The business is located in a Commercial Rehabilitation Act District.

In these districts, businesses that are at least 15 years old are eligible for exemptions to renovate buildings. The Hometown Hotspot will be exempt from $40,000 per year in property taxes for up to 10 years, according to Thomas.

Thomas said she does not view these exemption programs as cuts to the budget. If anything, she said, they will help increase tax receipts by attracting new and more diverse businesses to Hillsdale.

Normally, when the value of a property increases, so do property taxes, but these programs freeze tax rates at their current level for a certain number of years.

So, when Market House increased the value of its property through improvements, it was not penalized by having to pay higher taxes on the more valuable property. This also means that the more owners increase the value of their properties, the more they will save on taxes.

Thomas said these exemptions are meant to encourage development that would not occur otherwise.

“In order for someone to qualify for one of these programs, the property owner has to specify in their application that without a tax break they would not be able to afford the project,” Thomas said.

The new apartment complex on 42 Union St. is receiving property tax exemptions under the Obsolete Property Rehabilitation Act. This will save the property owner $20,000 a year in taxes for 12 years, according to Thomas.

In order to qualify for OPRA, the property has to be located in an OPRA district, and the city assessor has to deem the property obsolescent. Broad Street Downtown Market used OPRA for its construction.