It’s been one roadblock after another for East Bay Township and its new tax increment financing (TIF) plan, which the township conceived last year as a way of revitalizing the US-31 corridor.

On Monday, the Board of Trustees for Northwestern Michigan College (NMC) voted unanimously to exempt the college from the TIF tax capture plan. That decision follows similar opt-outs from Grand Traverse County and the Bay Area Transportation Authority (BATA). So can the TIF can still proceed as structured?

First, a refresher: In October, East Bay Township formed a Corridor Improvement Authority (CIA), a type of TIF district, to fund infrastructure improvements for the US-31 “Beach District.” The district stretches roughly from Avenue B to Holiday Road.

Like other TIF types, a CIA functions not as a new tax or a tax increase, but a tax capture. The district sets a base year for taxable values on properties within the CIA, and then captures the difference as those values increase over time. The Beach District TIF plan has a lifespan of 20 years and is intended to fund projects like a Four Mile/US-31 intersection pedestrian crosswalk, completion of the US-31 sidewalk network, year-round sidewalk maintenance, a community pier at the end of Four Mile on Grand Traverse Bay, and a new pedestrian bridge over US-31.

As conceived, the Beach District TIF would capture rising property tax revenues not just in East Bay Township, but also from three other key tax jurisdictions: Grand Traverse County, BATA, and NMC. With all those collaborators involved, East Bay previously estimated the plan would capture nearly $6.5 million over two decades, starting with just over $33,000 in the first year and gradually increasing to over $652,000 in year 20.

One by one, though, the would-be collaborators have backed out. The Grand Traverse County Board of Commissioners voted on April 14 to exempt their taxes from capture, and the BATA board followed suit at their April 23 meeting. NMC made the same move Monday, reasoning that the Beach District fell outside of the college’s purview.

“While we support the township’s vision for corridor improvements and recognize the potential community benefits of the project, the infrastructure investments contemplated through this TIF fall within the scope and responsibility of the township and county. As such, they are outside the core role of the college,” NMC President Nick Nissley wrote in a letter to college trustees recommending the opt-out. Nissley argued NMC’s “primary obligation is to ensure that taxpayer dollars entrusted to the College are used to directly support students and our educational mission,” and that the estimated $1.3 million the East Bay Beach District TIF would capture from NMC tax revenues over the next two decades should “remain focused on teaching, learning, and student success.”

“This is a regional corridor,” rebutted East Bay Township Supervisor Beth Friend at NMC’s board meeting. “It serves your students, your workforce partners, and the broader community that helps sustain NMC. Choosing to opt out without engaging in a good faith partnership and negotiation risks sending the message that this is someone else’s problem, and respectfully, that is not how the community has treated NMC. When voters support millages or funding of the college, they don’t all have students in their households, but they understand the shared value of investing in regional assets. This is a similar moment.”

“I think that we can’t be too short-sighted about what we’re doing to the young people that want to move here, or are here and want to stay here, when all the money comes due,” concurred City of Traverse City Mayor Amy Shamroe in a public comment. “By piecemealing some of these projects and maintenance that have been neglected by an entire generation, that’s a burden we shouldn’t be putting on one section’s population in the future. We all need to be responsible today and think about the next 20, 30 years and what that looks like for our community.”

Despite those impassioned pleas, the NMC board voted unanimously to exempt the college from the East Bay TIF plan. 

Still, Friend remains optimistic. Both Grand Traverse County and BATA, she notes, have committed to “good faith negotiations for developing an agreement” with East Bay Township, which she hopes will lead to alternative funding structures for the Beach District.

“We feel strongly that we can get to a more beneficial agreement with both organizations,” Friend says, acknowledging the reservations regional partners have raised about TIF plans. “In opting into the TIF, taxing authorities would not receive any inflationary increase in their current tax revenue from that district, nor any increases if there were uncapping on property taxes. If I were in those organizations, I don't know that I would stay in that TIF either.”

The “agreements” East Bay Township is working on with Grand Traverse County and BATA, Friend tells The Ticker, are aiming for fairer splits in property tax revenues as they grow in the years to come. The CIA district, in other words, would capture some of those tax increases, but not all of them.

“Let’s say a taxing authority was receiving $100,000 in tax revenue out of that CIA district right now,” Friend explains. “Would it be fair or appropriate that they would still receive $100,000 in five years, 10 years, 20 years? I don't know that that's the case. But through an agreement, what we can do is we can allow some of those inflationary increases or increases from uncappings to go back to that taxing authority. They can have the benefit of the growth of their current tax revenues while still investing in the goals of the CIA district.”

While Friend criticizes NMC for “opting out without engaging in a broader conversation about partnership and a potential agreement,” she’s hopeful the college will come back to the bargaining table.

“We always remain open to dialog and to advancing solutions with partners who are willing to come to the table, and that is always available to NMC,” Friend says.