DDA Eyes Project List, Citizen Advisory Council for New TIF Plan

Traverse City Downtown Development Authority (DDA) board members are working to identify a list of improvements needed in downtown Traverse City over the next 30 years – with the goal of including those projects in an updated tax increment financing (TIF) plan to be voted on next spring by city commissioners. Board members discussed potential projects Friday, as well as forming a required citizens advisory council that will also make recommendations.

The DDA is looking to 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. As part of the extension, the plan would be renamed the Moving Downtown Forward financing plan and include a new list of projects that could be funded through TIF over the next three decades. 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.

DDA CEO Jean Derenzy said housing was one notable example of a use missing in the current TIF 97 plan. The DDA’s other TIF plan – the Old Town TIF – allows for dollars to be used toward housing projects within a half-mile radius of the district’s boundaries. But TIF 97 funds can’t be spent on housing projects until the plan is updated to include that use, Derenzy said. DDA board members had strong consensus Friday that housing should be included in the new Moving Downtown Forward plan, with board member Katy Bertodatto saying she was “tired of hearing for years that we’re limited (in what we can do to address housing)...and then having the conversation stop there.” Bertodatto said the DDA should focus instead on what it can do to alleviate the housing crisis. DDA Board member Pam Marsh agreed, saying she was “confident there are things out there that we can do to contribute” to housing solutions as an organization.

Derenzy shared three categories of projects that could be included in the new Moving Downtown Forward plan: projects already listed in the TIF 97 plan that haven’t been completed, projects discussed by the DDA board but not yet included in the plan, and new projects suggested by staff. Some existing TIF 97 projects, like developing a new civic square downtown, could be carried forward so they could be finished. Housing is among the projects DDA board members have discussed but aren’t yet in the TIF 97 plan; other examples include a new downtown retail incubator, a redesigned riverwalk, and a TART Trail extension.

Staff also suggested new projects that could be included based on DDA and city commission strategic priorities. One is a districtwide heating and cooling system, which could help provide snowmelt throughout downtown. Widening sidewalks and reconstructing crosswalks at key intersections, as well as installing security cameras throughout downtown, were also on the list. Noting that the city is looking at creating a long-term master plan for the Open Space, Derenzy said allocating dollars for Open Space improvements could be another option. She also discussed improving Garland Street by adding trees, benches, and public art between Hotel Indigo and a new planned Marriott to provide a better pedestrian experience throughout the corridor.

DDA Chair Gabe Schneider noted that part of the board’s task over the next several months will be narrowing down the project list, trying to anticipate what downtown will need over the next three decades while also staying within the financial parameters of the plan. The goal is to “amend the plan to include more things the community has identified as needs,” Schneider said. “We’re talking about the next 30 years, and if it’s not in there, we can’t spend money on it.”

Board members requested that staff return at a future meeting with projects grouped according to how many DDA and city commission strategic priorities each project meets. Keeping in mind that some projects are interconnected or dependent on other projects being completed will be important, board members agreed, as well as considering general cost ranges for improvements and their long-term maintenance (cost estimates for each project will be included in the final plan).

When the DDA last renewed a TIF plan – extending TIF 2 in 2016, at which time it was renamed Old Town TIF – the district’s base was reset. In a TIF district, the taxable values of all parcels in the district’s boundaries are frozen at the rates of the year the plan starts (for example, 1997 rates for TIF 97). Those rates serve as a “base” for the 30-year lifespan of the plan. As property values have increased over time, taxes on the difference between the 1997 base rates and the actual property values have been captured to pay for public improvements in that district. When city officials renewed TIF 2, they also “reset” the baseline – moving it up to current property values, with the DDA capturing the new tax increase going forward. Resetting results in significantly less revenue coming in for projects, at least during the early years of a new plan until the tax capture gradually grows over time.

For TIF 97, the DDA wants to extend the plan but not reset the base. That will preserve enough funding for the significant list of projects being considered for downtown. However, some critics have argued that other jurisdictions – like the City of Traverse City, Grand Traverse County, and more – whose taxes are also being captured in TIF districts are missing out on revenues that should be returned to them. DDA board member Pete Kirkwood said Friday that TIF exists to ensure that those jurisdictions – who all benefit from having a vibrant downtown and who use and impact its infrastructure – regionally share in its upkeep, rather than making city residents solely responsible for it. “If we want these (downtown improvements), we either have to renew TIF 97 or we have to articulate some other funding mechanism, which no one has been able to do,” he said.

One potential compromise is extending (and not resetting) the TIF 97 base, but giving back some additional revenues to other taxing jurisdictions above and beyond the base so that those dollars can be used in other parts of the community. Derenzy told The Ticker after Friday’s meeting that she’s proposing to do just that, with the DDA looking at potential formulas that could be included in the new plan that would return more funds to other taxing jurisdictions. “It’s looking at how we’re working with our partners in a way that’s collaborative and not just the status quo,” she says.

Extending the TIF 97 plan will require extensive input, including from a new citizens advisory council comprised of residents who live within the TIF 97 district. The creation and structure of the council is outlined under state law. The council will be created by early 2024 through an application and interview process and will review the proposed new Moving Downtown Forward plan. Before then, the DDA will continue to host study sessions dedicated to individual aspects of the plan – such as financing and projects – and will host community listening sessions and loop in city commissioners to provide feedback, according to Derenzy.