KALAMAZOO DOWNTOWN DEVELOPMENT AUTHORITY BUILDING REHABILITATION PROGRAM PURPOSE As a fundamental goal of the Downtown Development Plan and Tax Increment Financing Plan (Plan), the Kalamazoo Downtown Development Authority (DDA) has determined that it is in the best interest of the public to halt property value deterioration, to eliminate deterioration, and to promote economic growth and vitality within the TIF District. The Building Rehabilitation Program is being created to provide an incentive for property owners to rehabilitate and reuse older buildings in the TIF District. The program is primarily focused on providing financial assistance for upgrading older buildings to meet modern building code and accessibility requirements. The redevelopment of vacant or underutilized upper floor space is also a prime goal of the program. The long-term goal of the DDA Building Rehabilitation Program is to create an environment that will continue to attract new investors, business and residents to the downtown community. PROGRAM OBJECTIVES To encourage the full utilization of older downtown buildings To reduce the rate of vacancy and blight in the downtown, with a strong focus on upper floor space To provide financial assistance to property owners in overcoming the barriers associated with the reuse of older buildings To preserve and maintain viable older buildings located in the TIF District Generally, to promote and encourage continued growth and expansion of business and residential activities and to support the purposes of the Downtown Development Authority ELIGIBILITY Properties must be located within the legal boundaries of the TIF District to be eligible. [See Attachment One] In general, any older buildings constructed prior to 1950 will be considered for program funding. Exceptions to this requirement will be considered on a case-by-case basis. The program is open to both owners and tenants; however, the owner must sign the Building Rehabilitation Agreement.
PROGRAM REQUIREMENTS Applicants will be required to complete an application packet provided by the DDA. following program guidelines also apply: The 1. Priority status will be given to projects participating in the DDA Design Assistance Program. Projects must also include exterior façade improvements as part of total project scope, or verify that appropriate façade improvements will be undertaken within a time period prescribed by the Project Review Committee. 2. Projects must maintain or create first floor retail, commercial or professional uses to be eligible for program funding. 3. Program funds will be allocated at $3.00 per square foot of rehabilitated space, with a maximum of $30,000 per project for eligible properties. Based upon demonstrated need and available funds, additional funding in excess of $30,000 per project may be considered. 4. Program funds can be utilized for interior renovation and construction costs, with an emphasis on barrier free design requirements and/or state and local fire and safety codes. 5. Applicant must provide proof that all property taxes are current and that the subject property is properly insured. 6. Applicant must provide detailed project financing and cost information and provide proof in the form of bank commitment letter(s) that all private financing is in place, if applicable. 7. Annual program funding will be limited, with projects awarded, as funds are available. The DDA will make final determinations on individual project eligibility and can reject any application based upon required insufficient program funds. 8. At least two licensed contractor quotes must be submitted, however, the applicant will not necessarily be required to accept the low bidder. 9. A minimum of 5% owner cash equity (of total project costs) will be required for all projects utilizing bank or other public financing. 10. Funding for projects undertaken prior to DDA review and written approval will not be considered. 11. All required municipal or governmental permits must be obtained prior to construction starting up. 12. Funds will be provided on a draw basis upon completion of work. Executed contracts and/or contractor invoices must be presented prior to disbursement of program funds.
