Gov. Gretchen Whitmer has signed a bill allowing Kent County and the city of Grand Rapids to potentially generate millions of dollars in public funding for major economic development projects, including the proposed Acrisure Amphitheater and soccer stadium.
Whitmer today signed House Bill 5048, which passed in November with bipartisan support and backing from local business leaders. It will allow the city of Grand Rapids to seek voter approval for a 2% excise tax on hotel and motel stays to pay for various entertainment and convention facilities.
Also under the legislation, Kent County and the seven other counties that levy a 5% hotel/motel excise tax could seek voter approval to grow that up to 8% in support of such venues.
“Today’s bipartisan legislation will ensure Kent County and the City of Grand Rapids can continue to grow and thrive,” Whitmer said in a statement. “Grand Rapids is one of the fastest-growing cities in Michigan and with more tools in their toolkit, they can finish two significant projects — a stadium and an amphitheater — to make their community a better place to live, work, and play. We must collaborate on commonsense, bipartisan economic development legislation that supports local small businesses and shows young people that Michigan is the best place for them to build their lives.”
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Last month, Whitmer had asked House Speaker Joe Tate, D-Detroit, to hold off on sending her the bill to sign while she continued to push for separate economic development legislation that did not move in the fall, Crain’s Detroit Business reported. The Senate passed those bills in a marathon session March 19, and the hotel tax bill was formally sent to her desk on March 20.
Now, county officials would need to approve placing a question on ballots to raise the hotel tax. City officials would need to do the same to create a 2% hotel tax.
Kent County officials previously told Crain’s Grand Rapids Business they plan to act fast to potentially put the question on the ballot as soon as the Aug. 6 primary.
If approved by voters, a new city tax and increased county tax could potentially generate more than $10 million in new revenue in the first year, according to past media reports. Grand Rapids leaders say the amphitheater and soccer stadium could generate a combined $1.28 billion in net new economic impact once completed. Developers hope to break ground on both projects yet this year.
Sponsored by state Rep. John Fitzgerald, D-Wyoming, H.B. 5048 has been a top priority for the Grand Rapids Area Chamber of Commerce.
Besides Kent County, the seven other counties that have a local lodging tax under a 1974 law are Calhoun, Genesee, Ingham, Kalamazoo, Kent, Muskegon, Saginaw and Washtenaw.
In written testimony, administrators from several of those counties told the Legislature last fall that the 5% lodging tax helped support several “transformational projects” in their communities and leverage private investment.
Kent County’s 5% room tax has gone toward paying off the debt on the construction of Van Andel Arena and the DeVos Place Convention Center. A share of the taxes also funds the destination marketing efforts of Experience Grand Rapids, Kent County’s convention and visitors bureau.
If city of Grand Rapids voters approve a 2% excise tax, the revenues could go toward paying off the $20.5 million in capital improvement bonds that the Grand Rapids City Commission approved March 19 to support construction of the $184 million Acrisure Amphitheater.
Debt service payments for the bonds will be reimbursed to the city by the Downtown Development Authority. The DDA approved the reimbursement agreement to contribute payments over the next 20 years at its Feb. 14 meeting.
Rick Winn, who chairs the DDA, previously testified in support of the hotel tax bill, as it would help provide a guaranteed revenue stream to back the DDA’s bond payments for the project.
If new or increased hotel excise taxes are approved by voters, sports complexes and aquariums would also be eligible for funding, potentially aiding in the development of the proposed soccer stadium and aquarium being considered for West Michigan.
“This is a significant milestone — a win for our communities, residents and our goal of making Kent County a leading destination for travel, entertainment, and business in the Midwest,” Fitzgerald said in a statement.
More from Crain’s Grand Rapids Business:
Divani owner puts downtown Grand Rapids wine bar and restaurant on the market
Return-to-office trends have furniture makers optimistic
Kent County board plans to act fast on potential hotel tax increase
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Crain’s Grand Rapids Business launched in 2023, bringing together MiBiz, the Grand Rapids Business Journal and Crain Communications to create the top source of business news, analysis and information in West Michigan.
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