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It appears the creation of a new commercial rehabilitation district on the city’s northside won’t happen after all.

After hearing negative backlash from South Haven residents at a city council meeting earlier this month, council members chose not to create a proposed 3-acre district. As a result, the proposal fails – at least for now.

“It’s done,” Mayor Scott Smith said afterwards.

Creation of the 3-acre district – roughly bordered by North Shore Drive, Woodman Avenue, Willow Court and a small portion of North Beach – would have allowed the only commercial establishment in that area, Bunde’s Bakery Cafe, to be renovated.

Owners Jim and Rachel Sankofski proposed to renovate the 1,000-square-foot structure – built in 1932 – and add 2,000 square feet of residential units for an investment of about $500,000.

South Haven had created a commercial rehabilitation district in 2018, which includes the city’s downtown district, a portion of Broadway Avenue and LaGrange Street, as well as a portion of North Shore Drive.

By creating the district, commercial businesses and developments within its boundaries are eligible, through state legislation, to apply for tax breaks for redevelopment and expansion of their building sites.

Several have done just that – including the developer of the downtown South Haven Center complex; the redevelopment of the former Save-A-Lot grocery story into a commercial plaza; and the redevelopment of several commercial buildings owned by Rock n’ Road Bicycle Shop and Crescent Moon Women’s Fashion Shop on Broadway Avenue.

“When the district was made it didn’t include us,” said Jim Sankofski. “We wanted to be treated like everyone else who was eligible for a commercial rehab (tax break).”

But when the Sankofskis approached city officials about the issue, city staff learned that they were unable, by state law, to amend the boundaries of the district that was established in 2018. The only way to remedy the situation was to create a new district measuring at least 3 acre in size.

Residential push back

The proposed site would have included Bunde’s Bakery and Cafe, but the remainder would have consisted of eight cottages and residential homes, whose owners were against being included in the new district for fear that it would open the door to further commercial development in the future.

“I would specifically like to emphasize that while everyone loves Bunde’s, it is a non-conforming use,” said Jerry Mollitor, president of the Water’s Edge Condominium Association. “What happens in five to 20 years when Bunde’s decides not to be a bakery anymore? What are we going to do with that building?”

Another resident said they were not a “commercial neighborhood.”

Even though city officials stressed the proposed district only addresses commercial structures in need of rehabilitation, not residential homes, residents were apprehensive to create the district.

“The request (for the district) comes from an owner with less than 1 percent of property in the proposed district,” said Matt VanDyk, an attorney representing the condominium association. “My client owns nearly 90 percent in the district and is keenly opposed to this district.”

About a dozen people spoke up during the public hearing. Following the negative comments, Jim Sankofski got up to speak.

Sankofski said he could feel the neighbors’ frustration, but alluded to his frustration that commercial businesses across the street were eligible for tax breaks for rehabbing their facilities, while he could not.

“If I were these people, I’d agree with them,” Sankofski told council members. “I asked to be treated like any other business. So I came to the city: Give us incentives you gave another business.”

As of Monday, no commercial tax exemption will be available to the Sankofskis for redevelopment of their property.

When Mayor Scott Smith closed the public hearing and asked whether council members wanted to make a motion to create, or nix the creation of, the new commercial rehabilitation district, none of the members chose to make a motion one way or the other.

“I think that answers that question, we’ll move on,” Smith said. “It (the proposal) dies due to lack of a motion.”