TIF Dominates Discussion for City, County Leaders This Week

Multiple jurisdictions are wrestling this week with what to do about tax increment financing (TIF). Traverse City commissioners and TC Downtown Development Authority (DDA) members will meet at a 7pm joint session tonight (Monday) to discuss the future of TIF 97 and a possible November ballot proposal to extend the plan. Grand Traverse County commissioners will consider a resolution Tuesday to opt out of East Bay Township’s new TIF plan. The county is expected to consider a different form of funding agreement with East Bay to still support projects in the US-31 Beach District corridor.

City of TC/DDA
City commissioners and DDA board members will meet tonight to “think together about the future of TIF 97,” according to City Manager Benjamin Marentette.

TIF 97 – of the primary funding sources for downtown projects and operations along with the Old Town TIF and a two-mill levy on DDA properties – expires at the end of 2027. Extending it will require the approval of voters, with a July deadline looming to put the request on the November ballot. In February, Marentette told commissioners there are three possible outcomes for TIF 97: it expires, it resets, or it extends.

If TIF 97 expires – and voters reject an extension – about $1.9 million in annual funding captured by TIF 97 will go back to regional partners (like the county, BATA, and NMC) and will no longer be available for downtown or city use. Another $2.6 million captured by TIF 97 will go back to the city, a fact extension opponents have said will allow the city to spread out revenues to other neighborhoods. However, the city will also assume responsibility for the entire TIF 97 district, which Marentette said would create “increased competition within the general fund for limited dollars” and potential tough budget decisions. Mayor Pro Tem Laura Ness previously questioned whether 15,000 city residents have the “obligation” to maintain a downtown used by 50,000 people daily from across the region.

TIF 97 could also be “reset,” meaning its baseline would move up to today’s property values and the DDA would capture the new increase on rising values going forward. Resetting means more money going back to taxing jurisdictions but less revenue captured for projects. If TIF 97 were to be reset, the first year of capture is estimated at $117,000 – with a lifetime capture estimated at $64.5 million over 30 years.

Extending TIF 97 as it is today, by contrast, would generate roughly $213 million over the next 30 years. The city could also extend TIF 97 but do a revenue split with partners instead of keeping 100 percent of the capture. Whether it’s a 70-30 split, 90-10 split, 50-50 split, or something else, each of those models has significantly different funding outcomes for downtown projects, CEO Harry Burkholder previously said.

Commissioners and DDA board members will jointly review those options tonight. They’ll also look at a working list compiled by the DDA of projects that would be covered by an extended TIF 97 plan, which has the new name Moving Downtown Forward. The list has 13 key capital projects, ranging from reconstructing East Front Street to lakeshore stabilization on Grand Traverse Bay to trail and crosswalk improvements to district-wide snowmelt. Funding would also go toward downtown programs and services – like holiday lights, trash pickup, and farmers market administration – and infrastructure maintenance.

Commissioners completed a survey giving their feedback on priorities from the project list, which will be shared and discussed tonight. Marentette says the city treasurer’s office has vetted the finances of the different TIF 97 options, noting: “It was important to have their close involvement because, at the end of the day, TIF is an optional funding tool that has a substantial impact on the city's budget – both within and outside of tax increment financing districts.” That goal tonight is to start getting consensus between commissioners and the DDA on the right ballot approach, one that “aligns with commission priorities” and is “viable for voter consideration,” Marentette says.

GT County/East Bay Township
Grand Traverse County commissioners will also discuss TIF at a Tuesday 9am meeting. The board will consider approving a resolution to opt out of a new TIF plan for East Bay Township’s US-31 Beach District. East Bay recently established a Corridor Improvement Authority (CIA), which is similar to a DDA, for the corridor stretching from Tom’s East Bay plaza to Burger King at the township limits in Acme.

While the TIF plan is still being finalized, it’s envisioned to address safety and placemaking projects on US-31 like a Four Mile/US-31 intersection pedestrian crosswalk, US-31 sidewalk network completion and year-round maintenance, a community pier at the end of Four Mile on Grand Traverse Bay, and a pedestrian bridge over US-31 to replace the one recently removed at the Traverse City State Park. Funding for a study to evaluate a pedestrian tunnel is also proposed, along with amenities like wayfinding signage, lighting, trail connections, BATA stop upgrades, Mitchell Creek restoration, and stormwater management.

Because it’s a new plan, regional jurisdictions can opt out of having their tax revenues captured by the TIF district – but face a May 9 deadline to do so. In comparison with TIF 97, the East Bay TIF plan is expected to capture a relatively modest amount over 20 years: just over $6.7 million. That’s at a projected four percent annual property growth rate in East Bay. Officials acknowledged some years could see much higher growth, but down years would balance that out. Township Supervisor Beth Friend said in a recent presentation to commissioners that that amount of funding alone can’t cover everything on the project list, but has “tremendous” potential to be leveraged to secure matching grants and other funding sources.

Like in Traverse City, East Bay could look at a revenue split with partners instead of capturing 100 percent. In a 50-50 split with Grand Traverse County, the county would still contribute over half of that $6.7 million lifetime capture for the CIA at nearly $3.5 million. Commissioners are considering opting out not to refuse funding completely but to give them time to negotiate a separate funding agreement with East Bay. Commissioners had concerns over whether a county TIF policy adopted in 2012 allows them to participate in East Bay’s TIF plan as proposed. They also wanted more input on specific projects the county would help fund, with a particular emphasis on pedestrian esafety.

Supervisors from Garfield, Acme, and Fife Lake townships all expressed support for the TIF plan and encouraged jurisdictions like GT County to participate. With the highest traffic counts in all of Grand Traverse County, the US-31 corridor is a “primary regional artery” and “economic engine” for the area, Garfield Township Supervisor Joe McManus said. Implementing the projects in the TIF plan “will alleviate regional traffic pressures and enhance the quality of life for all residents,” he said.