Kalamazoo Developers Secure Tax-Exempt Zone for Downtown Apartment Project

KALAMAZOO, Mich. — A historic block of downtown Kalamazoo is set to undergo revitalization, as the Kalamazoo City Commission unanimously approved a tax-exempt zone aimed at encouraging specific development projects. The move will assist developers Brian and Carmen Harris, who are seeking to transform a vacant second-floor space in the iconic Hiemstra Optical building into four one-bedroom apartments.

The Hiemstra Optical building, located on East Michigan Avenue, boasts high ceilings and large windows that highlight its 1860s construction. The second floor, however, is currently vacant, with torn-up walls that show the signs of decades of wear and neglect. Despite the challenges of working with a historic structure, the Harris couple sees potential in the space and aims to contribute to downtown Kalamazoo’s growth by adding more residential options.

“This is a way to bring more people downtown,” said Brian Harris. “The more people that live, work, and spend time in the downtown area, the better it will be for the restaurants, shops, and overall vibrancy of the neighborhood.”

The couple was drawn to the property not only for its historical charm but also for its proximity to Bates Ally, a popular outdoor space in the city. However, as they began exploring the project in more detail, the couple quickly realized that the cost of rehabilitating such an old structure would be far greater than initially anticipated.

“This is our first project of this size, and we didn’t expect it to be as costly as it turned out to be,” Harris explained. “Once we started getting construction bids, we knew we needed some financial help to make this dream a reality.”

To offset the substantial costs, the Harris family applied for a Neighborhood Enterprise Zone (NEZ), which, according to city officials, offers tax exemptions on new residential units for up to 15 years. The NEZ program aims to support redevelopment in key areas, providing property tax relief to developers in exchange for revitalization efforts that benefit the community.

Bobby Durkee, assistant city planner for Kalamazoo, explained that once the zone is in place, developers who apply for building permits in the designated area can receive a certificate granting them tax exemptions ranging from nine to 15 years. In this case, the tax exemption will help the Harris couple manage construction costs and make the project financially feasible.

“The zone was extended to cover the area surrounding Bates Ally, which includes several historic buildings and vacant storefronts,” Durkee said. “This is a small but strategically important section of downtown. While only four new apartments are planned for now, this could open the door for future development as well.”

The area surrounding Bates Ally, located between East Michigan Avenue and East South Street, features a mix of historical buildings, restaurants, and shops, along with several surface parking lots. Developers and property owners in the neighborhood are hopeful that the NEZ will stimulate further growth and redevelopment in the area.

Durkee noted that the city’s NEZ policy is designed to support projects of all sizes, from small developers like the Harrises to larger-scale initiatives. “Redeveloping 150-year-old buildings is no small task, especially when construction costs are high. This policy aims to incentivize both small and large projects to help revitalize the city.”

The Harris couple has already seen interest from neighboring property owners, some of whom have expressed curiosity about the potential success of the project. “There’s definitely been some buzz from other developers and building owners,” said Brian Harris. “They’re interested in seeing how this turns out and are eager to learn from our experience.”

While the project is still in the early stages, the couple is optimistic about the impact it will have on the downtown area. They are currently awaiting additional approvals from the city before beginning the rehabilitation process.

In the meantime, Kalamazoo residents and business owners are watching closely as the NEZ initiative takes shape, hoping that it will spark a wave of new development and bring more people back to the heart of the city.