TIF debate back as DDA plans future

·6 min read

Jun. 23—TRAVERSE CITY — Questions over whether Traverse City should continue a tax increment finance plan to pay for downtown projects loomed large during an open house.

Fewer than a dozen people met in the City Opera House Wednesday night, but the questions they asked were anything but small. They had some ideas to share as the DDA works on a strategic plan for the next few decades, both on what overall goals should be included and how to fund them.

Brad Segal is president of Progressive Urban Management Associates, the firm DDA CEO Jean Derenzy said the authority picked for the planning effort. It's called Moving Downtown Forward.

Segal explained how the funding mechanism works: as the taxable values of properties within the TIF district grow, that increased value goes to a separate fund for projects within the district.

For TIF 97, that's over the 1997 baseline from when the city created the district that maps show covers roughly two-thirds of the DDA's district.

It's one of the few tools that Michigan allows local governments for funding big-ticket infrastructure projects that benefit more than just a city's residents, Segal said.

"One argument for this, particularly in the state of Michigan, is that, yeah you've got a region sharing in the cost of this, but particularly in Traverse City the downtown is a regional asset," he said.

Derenzy said the current budget for TIF 97 is around $4 million, and Segal said over its life so far, the TIF plan put more than $20 million into numerous downtown projects.

Of the TIF capture, 47 percent is money that would have gone to a handful of other taxing jurisdictions, especially Grand Traverse County and Northwestern Michigan College, Segal said.

It's money that several people in the audience said they wouldn't want the city to do without.

Gil Rupp, who argued for keeping the current DDA model in general as Segal and others examine its organizational structure, said many of the objections to TIF seem to come from people who don't understand it.

Rupp previously administered Traverse City's parking, as previously reported.

That missing funding nettled other jurisdictions, and Segal acknowledged TIF is controversial.

Former city commissioner Deni Scrudato questioned whether TIF should be called cost-sharing and not diverting the money that could be going to the city's general fund and other local governments and organizations.

Technically true, Segal said, but doing away with it would leave the city 47 cents short on each dollar it currently gets through TIF.

Resetting the baseline when TIF 97 expires in 2027 would leave the DDA waiting for enough taxable value growth to have the budget for any new improvements, Segal said.

Afterward, city resident Barb Zupin said she still took issue with the money being tied to just the downtown when the city has so many other needs. Plus, downtown infrastructure isn't the only place where people from outside city limits use city assets, she agreed.

It'll be up to the city commission in a few years, Segal said — Derenzy agreed that city voters could force a referendum on a TIF-funded project involving borrowing money through a bond issue.

Earlier on Tuesday, city commissioners and DDA board members talked about some of the same issues.

Scott Hardy of the DDA board said it's time for a decision on TIF and some of the other issues city leaders have debated for a decade. There are people who want to invest in the city who want to know what it's going to look like.

"We've got to quit just talking about it and do something, and it may not be something we like but whatever, just do it," he said.

Those other issues included housing, one where Hardy and others wondered how much a role the DDA could play — Segal told the open house audience Wednesday that it's a problem the DDA can't solve alone.

The city is at a tipping point, Segal told the joint session Tuesday. And if it tips too far it risks resembling Colorado resort towns, where increasingly unaffordable housing has driven people to commute 30 miles or more to work.

City Manager Marty Colburn recalled the city and DDA's effort to redevelop two city lots, including one now planned for a mixed-income apartment building.

Segal said downtowns can help with other incentives, even if they can't directly pay private developers. Those could include parking for projects where developers agree to create affordable housing.

Mayor Pro Tem Amy Shamroe said housing that young professionals can afford is critical for the city if it hopes to keep growing its downtown, businesses and institutions.

The DDA isn't a developer and doesn't own property, Hardy said. Plus, it's the most expensive real estate in town and a charter amendment requiring a vote on tall buildings complicates matters even further, he argued.

Mayor Richard Lewis agreed with Hardy that someone has to pay to subsidize an affordable housing project. Lewis argued the two boards should still "dream big" and work with others to bring such projects together.

Some audience members brought up the vote requirement Wednesday evening, with Gil Rupp and Brilliant Books owner Peter Makin saying they wanted to do away with the voter-adopted requirement from 2016.

Makin said he saw it as a self-defeating rule, while Zupin argued the city would be "shooting itself in the foot" to make Traverse City look like a big city when so many people who come to town are looking to escape just that.

Other perennial topics like parking came up as well, and Lewis said he was the source of a question as to whether the city has the "political will" to build a new parking deck. It's another tough question that's sure to stir public comment.

The joint DDA-city meeting and open houses were early steps in charting a path for the DDA, both its funding sources and internal structure, Derenzy said.

Megan Motil, founder of Parallel Solutions, reviewed some of the input the process has collected so far with the firm's help. More than 900 people responded to an online survey, live until June 30.

They weighed in on everything from top priorities — parking, stormwater and housing scored highly — to ways the downtown has improved or not — parking didn't fare well there. Others did as well, including city commissioners, property owners and others with a stake in the downtown.

That input plus demographic and market trends — young people increasingly choosing downtown living, along with baby boomers, plus the likelihood of people returning to office work post-pandemic, to name a few — are the footings for the strategic plan, according to Segal and Motil. Segal said they'll be back in September to review the draft plan.

Derenzy urged a small crowd at the later open house Wednesday to give their feedback.

"We don't have all the answers, of course not, because a downtown is about evolving," she said.