Promises Made, Promises Kept
By Jim Carruthers | May 20, 2023
Several decades ago (mid 1990s), Traverse City convened area businesses and citizens to talk about “blight” in downtown. They formed the Downtown Development Authority (DDA) TIF Advisory Committee, whose mission was to come up with a plan to do something about it.
A tax incentive program called tax increment financing, more commonly known as TIF, was gaining traction across the nation and helping communities with the redevelopment of urban blight in deficient downtowns. The idea of TIF 97 was born but had to be sold to the community for it to work.
The plan was intended to be a temporary tool with a defined beginning and end date, or that’s what they told us to promote this new tax incentive program on the citizens. It was never meant to be a permanent tax. The DDA needed the buy-in from the community, so they told us it would be a temporary loan of sorts. It was marketed as a way to use the future increase in taxable value downtown on new development as an upfront loan to help developers redevelop the downtown and help the city fund infrastructure projects in the district. This would end the blight and generate more taxable revenue for the city in the long run.
It was promised as a 30-year loan program. When finished, the money (the increased taxable value) would be given back to the city’s general fund to be used across the entire city, and we’d celebrate a job well done. The increase in taxable value could then be used to grow citywide infrastructure needs by fixing and replacing things like roads, sewer lines, and making sure our fresh drinking water was clean and lead free.
How TIF 97 would do this was to allow the city to take funds from our local nonprofits like the Traverse Area District Library, Commission on Aging, our veterans, BATA, Northwestern Michigan College, and more because that was free money and wouldn’t come out of the taxpayers pockets. The DDA said it was a way for the “region” to support the redevelopment of downtown without it placing further burden on the citizens.
But what they didn’t tell you is that TIF was actually robbing Peter to pay Paul. The funds would be taken from the nonprofits’ budgets, which ultimately would run short. So the city would then have to ask the citizens to fill those gaps with additional millage to cover budget shortfalls for the nonprofits. Ever look at your tax bill to see all the millage you pay? It’s not just the nonprofits subsidizing the downtown TIF—it’s you subsidizing the downtown to help the nonprofits become whole after the DDA robbed them of their monies.
It’s a vicious cycle and one the DDA wants to hide so they can continue the gravy train that feeds their DDA budget with TIF monies. It’s kind of like the man behind the curtain controlling the slot machine that flows the winnings into the DDA’s pocket without you knowing anything about it. It’s a smoke and mirrors show and why so many people know so little about TIF after all these years.
The TIF is set to end in 2027, but the DDA does not want that to happen. They now want to add the latest issue, “housing,” to the plan, which makes them feel good and gives the impression they are doing something about it. But in reality, those might just be words to give the DDA relevancy. What they really are trying to do is extend the TIF 97 plan on the backs of hot-button issues to keep the tax incentives flowing into the DDA budget.
TIF 97 was never supposed to be forever. Over the past 30 years, we have combated our blight, redeveloped our downtown, and have become a very popular, top-rated international destination. We just about hit every “top 10” list you can get on telling us how great we are. TIF 97 has done what the program set out to do, so it’s time to honor the promise made by the DDA and return the tax capture to the city general fund and celebrate a job well done.
As they say, promises made, promises kept. We should keep the promise made to our citizens as intended so many years ago and stop feeding the beast with our tax dollars so the city can help grow all of the city, especially outside our downtown district.
Jim Carruthers served as the mayor of Traverse City for six years, a city commissioner for eight years, and a Parks & Recreation commissioner for eight years prior to that.