More and Less
By Stephen Tuttle | Oct. 26, 2019
As Washington goes from bizarre to surreal, here at home our local DDA wants more than it was promised, and a local school board gave us less than we deserved.
Legislation enacted in 1975 permitted the creation of downtown development authorities (DDA) to correct and prevent downtown blight, promote economic growth and development, and encourage historic preservation.
They are primarily financed through tax increment financing (TIF) in districts created in need of their assistance; a baseline property tax is established the year a TIF begins, and revenues above that baseline are then “captured” by the DDA in subsequent years. In Traverse City, business owners within a TIF district also pay an additional two mil tax.
It is a program that helped sustain and revitalize Main Street Michigan during difficult economic times. Most have done a praiseworthy job, including here in Traverse City.
Our DDA has a pair of TIF districts and would now like to extend one of those, TIF97, for an additional 13 years. Created in 1997, its 30-year lifespan should expire in 2027,
but the DDA wants to extend it to 2040.
This was not such welcome news to everyone. At least some city and county leaders believed there was an agreement in place: that the city and county would sacrifice revenues (TIFs take revenue that would otherwise go to the city, county, Northwestern Michigan College, and the Bay Area Transportation Authority) for 30 years only.
The money is significant; this year alone, TIF97 will capture about $1.4 million that would otherwise go to the city's general fund, and another half-million from the county.
Jean Derenzy, executive director of the TC DDA said, “We're not reneging on our promise. The promise was economic impact, and it has worked. But we're not done with the plan, and that's the key.”
Indeed. They have plans aplenty. There's the multi-million-dollar permanent farmers' market, the multi-million-dollar civic park (for which there is no land), work on the lower Boardman, and a long want-list of other projects.
Then there's the third parking deck they're determined to build on a postage-stamp-sized lot on West Front Street. It could cost as much as $19 million, and the DDA cannot afford the financing absent a TIF97 extension. (To provide significant additional parking, it will have to exceed the city's height restrictions.)
We know downtown Traverse City is the region's economic engine, and we know it provides more tax revenue than the rest of city, despite the TIF captures. We know because we've been told over and over again.
But the conceit here is the presumption that anything the DDA wants to do downtown is necessarily more important than what the entities from which they capture taxes would do.
And to assume a 13-year extension is the end of it is naive. The DDA will always have more things to do. They aren't likely to announce they're ready to close up shop in 2040 or any other time; their planning becomes self-perpetuating. They are already considering consuming the North Boardman Lake District — business owners in the district have requested it — but have delayed the decision while attempting to add even more parcels. They have not yet requested it become another TIF district, but it's hard to believe they won't.
Our DDA has done and is doing fine work. They have a long list of accomplishments; they've done their job. And there is nothing malevolent about their request for a TIF97 extension. But people did not think TIF districts were going to be permanent, or nearly so, when they were first approved. It seems 2027 would be a good time to stop capturing money from the city, county, NMC, and BATA and let those entities use it as they need. They have plans, too.
Meanwhile, Traverse City Are Public Schools (TCAPS) has a problem of its own making. Ann Cardon, its new superintendent, resigned (or more likely resigned, rather than being fired) after 72 days on the job. She had been unanimously approved by the schoolboard and was reportedly well-liked by teachers and school administrators.
Speculation — and that's all we have — is that a disagreement regarding the state's determination TCAPS had been overpaid hundreds of thousands of dollars for its registered homeschool students could not be resolved. Or maybe it was the new public school funding formula. Or perhaps Cardon's use of the word “we.”
Whatever the cause, the decisions were all made behind closed doors and now we have confidentiality agreements. In what can only be described as a shabby performance by a majority of the board, they couldn't discover any problems at all during the interview process – remember, they approved her unanimously – and then couldn't figure out how to solve some kind of issue when it arose. Instead, they appeared to be a conspiratorial cabal rather than people we trust to lead our school system.