| Mr. Casey commented the Board was brought up to date at the last meeting relative to |
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| the recently approved Michigan Business Tax and how that will significantly impact the |
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| SmartZone. In the bill, the SET and the school personal property capture is 100% |
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| exempted. The impact to next year’s SmartZone budget is estimated to be |
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| approximately $90,000, or one-third of the total capture for the year. Currently, 50% of |
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| this amount was captured and was redirected to fund the incubator’s operations. The |
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| schools were then reimbursed by the State Education Fund. It will get worse in future |
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| years, but we’ll ultimately make up for it because we can capture from all uses under |
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| development. Mr. Casey indicated he completed a financial analysis on the Interchange |
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| Technology Park to estimate the capture benefit after development. This estimate is |
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| about $225,000 in annual capture to the LDFA Plan and the SmartZone Plan would |
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| receive about $350,000 annually from approximately 200,000 square feet of mixed-use |
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| development. At the last meeting, Mr. Casey indicated there |
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| was a legislative initiative to write a law to account for how we would be reimbursed, |
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| but this has not yet been sent to the legislature for consideration. At the last meeting it |
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| was suggested the capture area be expanded to make up the revenue. Mr. Casey is a |
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| little reluctant to do that because he wants the LDFA and the SmartZone to capture |
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| from the same areas. The preferred alternative is a legislative initiative to reimburse the |
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| SmartZones. In the meantime, Mr. Casey indicated he could begin working on the |
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| expansion of the capture area to provide another alternative to make up the lost |
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| revenue. The Board will be kept informed on this effort. |
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| Mr. Casey reported that the incubator’s original 10,000 square feet of space is almost at |
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| capacity with only one suite with two desks available. There is an additional 20,000 |
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| square feet of space available, but a funding source for building out this area is not yet |
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| available. The incubator (a level 3 user) is not on Oakland University’s fiber network |
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| because it is a profit-making venture and therefore can’t be connected to their system. |
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| Ever since its inception, the incubator has been having problems with fiber outages. |
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| One of the tenants is in the midst of a software launch for a customer and has |
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