ESCANABA — Dial Companies, which owns the Delta Plaza Mall, will receive further tax breaks to rehabilitate the mall property following a public hearing held Thursday.

Four years ago, the city designated the mall building as an Obsolete Property Rehabilitation District under the Obsolete Property Rehabilitation Act (OPRA). The act allows for partial exemption from property taxes for a set period of time to encourage certain types of improvements on underutilized or decaying commercial or commercial/residential properties in designated communities.

“A lot of people don’t know about OPRA and it would be very, very nice if they did,” said Council Member Peggy Schumann, who noted she had received OPRA designation for a building she owns.

At the time the designation was made for the mall property, the city and Dial Companies did not follow through with the public hearing needed for the special tax abatement to take place, but renewed interest in redeveloping and rehabilitating the property prompted the two parties to pick up where the project was left off in 2014.

Earlier this year, the Escanaba Brownfield Redevelopment Authority designated the mall and some of the adjacent outlots as a brownfield property after a baseline environmental assessment found the chemical tetrachloroethylene in the groundwater at the mall near the site of a former dry cleaning business. Brownfield designated properties are eligible for a number of benefits to support clean-up efforts and redevelopment, but one key way developers benefit is through tax incremental financing (TIF). In the case of brownfield sites, this means that the difference between a property’s taxable amount at the time it was designated a brownfield and the value of the property once it has been redeveloped is captured by the authority and returned to the developer to pay for specific eligible expenses that are included in a plan approved by the authority and the city council.

Dial’s plan for the mall property approved by the council on Oct. 18 included $1,564,058 of expenses that are considered eligible activities for reimbursement and will be paid back over a period not to exceed 30 years. Early estimates suggested roughly $700,000 would remain unreimbursed at the end of the 30-year period.

However, the decision by the council Thursday to approve a partial exemption of property taxes for the mall building itself for up to 12 years beginning on Dec. 31, could change those numbers.

The improvements that have already been made on the outlots — such as the construction of the soon-to-open Starbucks on the corner of 3rd Avenue North and Lincoln Road — are not considered eligible for brownfield reimbursement and are not calculated as part of the TIF capture. The outlot upgrades are also ineligible for OPRA, since only the mall building itself is considered an OPRA district.

Functionally, this means the city will collect slightly more in taxes from the mall property as a whole for 30 years as a result of the outlot improvements made before the Sept. 11 brownfield designation. For 12 years the mall building itself will not contribute any additional tax revenue to the city beyond what it does now, as the OPRA established Thursday locks in the tax rate for the building. Locking in the tax rate with OPRA also means the mall will not be contributing to the TIF collection used to reimburse Dial for the redevelopment of the property for 12 years of the 30-year brownfield redevelopment period.

“We’re not giving them free money. We’re just leveling their tax bill, we’re just letting them improve their property and not hit them for the improved value until year 12, and then we hit them for the full value. It’s not like we’re screwing ourselves. If we do nothing, the value will go down,” said Council Member Ralph Blasier.

Technically, neither the city nor any of the other entities that collect money through taxes will lose any funding due to the OPRA or the brownfield redevelopment plan, but the amount those entities could potentially collect will reduced. According to a spreadsheet presented at the meeting, the total amount the city’s operating budget could lose in tax capture with the approved OPRA will gradually increase from $1,974 to $6,244 annually during the 12 year period. Other entities, such as Bay College, the Delta Area Transit Authority, the county, Community Action, the sheriff’s department, and central dispatch will also be affected.

The OPRA designation was not the only public hearing on Thursday night’s agenda. The council also held hearings and voted to approve the submission of a grant application for a new public safety vehicle and approve a $100,000 Community Development Block Grant/Revolving Loan Fund program grant to Northern Machining & Repair for new equipment. The loan will result in the hire of five new employees, 51 percent of whom have been previously classified as low- to moderate-income.

All three public hearing items were approved unanimously by the council members present Thursday. Mayor Pro-tem Ron Beauchamp was not present at the meeting.