Traverse City News and Events

As Clock Winds Down On TIF 97, DDA Considers Final Projects, Plan Extension

By Beth Milligan | Dec. 11, 2021

Six years. $15 million. That’s approximately how much time and money is left in the Traverse City Downtown Development Authority’s (DDA’s) TIF 97 plan, the primary funding source for improvement projects in the heart of downtown, including Front Street and the Warehouse District. At a special strategic meeting Friday, DDA board members identified two major projects they hope to complete before the plan ends in June 2028: building Rotary Square and reconstructing the alleys in the 100 and 200 blocks of Front Street. They also discussed pursuing an extension of TIF 97 beyond 2028 to fund the construction of a West Front Street parking deck and several Boardman River improvement projects.

Consultant Megan Motil of Parallel Solutions led board members through a three-hour facilitated session to identify the top priority projects the DDA hopes to finish with the remaining funds and time left in the TIF 97 plan. TIF 97 is one of two tax increment financing districts downtown – the other is TIF 2, which covers Old Town, River’s Edge, and Midtown – that capture taxes on increasing property values within their boundaries (pictured). Those funds are then used to pay for public improvement projects in the districts, serving as the main source of funding for downtown maintenance and enhancements.

TIF 97 is generating roughly $3 million annually in revenues, according to DDA CEO Jean Derenzy. With an estimated $15 million available to spend before the plan expires – once administrative costs and other operating expenses are deducted – and over $56 million in possible public improvement projects listed in the DDA plan, Derenzy wanted input on narrowing the project list down to a feasible budget range. She said the DDA could issue a six-year bond upfront to cover $15 million in work so projects could begin immediately, but said the DDA could not commit to projects beyond that amount or beyond 2028 unless TIF 97 was extended.

Completing Rotary Square – the long-planned civic square slated to be built on the southeast corner of Union and State streets – rose to the top of the board’s priority list. The DDA has already purchased the property from Huntington Bank and received a $1 million gift from Rotary and a $2 million allocation from the state of Michigan toward the project. “When you bought the property, you said ‘we’re in,’” Mayor Richard Lewis told the board. “We’re going to have to do something.”

Also rising to the top of the priority list was the reconstruction of the north alleys in the 100 and 200 blocks of Front Street. Though a much newer addition to the list of potential projects than Rotary Square, the alleys have recently become an urgent priority after consultants flagged serious safety concerns with the deteriorating retaining wall along the Boardman River. As water levels have risen in the last decade, the soil underneath the wall has been scoured out, leading to “pavement failure, sidewalk failure, (and) disappearing signs” in the alleys, according to SmithGroup. Of greater concern is a large 24-inch sanitary sewer main that sits directly on the top of the river wall foundation and is at risk of failure. The consultants recommended relocating the sewer main away from the wall and closer to the buildings, as well as replacing the business service lines connected to the main. Tearing up the alley could give the DDA the opportunity to transform the 200 block section, taking out the retaining wall and building a new riverfront plaza and riverwalk providing direct public access to the Boardman. Derenzy said that move is supported by business owners – despite the loss of alley parking – and by the Lower Boardman River Unified Plan, a master plan set to be adopted soon by the city that outlines desired river improvements.

Tackling Rotary Square and the alleys could put the DDA right in the $15 million range for TIF 97 projects, according to cost estimates provided by Derenzy. Board members agreed Friday on pursuing a potential bonding plan for those projects as the best path forward; the DDA board and city commission would still need to officially vote in the future to authorize a bonding plan. Prioritizing Rotary Square and the alleys leaves several other projects on the table, however, notably a long-planned third public parking deck on West Front Street. At a conservative estimated cost of $22 million for the deck, Derenzy said there was no way to tackle the project within the current TIF 97 plan. However, if the city were to extend TIF 97 beyond 2028 – something it can do unilaterally, despite opposition from other local taxing jurisdictions who are set to receive revenues being captured now once the plan expires – it could finish projects like the deck, Derenzy said.

DDA board members signaled support for pursuing an extension of TIF 97 to pay for the parking deck, as well as an estimated $12 million in Boardman River preservation, improvement, and recreational projects outlined in the Lower Boardman River Unified Plan. Board Vice Chair Scott Hardy said west side development was being hindered by a lack of a deck, adding that if one were to be built, it could spur more investment that would ultimately create more TIF 97 revenue. However, “there just aren’t that many people who are going to invest on a wing and a prayer,” he said. “There is solid urgency to defining what we’re doing on the west end of town with a west end parking deck.”

Hardy also said that while taxing jurisdictions might be unhappy about TIF 97 being extended beyond its promised 30 years, the purpose of the plan was to accomplish the projects described within it, which includes a third parking peck. “The TIF plan is a long way from being complete,” he said. Derenzy also noted that TIF capture is the only legal cost-sharing model in the state of Michigan that ensures infrastructure expenses are spread across the entire region, which benefits from having a thriving downtown hub. “It’s not fair for Traverse City residents to shoulder the whole burden of infrastructure,” she said. “This is the only mechanism we have (to spread out costs).” If TIF 97 is extended and a deck is included as part of that plan, it could still be close to a decade before it’s built. In that scenario, Derenzy said she would urge city leaders to slow down their plans to redevelop surface parking lots into mixed-used developments in order to preserve downtown parking until replacement spots are available in the deck.

Friday’s meeting raised existential questions DDA board members will have to tackle about other key projects. After going through an extensive public input process this year to create a new design for East Front Street – originally intended to be reconstructed next year – Derenzy is now recommending putting the project off after the final design was criticized by both residents and business owners. Business owners also told Derenzy they already ordered inventory for spring/summer 2022 and couldn’t afford to have the street shut down next year. The planned reconstruction of Grandview Parkway in 2023 means 2024 is now the soonest East Front could be tackled. DDA board members did not identify the project as a priority for TIF 97 funding, which could delay the timeline even further, but Derenzy said it was possible to pursue other funding sources outside of TIF for the street reconstruction.

The Sara Hardy Downtown Farmers Market – which has long been targeted for a redesign and the creation of a permanent market structure – also failed to generate interest as a funding priority Friday. Hardy said the lack of enthusiasm among board members for the market as a priority raises questions about whether “the DDA should be in charge of the farmers market in the first place.” He added: “Are we the legitimate group that ought to be maintaining and operating that?” Derenzy acknowledged that it wasn’t clear whether downtown parking Lot B is the right permanent home for the farmers market, a crucial question the DDA will need to answer going forward.

Despite many unknowns still lingering over downtown projects, DDA board members expressed satisfaction Friday with having a clearer sense of the work they want to tackle over the next six years, as well as a possible goal of pursuing a TIF 97 extension. “We actually have some hard costs that we can move forward with,” Derenzy said. “It’s a plan to be able to implement.”

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