Traverse City Downtown Development Authority (DDA) board members unanimously approved changes to their proposed 2024-25 budget at a special meeting Friday – including a marketing funding change that City Commissioner Heather Shaw said would switch her position from opposing to supporting the budget. That should clear the way for the DDA budget to secure a required minimum five approval votes at the city commission’s meeting Monday, avoiding a looming DDA shutdown at the end of the month.

DDA board members met Friday after city commissioners rejected the DDA budget in a 4-3 vote earlier this month, with Commissioners Shaw, Jackie Anderson, and Tim Werner opposed. Those commissioners cited among their concerns an ongoing debate over whether the DDA’s tax increment financing (TIF) 97 plan will be extended, saying the budget should better reflect the reality that TIF 97 could be winding down in a few years and minimize outlays for multi-year projects that may not ultimately materialize if the plan ends.

The failure to secure the five votes needed to pass the budget put commissioners in violation of the city charter, which requires the board to approve all city budgets by the first Monday in June. City Attorney Lauren Trible-Laucht issued a legal opinion stating that if commissioners did not approve a DDA budget by the end of the fiscal year June 30, the DDA could not spend any funds starting July 1. That would impact a wide range of expenditures, including running the farmers market, collecting garbage downtown, and managing citywide parking.

DDA board members made three key changes to the proposed budget Friday in an attempt to obtain more support. Those included allocating $100,000 for a new mid-block crosswalk on State Street and $100,000 for a stormwater management infrastructure project – both added as line items in the TIF 97 budget. The crosswalk would be part of the two-way conversion project on State Street, while the stormwater project is described as potentially covering “hyper-focused stormwater elements in the Lower Boardman/Ottaway Riverwalk design and engineering process and/or contributing funding toward stormwater elements associated with the future reconstruction of Lot B (which has been estimated at roughly $400,000), or another city stormwater project in downtown.”

Both of those projects were requested by Werner, according to a memo from City Manager Liz Vogel. The third budget change – one publicly requested by Shaw – removed marketing and communications as a line item in the TIF 97 and Old Town TIF budgets and put it under the DDA general fund budget. That moves $80,000 from TIF 97 and $30,000 from Old Town TIF over to the general fund budget. With a charter amendment on the ballot this fall that would require a vote on any major TIF decisions, Shaw said she didn’t want to see the DDA using TIF funds to pay for marketing materials that could be used to “campaign” for a pro-TIF position on the proposal.

Multiple DDA representatives – including Mayor Amy Shamroe, who sits on the board – have objected to Shaw’s use of the word “campaign,” noting it’s illegal for the DDA to campaign for a specific position on the proposal. As with other entities with millages or other initiatives on the ballot, the DDA is permitted to put out educational materials about the proposal. Still, DDA board members agreed to shift marketing funding. In a written statement from Shaw relayed by Shamroe at Friday’s meeting, Shaw said she would change her vote.

“I’m not here to break the machine. That would be poor governance on my part. The show must go on,” Shaw said in her statement. “That said, the TIF 97 extension is a major decision that begs the question: What do we want to invest in over the next 30 years, and how? I sincerely hope that a decision of this magnitude is allowed to be debated publicly and voted on by residents.” Shaw continued that she recognized the DDA is “under considerable stress,” including being in a leadership transition, and that she acknowledged “both the turmoil that this budget debate has caused and the real need for both the DDA and the city to get back to the day-to-day work of governing.”

“So, let’s move on,” Shaw said. She concluded by stating that if “the DDA moves that marketing and communication line item to its general fund and uses its operation budget for its campaign expenses, then I will vote ‘yes’ to approve the DDA budget.”

Shaw’s shift should provide the five votes necessary for the DDA budget to pass at Monday’s meeting, where it is on the agenda for reconsideration – even if Werner and Anderson remain opposed, as Anderson said she was during public comment Friday. Anderson said she was “disappointed with the response of the board to the concerns of the city commissioners regarding the budget,” calling it a “business-as-usual spending plan rather than truly considering the opportunity for a brief pause until our shared future becomes better known” after the November ballot vote. Anderson said that while “everybody loves downtown,” she wanted to see a temporary halt on any major expenditures in the DDA budget. 

DDA Board Chair Gabe Schneider said the proposed budget “makes no assumptions about TIF” or its future. “It’s a standalone budget that represents the year ahead and the work that we hope to get done,” he said. DDA board member Pete Kirkwood objected to characterizations that the board is driven by an agenda or trying to push projects on the community, noting that items in the budget – like improvements along the Boardman/Ottaway River – were included because of overwhelming public support at community input sessions.

“We are merely the tool or the implementation device for something which our community has already gone on record emphatically supporting,” he said. “It’s not like the DDA is some nefarious organism that’s trying to grasp for power. The DDA is simply trying to deliver to this community what this community has already said that it wants.”