Traverse City’s TIFs will divert over $2.7 million from City finances this fiscal year. This amount increases every year. The money diverted gets spent on the downtown. It does not contribute to common City expenses. And the rest of us have to make up the shortfall. And if TIF97 is extended, more than $121 million more will be diverted over the next 32 years.
This has to stop!
Last fall city voters collected enough petition signatures to put a proposal on the November 2024 ballot that tax increment financing plans (TIFs) cannot be adopted, amended or extended without a vote of the people.
But the DDA is trying to evade voter approval on TIFs. The DDA plans to ask the City Commission to extend TIF97 before we get a chance to vote in November. The City Commission will probably act on this in the fall.
To protect the right of City voters to decide on TIFs, we will circulate an initiative petition to block any extension of TIF97 without voter approval.
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Thank you voters who signed the petition. We have turned in the petition sheets May31st and upon certification of sufficient signatures we expect our proposal to be placed on the November ballot. If you have questions call or text 231-947-2500.
Or you may click CONTACT US, above, if you have questions or you want to assist with this campaign.
Learn more
TIFs divert millions of dollars each year from City finances and the amount diverted grows each year.
TC’s TIFs have a substantial effect on City finances but this is largely unrecognized. Viewed by their $2.7 million annual drain on City finances, the TIFs rank like a third most expensive City department behind only police and fire and ahead of parks & recreation and streets. And the amount of City tax money diverted to the TIFs grows every year.
Impact on taxes
TC’s TIFs divert a portion of all current and future property tax millages except those for K-12 education. On the City side the TIFs divert $2.3 million from the City’s general fund leaving less to pay for basic City services. The TIFs also divert over $400,000 per year from the police and fireman’s pension fund. (This is the Act 345 millage on your summer tax bill.)
Leaves less money to pay for basic City services. At some point either City services will decrease or property taxes will increase.
We are facing this now. In November we are asked to vote on a property tax increase to pay for ambulance service.
Without the TIFs we would not have to increase property taxes to pay for improved ambulance service.
In November we voted on a property tax increase to raise about $1.3 million to fund ambulance service. Without the TIFs taking $2.3 million annually from the City’s general fund, we would have more than enough money to pay for ambulance service without a property tax increase.
The TIFs increase our property taxes
TIF 97 and Old Town TIF are increasing our property taxes right now. This happens because the TIFs are diverting $2.7 million this year from the City finances and the rest of us have to make up the difference. The TIF districts contribute very little to common City services (police, fire, streets, etc.). Circuit Court Judge Rodgers recognized this in an opinion issued in 2016. Read the highlighted text. (attached below). Calculations of the tax impact are also attached below.
And the DDA wants to extend TIF 97
In TC we have two TIFs (TIF 97 and Old Town TIF). TIF 97 was established in 1997 and scheduled to run for 30 years. Over the course of that time there were a number of promises by the DDA that TIF 97 would not be extended. And in 2007 a citizens advisory committee was formed called the Citizens Operational and Financial Analysis Committee (“COFAC”). COFAC reviewed the TIF programs in the City and recommended they be terminated early, that all City debt incurred for TIF activity be paid as soon as possible and that the tax savings to the City be split between tax reduction and the funding of basic infrastructure. In response to the COFAC recommendations, the DDA said it had no intention of extending the TIFs. But time has passed and DDA directors have changed. The siren call of lots of money to spend is strong and now the DDA wants to extend TIF 97.
Do TIFs earn their keep?
The story justifying a TIF is that the City will not see any reduction in taxes and the TIF earns the taxes resulting from increased taxable values because the TIF causes the increase in taxable value. However, this is false. The taxable value of real property increases for three reasons: inflation, the uncapping of taxable value when properties are sold and new construction. The TIFs do not cause inflation. That depends on national economic conditions. The TIFs do not cause the uncapping of taxable values. That depends on the circumstances of property owners. For example, someone reaches retirement and wants to sell their property. And even with respect to new construction, the TIF does not cause all of it. Some construction would have occurred without the TIF.
We can see how much our TIFs have increased taxable values by comparing the actual increase in taxable value in the TIF 97 district as compared to the rest of the City. When we do that we can see that the increase in taxable value in the TIF 97 district does not exceed that of the rest of the City by nearly as much as the DDA wants us to believe. In fact, if we were to divert City taxes to TIF 97 solely as a reward for the increase in taxable value, TIF 97 should receive only 50% of the increase in taxable value rather than 100% of it.
Promises Made. Promises Kept.
TIF 97 diverts tax revenue from the library. TIF 97 and Old Town TIF divert tax revenue from NMC, BATA, Commission on Aging, Recreation Authority, Veterans, Animal Control, Conservation District and Grand Traverse County. The DDA argues that the money received from other taxing authorities is reason to extend TIF 97. But this is not free money. It comes from taxes established (often voted) for particular purposes. The taxes should go to the intended purposes.
For 26 years the City and other taxing authorities put up with diversion of their normal tax revenue on the promise that it would end in 30 years. It is wrong to breach that promise.
Costly, Wasteful Spending
One further effect of the huge tax dollars diverted to the TIFs is that the DDA has too much money to spend. Its decisions have become extravagant and wasteful. Witness the three biggest projects planned by the DDA. These are a west end parking deck (latest projected cost $30+ million), a river walk project along the 100 and 200 blocks of Front Street (projected cost $65+ million) and heated sidewalks downtown (projected cost $20 million).
These plans work at cross purposes to each other. The west end parking deck is planned to expand downtown parking while the river walk project would eliminate 119 existing parking spaces. Why do either?
These plans are poorly conceived. The Old Town parking deck is used only to 21% of capacity and is just three blocks away. Why build an expensive new parking deck?
These plans have misplaced priorities. The DDA wants heated sidewalks downtown while some streets in the neighborhoods don’t have any sidewalks at all.
On Parking
More text coming soon.
Parking decks are bad
More text coming soon.
Environmental considerations
More text coming soon.
What is a TIF?
TIF is the term commonly used for a tax increment financing plan. TIFs are one way of financing public improvements, usually in a deteriorated downtown business district.
How do TIFs work?
When a TIF is adopted, a specific area is defined as the TIF district. The current taxable values of all properties in the TIF district are totaled. This establishes the taxable value base for the TIF. It is expected that taxable values in the TIF district will increase as redevelopment proceeds. In the years after the TIF was established, tax revenues generated from the difference between the increased total taxable value in the TIF district and the taxable value base are placed into the TIF Fund and used for public improvements listed in the TIF plan. The property taxes affected by the TIF plan include taxes levied by the city where the TIF district is located and taxes levied by other taxing authorities like libraries, community colleges, etc. This diversion of tax revenues to the TIF continues for the life of the TIF plan and stops when the plan ends.
Sign the petition
Call or text 231-947-2500 to arrange for a petition circulator to meet you to collect your signature.