Apr. 6—TRAVERSE CITY — The city’s Downtown Development Authority Board took another step toward approving its updated Tax Increment Financing (TIF) plan as it moves closer to submitting the 30-year plan extension to the City Commission.
The DDA Board at a Friday study session readied the plan — that’s been more than two years in the making — for a vote at its next regular meeting on April 19. Under the current timeline, the plan would head to the City Commission on May 6 for scheduling a public hearing on May 20.
The City Commission could vote on the plan following the hearing. If approved there, it would create a 20-day window for TIF plan opponents to circulate citizen petitions to challenge the approval, which could create a city-wide referendum on the TIF plan at the Nov. 4, 2024 election — where city residents will also vote on a proposed city charter amendment requiring voter approval of TIF districts.
“I’m looking forward to this plan coming to the city commission,” said Mayor Amy Shamroe, who also serves on the DDA Board. “I think it’s going to show how well it holds up here.”
Last month the DDA agreed to a one-month delay in voting on the TIF plan, after Board Chairman Gabe Schneider and Vice-chair Scott Hardy suggested a longer delay — at least until the DDA had a permanent chief executive officer in place which is expected this summer. Former CEO Jean Derenzy left in early March and was replaced by Harry Burkholder, the DDA’s former chief operating officer who’s now the interim CEO.
In a memo to the board, Burkholder pointed out that failure to extend the TIF plan would create a $4 million-plus hole in the DDA’s revenue budget. The TIF mechanism, which captures the growth in tax revenue in the downtown from the baseline property value established in 1997, skims about $2.3 million from the city’s general fund and another $1.7 million from regional taxing partners including Grand Traverse County, Northwestern Michigan College and others. The anticipated TIF revenue in the 2024-2025 fiscal year, which begins July 1, is just under $4.4 million.
“Simply put, if TIF-97 is not extended needed maintenance and upgrades to existing infrastructure, as well as future infrastructure needs, would come directly from the city’s general fund,” Burkholder wrote. “This would likely mean that hard choices would need to be made and future infrastructure investments as well as needed maintenance and upgrades to existing infrastructure throughout downtown and the entire city may be eliminated or deferred.”
Burkholder also noted that “large transformative infrastructure projects” including the proposed Lower Boardman/Ottaway River upgrades that are typically funded through the sale of city-backed bonds would be in jeopardy unless city taxpayers made up the difference.
“If TIF goes away, restoring the Boardman becomes a 50-60 year project, or it doesn’t happen at all,” Shamroe said.
Burkholder said that since the TIF-97 plan was approved, it captured just over $38 million through the TIF mechanism — nearly $20 million from the city’s general fund and just over $18 million from the other taxing units. He also noted the growth in the value of the DDA district over the life of the plan, which started at just under $33 million and has grown to more than $171 million — an increase of more than 400 percent in the township’s taxable value.
The revised TIF plan — dubbed the Moving Downtown Forward TIF plan — also includes a revenue-sharing mechanism to share some of the revenue growth with the city general fund and other taxing units. Over the lifespan of the proposed TIF plan, the city general fund would gain about $24 million in revenue while the other taxing units would share about $16 million.
Board members didn’t make any late changes to the plan, but had an extended discussion on earlier modifications including the decision in early March to remove a $32.4 million west-end parking structure proposed near Pine and Street streets from the list of eligible items in the plan. Board member Scott Hardy continued to criticize the decision and said the need for public parking continues to escalate as more businesses and residential get developed on the west end of downtown.
“It’s not an insignificant elimination of the deck — that’s been an integral part of what we’ve been talking about since 1997,” Hardy said. “I’m frustrated … parking is the lifeblood of downtown businesses.”
Other members disagreed, countering the west-end deck has become “a target” for TIF opponents.
“There are too many infrastructure needs downtown that are more important than parking,” board member Mike Powers said. “I hate to hear us keep going down the parking garage road, because I think it’s what going to lead us to the eventual demise of TIF.”
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