Investing In Downtown: An Oral History Of TIF 97

It’s one of the hottest-button debates in recent Traverse City history: Should TIF 97 be amended and extended for another 30 years? Or should the tax increment financing plan that pays for major downtown infrastructure projects be sunsetted? The answer to that question will come sometime this year, whether in the form of a city commission decision or a public referendum. But how did TIF 97 come to be in the first place? The Ticker took a look back three decades to get the origin story, told below in oral history form.

The Cast of Characters

Rick Korndorfer: Local real estate agent and downtown business owner; also a board member for the Traverse City Downtown Development Authority (DDA) during TIF 97’s inception.

Richard Lewis: Traverse City’s city manager when TIF 97 was created; later served as mayor.

Scott Hardy: A current DDA board member. Also the son of Larry Hardy, who served as a city commissioner – and later, mayor – during TIF 97’s infant stages.

Jean Derenzy: Current (but soon-to-be-outgoing) CEO of the DDA.

Bryan Crough: Derenzy’s predecessor at the helm of the DDA, and a core architect of TIF 97.

The History

Korndorfer: I was a partner in an office supply and office furniture company that operated downtown in the ‘80s and ‘90s. An attorney from downtown, Chuck Judson, was on the DDA board, and he approached me and asked if I would be interested in serving. That's how I ended up jumping on board. One of the first things we did after I joined the DDA is we hired Bryan Crough as our CEO.

Lewis: Bryan had become the DDA director six months prior to my arrival in Traverse City. I got here in July of 1991. So, Bryan and I became partners in a lot of efforts to move the city forward.

Korndorfer: One of the biggest issues downtown at the time was parking. We didn't have enough parking. And so, we thought we should build a parking deck. Instead of having the cars spread all over creation, we could stack them 4-5 stories high. But, of course, parking decks are very expensive, and we didn't have money for that kind of thing.

Lewis: We undertook a study asking, ‘OK, if we're going to do something differently [with parking], what's it going to look like?’ And it came back and basically said, ‘Look, if we’re going to do anything [in terms of growing downtown], we’re going to need three parking decks.’ The report recommended one deck on the east side of downtown, where the current Hardy deck is; a second one down on the west end of town; and a third where the Old Town deck is now. And we said, ‘Well, there’s only one way this is going to happen: We’re going to have to have a TIF plan to pay for the construction.’ Because the city couldn’t do that by itself.

Korndorfer: TIF is captured tax dollars. So, for example, the school system and Northwestern Michigan College (NMC) get tax dollars from all the property owners. And they still get those tax dollars; it doesn't stop. What stops are the incremental increases in tax revenues from rising property values. Those are captured in the TIF.

Lewis: There was already a TIF plan – called TIF 2 – but it was all happening in the space of what is now the Old Town TIF. It didn't apply to downtown. There had once been a TIF for the downtown area, but it had just phased out. It didn’t work out, or they just didn't follow it through.

Beyond parking issues, downtown Traverse City had fallen upon hard times, with many anchor retailers leaving it behind in favor of the newly-built Grand Traverse Mall.

Lewis: I arrived in 1991 and the mall opened four months later. Everybody thought, ‘Oh my gosh, what's going to happen downtown?’ We had JC Penney, which is now Horizon Books, and they moved out to the mall. There were a lot of concerns about what was going to happen in the future.

Derenzy: I was working in county administration [in 1997], as the city and the county were looking at the creation of the Brownfield Redevelopment Authority. So, I was not really involved in the creation of TIF 97. But I do remember downtown, and at the time, the place where people went for their lunches or to get whatever they were shopping for for was not downtown; it was out at the malls. I remember when JC Penney went out, and I remember the feeling that we really needed to focus on trying to invest in the downtown community.

Hardy: My dad was on the city commission in 1997, and then mayor in 1998 when TIF 97 was approved by the city commission. I remember, from conversations with him and Bryan Crough, that we were trying to use this new regional taxation tool to revitalize a rather moribund downtown Traverse City. Both movie theaters were closed, the JC Penney store was vacant – as were several other storefronts – and there was a Firestone tire store at 101 Park Street.

Lewis: The DDA took on the effort – with the city’s support – to develop the whole TIF 97 plan.

Hardy: My understanding is that Bryan spoke with our state legislators to confirm how we could use the [TIF] tool, and then got approval from the taxing jurisdictions to use it to revitalize the downtown and its tax base.

Korndorfer: Bryan Crough was a dynamo. I think what he brought to the table was energy and enthusiasm, and with those things, he spearheaded a lot. He wasn't afraid to take things on, and he wasn't afraid to go introduce himself to all the property owners and all the merchants and get everybody on board. He was really the person who got everybody thinking as one that ‘We can do this.’

Derenzy: I worked with Bryan for many years, and he was always asking ‘How are we encouraging investment into the downtown?’

Crough passed away suddenly in 2013, at the age of 59. After his passing, then-city-manager Ben Bifoss called him ‘the man who built downtown Traverse City,’ while the State Theatre honored him with a marquee that read: “Bryan Crough - When We Look Down This Street We'll Always See You”

Lewis: I remember the night the new TIF was adopted in 1997. It was November or early December, and the meeting was held at the old dome at the Park Place, because there was a big crowd that was really interested in it. And I remember, on that particular night, Larry Hardy asked me the question: ‘So Richard, this is going to take revenue out of the city’s general fund, what do you think?’ And I said, ‘Well, as a city manager, no one likes to lose their revenue. But we’ve got to think bigger about what's going to happen in our downtown.’ Because the city by itself could not have built a parking deck.

Hardy: I don't remember that [TIF 97] was a tough sell to either the city commission or the residents of Traverse City.

Korndorfer: I think people were pretty amenable to it. I don't remember too much negativity.

Lewis: I think for the most part, everybody knew it was something that needed to happen. There was some debate, but the DDA made a pretty good argument: This was all about parking, and it was about the fact that downtown is the center of the community up here. The only way that we were going to get other governmental units to help us pay for stuff was through TIF. And so, the county administration, the folks at NMC, they all saw the need and they backed it.

After the city commission approved TIF 97, it took some time for its impacts to start being felt.

Korndofer: I think the first big thing we did [with TIF money] was the streetscapes. We put in new sidewalks and lighting for the streets in the 100 and 200 blocks of Front Street, and then we extended that work out further to other blocks and up Union and into Old Town.

Derenzy: I didn’t even remember that parking was the big focus of why the TIF was needed. I remember there needing to be a focus on investments for the infrastructure downtown: the sidewalks, the lighting, the street grates, the trees. That’s what I remember the discussion focusing on at the time.

Lewis: When we got around to doing the first parking deck, it was a referendum vote. Fortunately, the public said, ‘Oh, go ahead and build it.’

That first parking deck, known today as the Larry C. Hardy Parking Garage (pictured), sits with the 300 block of Front Street to the north and State Street to the south. Voters approved the garage – and the use of TIF funds to build it – in 2002; it opened the following year.

Korndorfer: The idea behind the parking deck was really that, if you go put your car or truck in a parking deck, you don't use it. You leave it in the deck, you get out of the car, and you walk wherever you go downtown. It was all about pedestrians. Cars and trucks don't spend money, but pedestrians do. And, our reasoning was: If you can get people downtown, and give them a place to park, and get them out of their vehicle, then they'll have a good experience. I think that that has proven to be true in downtown Traverse City.