Could Traverse City Become Michigan’s Next SmartZone?

An effort to make Traverse City the first “SmartZone” in northern Lower Michigan could bring new technology funding, jobs and infrastructure to the region.

Michigan has 20 SmartZones – or special technology parks designed to encourage economic growth in the tech and research sectors – across the state now. Created in 2001 by the Michigan Economic Development Corporation (MEDC), the SmartZone program allows participating communities to create a geographic district in which colleges/universities, incubators and tech firms are clustered together in close proximity to promote collaboration and growth. Companies located within a SmartZone are eligible for microloans and other business accelerator resources, including grant writing, incubator and wet lab space, product development, marketing, technology mining, and venture capital assistance.

The tech parks are also able to capture tax increment financing (TIF) dollars within their boundaries to pay for infrastructure projects – such as high-speed fiber Internet – and boost further economic growth in the district.  (Such districts can’t capture existing taxes or levy additional taxes, only capture taxes on new growth within the SmartZone.) “The idea is to attract high-tech entrepreneurs to diversify Michigan's economy,” explains MEDC Vice President of Entrepreneurship and Innovation Fredrick Molnar. “It’s pulling in the university, pulling in the city, pulling in the business community so that everyone’s working together.”

The program is an ideal match for Traverse City, both state and local officials believe. “To me it’s a natural fit for Traverse City, because it’s one of the most up-and-coming cities in the state,” Molnar says. “I think everyone recognizes that.” In a memo to Grand Traverse County Economic Development Corporation (EDC) board members earlier this month, County Director of Community Development and Codes Jean Derenzy pointed to Traverse City Light & Power’s planned citywide fiber deployment project, new local technology incubator Startology, and Northwestern Michigan College’s planned $14 million 21st Century Innovation Center as examples of projects that align with the SmartZone concept.

“These zones were created to help Michigan obtain national and international recognition as a center for technological advancement and give communities unique real estate to attract technology companies and workers,” Derenzy wrote.

Traverse City’s designation as a SmartZone would help balance what otherwise appears as a lopsided distribution of the program status on MEDC’s map (pictured). Of the 20 SmartZones in Michigan, 17 are concentrated in the southern half of the state; the other three are scattered across the Upper Peninsula. The entire northern Lower Michigan region, both eastern and western, is missing such a technology park.

“If you look at the map, (Traverse City) seems very logical for it when you see that gap,” says Molnar. “It also makes sense because of how the community is growing and the things that are going on there.” The SmartZone program is also designed to help communities that are heavily dependent on one industry – such as tourism in Traverse City – diversify their economies, Molnar says.

Derenzy also calls Traverse City the “obvious location for a SmartZone to represent its region,” noting that locations as remote as Houghton/Hancock and Sault Ste. Marie have such parks but that “shockingly” no communities in the more densely populated areas of northern Lower Michigan do. “The timing is correct to receive the designation,” Derenzy wrote.

While communities in the past have been able to apply with the state for SmartZone status, a legislative cap on the number of program participants means Traverse City will need the assistance of state legislators to qualify for the program. Local officials could either appeal to legislators to allow Traverse City to become its own SmartZone or else a “satellite” SmartZone that’s partnered with the program of an already existing park, such as Lansing. Derenzy proposed such a partnership to EDC members, saying “a window of opportunity is potentially available for a legislative designation for Traverse City to be awarded a Satellite SmartZone” status in the state’s 2018 fiscal budget.

EDC Chair Warren Call says board members “to a person saw the value” of the SmartZone program at their meeting this month about the designation. “I wouldn’t say there’s buy-in yet, only because it’s so early, but there’s a lot of interest,” Call says. “We’d have the ability to access state and federal funding toward economic development that we’re leaving on the table right now. (That funding) is earmarked for economic development, and it’s not coming here because we don’t have a SmartZone….it’s an opportunity that’s not been seized.”

Call says next steps for the EDC include getting a clearer sense of the legislative action needed to acquire SmartZone status for Traverse City, then creating a plan the board would bring to Traverse City and Grand Traverse County commissioners for their support. “We need to get the public entities on board,” he says.

If community leaders agree on a plan, Sen. Wayne Schmidt (R-Traverse City) says he is willing to do his part to help get legislation introduced and passed to bring a SmartZone to Traverse City.

“We have a lot of good contacts at the MEDC and have already worked on a lot of legislation on SmartZones, and we’ve got good partnerships already in Traverse City and Grand Traverse County,” Schmidt says. “It’d just be a question of focusing on what we want to do and getting the bill drafted and introduced. It would take a little bit of work to do it, but working with all the partners, we could get it done."