TIF extension gets DDA go-ahead

August 17—TRAVERSE CITY — A 30-year extension of downtown’s major Tax Increment Financing (TIF) plan was approved by the city’s Downtown Development Authority Board, a plan which now heads to the City Commission where it faces an uncertain future and potential fallout from two proposed city charter amendment votes in November.

The DDA Board on Friday morning unanimously approved its Moving Downtown Forward TIF plan — formerly known as TIF ’97. The plan, which provides for tens of millions in downtown improvements and maintenance over the next three decades, was twice delayed by the DDA this spring and summer as the board completed its executive director search, and to avoid a potential conflict with the two city charters amendment proposals requiring city voter approval of TIF plans that are on the Nov. 5 election ballot.

“This is a shared vision for the future,” DDA Board Chairman Gabe Schneider said. “This was not born out of a boardroom — it’s been born out of the community.”

DDA Executive Director Harry Burkholder presented the board with a brief overview of the history of TIF and the DDA, which was formed in 1978 to address several empty storefronts and expanding blight in the downtown. He highlighted various TIF-funded projects over the years including the Hardy parking deck, bridge renovations downtown, tree planting, widespread streetscape and intersections improvements, along with other services including the city’s downtown police officer and downtown trash removal. Burkholder credited those improvements for helping boost the taxable value of the TIF-97 district from just under $37 million in its first year to more than $209 million in 2024.

“We didn’t really support our public spaces,” Burkholder said. “We’ve come a long way, and that’s partly from the TIF.”

Some of the major downtown improvements specified in the plan include the riverfront improvement project along the Lower Boardman Ottaway River valued at more than $57 million. Other items include up to $7 million in improvements to Rotary Square along Union Street, $30 million in street, sidewalk, crosswalk and streetscape work throughout the downtown, and another $15 million for the installation of heated sidewalks.

The plan also provides for up to $38 million for new housing opportunities including affordable and workforce housing, $20 million for stormwater infrastructure, $3 million in additional bayfront improvements, $5 million in trail, transportation and other work spelled out in the city’s new mobility plan, $4.5 million in improvements to the Farmer’s Market and $5 million for work on the East Front Front “gateway” to the downtown. The plan also includes a new 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 under the revenue-sharing proposal.

One major item in earlier versions of the plan — a west-end parking structure estimated at more than $32 million — was removed from the plan in March after a majority of DDA Board members agreed there wasn’t sufficient public support for the project.

The TIF plan allows for up to $90 million in city bond debt for downtown projects specified in the document, including funds for maintenance of work that’s already been completed.

But critics of the plan said the TIF district has done its job to revive the downtown and that it’s time to return those tax dollars that are diverted from the city’s general fund and from other local taxing units. TIF generates around $4 million annually for the DDA, of which some $2.3 million is captured from the city’s general fund and another $1.7 million from other regional taxing entities including Grand Traverse County, Northwestern Michigan College and the Bay Area Transportation Authority.

Former mayor Jim Carruthers, part of a local group called TC Taxpayers for Justice which opposes the TIF extension and organized the two city charter amendment proposals, said TIF was “developed as a temporary development tool … it was developed to have a beginning date and an end date. It was never recommended to keep changing plans and move plans into the future and make TIF an extension over and over and over.”

Carruthers pointed to various city documents, committee recommendations and staff comments going back 15 years that “discourages” extensions or expansions of TIF plans and projects.

“For years — years — we’ve discussed not extending TIF and moving (it) forward,” he said.

City Commissioner Tim Werner also criticized the DDA for “going in the wrong direction” from the city’s efforts to combat climate change.

“The DDA is doing nothing — and worse than doing nothing, spending $4 million a year on pet projects for the sake of spending,” he said.

Several DDA Board members pushed back on Werner’s comments. Mayor Amy Shamroe said several items spelled out in the revised TIF plan would improve environmental conditions downtown, including the riverfront improvements and stormwater management upgrades. Without TIF revenue, those improvements would have to be paid for from the city’s general fund without other regional funding, she said.

“I’m trying to wrap my head around how all these things will work (without TIF funds),” she said.

Board member Peter Kirkwood said losing TIF funds would cripple the DDA’s ability to combat climate change.

“If you care about climate change, you should support TIF,” he said.

After almost five years of the plan’s development and months of delays this year, the TIF plan now moves to the City Commission, which has to conduct another public hearing on the plan which has not been scheduled. The commission needs a majority vote to adopt the plan, which could then also be sent before voters as part of a citizen petition initiative.

The TIF-97 district is one of two tax increment financing districts downtown; the other is the smaller, 52.5-acre Old Town TIF district which was the city’s first TIF district established in 1985 and extended in 2016.