13. Construction must commence within 90 days of approval for funding and be completed within 120 days after construction start date. Requests for time extensions must be submitted in writing and will only be approved upon the express written consent of the Kalamazoo Downtown Development Authority. 14. Applicants must demonstrate a bona fide commitment to implement building improvements and must certify that construction will commence within 60 days of funding approval and that the Applicant shall complete the Project within 120 days thereafter. Applicant will be in default if rehabilitation is not undertaken within the specified time period, with 100% of any paid costs and expenses to be reimbursed to the Downtown Development Authority. 15. Applicant must agree to abide by the items outlined in Attachment Two: Cooperation Agreement. INELIGIBLE USES OF PROGRAM FUNDS Program funds cannot be utilized for any of the following uses: 1. Property acquisition costs 2. Paying off existing debt 3. Site plan, building or sign permit fees 4. Building demolition 5. Environmental consulting, testing, or actual abatement/clean-up costs 6. Property appraisal costs, legal fees or loan origination fees APPLICATION AND SELECTION PROCESS Applications may be obtained in person in the offices of the Downtown Development Authority, 157 South Kalamazoo Mall, Suite 175, Kalamazoo, Michigan 49007, or by calling (269) 344-0795. DDA staff to determine initial eligibility will screen applicants. At that time, the estimated scope of work will be discussed. The pre-application process will also include a site visit by DDA staff. If the applicant and staff representative reach consensus that the project should move forward, the project will be presented to the DDA Project Review Committee for preliminary approval. This committee will meet as needed (not more than once per month) to provide input, make suggestions to scope of work and approve or deny individual projects. Upon preliminary approval by committee, the project will be submitted to DDA Board of Directors for final approval. Upon approval of the DDA Board of Directors at a regularly scheduled monthly meeting, a Building Rehabilitation Agreement will be executed and the project can proceed.
A $50 nonrefundable application fee must be included with the application packet. NOTE: The Downtown Development Authority shall be held harmless for any disputes that may arise under any contracts between the applicant and contractor. Selection Criteria 1. Buildings with first floor retail uses or projects, which will result in new commercial occupancy, will receive funding priority. 2. Additional criteria that address the economic impacts of the proposed improvement and the overall program goals are included in Attachment Three and Four of this packet. 3. Attachment Five of this packet addresses General Design Guidelines that will govern the evaluation taken by Project Review Committee of proposed improvements. SOURCE OF PROGRAM FUNDING The Kalamazoo Downtown Development Authority (DDA) sponsors this program. The source of funding for the program is tax increment financing revenue made available under Michigan Public Act 197 of 1975 (Sections 125.1657.7 (c.); (d); (i)) and City Ordinance 1450, as adopted by the Kalamazoo City Commission in March, 1982. The DDA Board of Directors for approval by the City Commission recommends annual funding allocations for the program. RIGHTS RESERVED The Kalamazoo Downtown Development Authority reserves the right to reject any and all applications up to the limit of closing. The specific program guidelines herein are subject to revision or amendment by the DDA Board of Directors. The DDA may discontinue this program at any time, subject to the availability of program funding. FINANCING GUIDELINES Applicants must demonstrate proof of 50% in matching funds, whether owner equity or private financing. Eligibility, rates, terms, and conditions of private financing will be determined on an individual basis subject to the normal credit granting criteria of participating private banking institutions. Program funding will be in the form of a reimbursement to the property owner/ applicant. Requests for funding reimbursement may be made at 30%, 60%, and 90% project completion. Applicant may make up to three draws on program funds with 10% of each draw being retained by the DDA. DDA will release the final 10% upon completion and occupancy.
DEFAULT AND REMEDY To access program funds, applicants must demonstrate a bona fide commitment to implement building improvements and must certify that construction will commence within 60 days of funding approval and applicant shall complete the Project within 120 days thereafter. Applicant will be in default if rehabilitation is not undertaken within the specific time period, with 100% of paid costs and expenses to be reimbursed to the Downtown Development Authority. In the event of default the entire amount of outstanding Building Rehabilitation Program funds shall become due and payable, plus collection costs and reasonable attorney fees, if applicable. One or more of the following events shall constitute a default: 1. The Applicant fails to pay, when due, any real estate taxes or special assessments on the subject property during the five-year term of the Development Agreement. 2. The Applicant expends program funds for uses other than approved project costs as represented in the original application. 3. If, during a period of five (5) years following the completion of the project, the Owner/Applicant transfers ownership or interest in subject property to another party, unless, such transfer secures the prior written approval of the Kalamazoo Downtown Development Authority. 4. The Applicant defaults on bank loan or other public financing made in conjunction with the DDA Building Rehabilitation Program.