DDA Approves Moving Downtown Forward TIF Plan

A long-debated new tax increment (TIF) plan – called Moving Downtown Forward, which would extend downtown’s TIF 97 plan by another 30 years – took a major step forward Friday after Traverse City Downtown Development Authority (DDA) board members unanimously approved it, sending it on to city commissioners for final approval.

After two previous vote delays this year, DDA Executive Director Harry Burkholder said the plan approved Friday was “the culmination of work by the DDA board and the community that began in 2019.” The DDA has been working to rename and extend the TIF 97 plan – which covers the core of downtown Traverse City and is set to expire at the end of 2027 – by another 30 years. TIF districts capture taxes on rising property values within their boundaries to fund public improvement projects. However, those projects must be named in the plan in order to be funded.

Burkholder gave a recap Friday of the Moving Downtown Forward plan, saying it would both pay for new public infrastructure projects as well as continued maintenance of downtown. Key projects in the new plan include a permanent shed for the farmers market, the buildout of Rotary Square, riverfront improvements along the Boardman, snowmelt and stormwater systems, mobility and streetscape upgrades, and services ranging from downtown police to trash collection. Notably, a heavily scrutinized third downtown public parking deck was not included in the final draft of the Moving Downtown Forward plan.

Burkholder said TIF projects have been instrumental to the success of downtown, noting that the taxable values of properties in the TIF 97 district have risen from $36.8 million in 1998 to $209.3 million in 2024. The plan has ensured that regional partners also participate in the upkeep of the city center, Burkholder said, with no alternate funding mechanism available to capture that support if TIF is eliminated. He cited as an example the recent construction of the South Union Street Bridge, a $4.12 million project that was 12 percent funded by TIF. Five percent of the funds, $243,225, came from regional taxing partners. Without TIF, Burkholder said, that money would have had to come from other city funding sources.

Downtown property owners contribute approximately 53 cents on the dollar of TIF funding, according to Burkholder, with regional partners contributing the other 47 cents. Moving Downtown Forward includes a mechanism to help share some of downtown’s success with those regional taxing partners, Burkholder said, with the first seven years of the TIF 97 plan revenue to be returned to them in addition to 50 percent inflationary growth. That should return $1.4 million to those partners annually, he said, including $850,000 to the city.

With two charter amendments on the November ballot targeting TIF, board members spoke extensively about their concerns if TIF funding is rejected or becomes unavailable downtown. Mayor Amy Shamroe said TIF critics have spoken in favor of significant funding coming back to the city instead of going to the DDA if TIF was eliminated. But a large portion of that pool of money only exists if TIF exists, Shamroe said, since it’s captured from the regional taxing partners through TIF. “If TIF goes away, about half that money goes away,” she said. “That means there’s tens of millions of dollars in that number that actually aren’t going to exist.” Shamroe said that without TIF as a dedicated funding stream for downtown, city leaders will have to decide between allocating general fund dollars to downtown or to other parts of the city. “It’s going to become a battle between neighborhoods and downtown (for funding),” she said.

Vice Chair Scott Hardy agreed, saying not enough discussion has focused on the expenses that will go back to the city if TIF is eliminated. “We have 50,000 people coming into this town every day, and why on earth should 16,000 people pay for that?” he said. “It's myopic to talk only about the revenue that might go back to the city. We're going to forego opportunities, we're going to forego revenue share, and we're going to send expenses back with it.” City Commissioner Tim Werner, however, spoke out against Moving Downtown Forward in public comment, saying that public perception is the DDA is spending millions of dollars on “pet projects for the sake of spending.” Werner also said he thought the DDA was not doing enough to address climate change in the plan.

Board member Ed Slosky called himself a “reluctant supporter” of the TIF plan, labeling it a “Band-Aid” to pay for services and infrastructure because Michigan’s “antiquated” tax systems don’t allow communities to leverage taxes that other states do, like rental car or amusement taxes. He said Traverse City should “lobby Lansing for increased revenue streams so we can sustain our future.” Pointing to multiple travel features on Traverse City in the New York Times and other high-profile publications, Slosky said the DDA and city needed to be prepared for the coming demands on the community.

“We are becoming an internationally known destination, and there's no one in this room who's going to change that trajectory,” he said. “We have to work with understanding what is coming toward us.”

Chair Gabe Schneider said the DDA’s approval of Moving Downtown Forward was a “momentous occasion,” saying it came out of a process led by public input. “This is not born out of a board room, this is born out of a community,” he said. However, final approval still lies with the city commission, which must pass the TIF plan with a simple majority (at least four commission votes). One of the two TIF proposals on the ballot in November also seeks to unwind any action the city might take on TIF 97/Moving Downtown Forward this year, forcing the plan to a public vote – though the legality of those proposals has been questioned by the state attorney general’s office.

Shamroe said she was looking forward to “having a bigger conversation at the city commission level” on Moving Downtown Forward, including with TIF critics. “Maybe we'll get some more direction of what people are actually looking for if they're not happy with where we're going right now,” she said.