KALAMAZOO, Mich. (WOOD) — Kalamazoo city commissioners unanimously approved adopting a policy that establishes tax-advantaged areas for future housing projects.

In July, Kalamazoo city commissioners had a public hearing about whether to establish a Neighborhood Enterprise Zone that includes the Arcadia Iron Works building at the corner of Rose and Water streets. On Monday, they unanimously approved it, as well as a policy for others like it in the future.

The policy allows qualifying housing projects within a certain district the ability to apply for a tax incentive. Sharilyn Parsons, who serves as the city’s housing development project coordinator, believes it will attract developers to Kalamazoo.

“We are looking at how we can offset operating costs that would help to create some affordability in all of the projects that would benefit from this tool,” she said.

Tax abatements range from nine to 15 years, depending on the location, housing types, housing cost and parking. City planner Christina Anderson explained anywhere within city limits would get nine years, but developers could get a 12- or 15-year abatement if they meet additional criteria.

“You can get to 15 years if you do one of those two things — either housing type or affordability — and you reduce the amount of parking that you’re building on site,” she said. “You can use existing parking in other locations to meet your need if you have it. Not building it on site gets you an additional three years.”

Anderson added developers can also achieve that amount if at least 20% of the units are priced at 80% of the county’s area median income. According to city staff, the AMI is $92,200 for a family of four or around $47,000 for a single earner. The policy centers on market-rate housing.

“If market rate units are not made available, what happens is those higher incomes want a place to live, so they go where they can afford and they price out our workforce and low-income units,” Parsons said.

According to the Kalamazoo County Housing Plan, 2,155 housing units are needed in the city over the next 10 years, ranging from single- and multi-family homes to apartments and accessory dwelling units.

“We are, as a country, overbuilt for one type of housing — that is a single-family detached unit,” Anderson explained. “As our population ages, not everybody can stay or want that type of unit.”

More than half of the total units —1,200 — are desired in the city’s urban center, which includes all of the Vine, Stuart and Southside neighborhoods and portions of the immediate surrounding neighborhoods, but not the central business district in downtown.

As for the policy, the zones would be annually monitored by the city. There are conditions for when an NEZ certificate should be revoked, including if the work is not completed within the agreed time frame and if the developer and/or property owner do not comply with the terms.

“Time is money,” Anderson said. “It is helpful both on a developer’s end to know exactly what the path may be, and certainly better for city staff to know when we’re doing these, what are the steps we need to do to create them.”

Anderson told commissioners they expect 13 additional future housing projects to apply as a NEZ.

“We anticipate there to be new requests, more requests of this type of tool,” Anderson explained. “We want to make sure that we are creating a predictable path and predictable set of guidelines for when a developer or neighborhood association comes to us to request a Neighborhood Enterprise Zone.”