Granby approves tax shareback agreement with Sun
Michigan based resort development company Sun Communities is finding out that it, literally, pays to be a big developer in Grand County after the Town of Granby agreed to enter a tax shareback agreement with the publically traded company in late November.
During the Granby Board’s last meeting in November the Trustees voted approval of a tax shareback agreement with Sun Communities, developers of the proposed RV resort and workforce housing subdivision on the Shorefox property. Under the terms of the agreement Sun Communities will be reimbursed 50 percent, “of all sales tax generated from the property for all costs incurred by owner (Sun Communities) in connection with the installation of the eligible improvements,” the agreement states.
Essentially Sun Communities will be eligible to be reimbursed on infrastructure improvement projects it undertakes related to the development. Any reimbursement will come from sales taxes generated from the sale of goods and services, exclusively on the property, after the resort is up and running.
Granby Town Manager Aaron Blair explained citing the example of the future adventure park Sun plans to construct at the development. If a person purchases a pass to the adventure park Granby will levy a four percent sales tax on that purchase. Sun could receive half of that sales tax revenue.
The agreement has a sunset clause with limits the total value of the shareback, or the total time within which Sun can receive reimbursement. Sun is not eligible to begin receiving the tax reimbursement until after the company has provided written notification to the town that it has completed construction of at least 50 of the proposed resort sites. Afterwards Sun is eligible to receive up to $10,000,000 in tax reimbursements or to receive reimbursements for 25 years, whichever comes first.
There are caveats to the agreement related to what qualifies as an “eligible improvement” and what expenses incurred related to those improvements qualify as being reimbursable. Eligible improvements are all related to infrastructure projects in and around the property and include water and sewer lines, roadways, curbs and gutters, a water treatment plant, wells, pumps, pipelines. The agreement allows for additional unlisted improvements but requires that any improvements be necessary of implementing water agreements, providing electrical, cable and fiber optic service to the property, or for providing vehicular access to the property as well as lighting access routes, to qualify as an eligible improvement.
Sun Communities will be able to recoup costs associated with those projects related to principal costs of engineering, surveying, and construction including both labor and materials. The tax shareback agreement does not obligate Sun Communities to conduct any of the infrastructure work that qualifies as “eligible improvements”. Granby is not required to share any tax revenue with the company unless those improvements are undertaken though.
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