Traverse City enables more cronyism in its latest money grab.

Does a Tax Increment Financing (TIF) scheme really work?

It seems that each year, special TIF districts are set up throughout our state in order to promote growth or development of a particular economy or industry.  The revenues raised through a TIF scheme are theoretically targeted, specifically for the district raising the value of that district over a specified period of time.

But does it work well enough and is it worth the effort, and goodwill lost, as it continues to be abused by those who hold the authority?  As voters look at the millage requests on the ballot, they now see the language that reminds them that not-all-of their voted in millage will go where it is intended.

A TIF scheme is done by

1. Establishing a district; a set of boundaries for the real estate affected by the TIF.
2. Establishing a time capture period for the TIF (20-30 years typical)
3. Capping the property taxes of the district at an fixed value at the start of the TIF Capture period.  These taxes are currently what goes to the local agencies (police, fire, schools, libraries, aging commissions, general government, etc.)
4. ‘Capturing’ tax revenues from increases in valuation to an authority which manages growth by spending captured revenues to improve the district.  Sometimes the TIF captured monies are used to offset developer expenses, establish a basis for loans, and lower their taxes to encourage their growth and participation in the specified districts.
5. At the end of the capture period, the properties are fully assessed at their new ‘improved’ values, and the (now) additional revenues then flow to the normal recipients (Police, fire, et al.)

As an example, a library might collect $40,000 from a district in year one, and in year twenty-five, it will still be $40,000 if that is the length of the TIF.  Inflation is ignored, and any taxes from inflationary and other increase in value goes to the capturing body to pay it’s bills, pay off developers, and cover debts incurred.

That’s it in a nutshell.

It should be noted there are numerous ways in which such plans can easily be abused.  In addition to number 5 above, TIF schemes can be extended in some cases, damned near into perpetuity.  In the case of Traverse City’s TIF2 just passed, it was ‘reset to the current values, and will hold the same output to the multitude of taxing jurisdictions for 25 years.

Proponents for TIF schemes would say that without such mechanisms, particular zones, neighborhoods, real estate would largely go undeveloped, or might remain ‘blighted’ or undesirable.  Such cheer-leading often cites the need for a spark to induce or reintroduce vitality and growth.  “Absent a specific program to create it, it won’t happen.”

Opponents argue that TIF schemes undermine the normal development of a community, or rob that community of funding that would grow without such a program in place.  That TIF steals from the very things which naturally promote growth and stability, such as funding for libraries, adequate police, and other community based services.

There is truth in both pro and con.  But as such schemes go, it is rife with abuse and manipulation. And as there are those trained to manipulate government to their ends, the abuse is nearly always without exception.

Traverse City established a district in 1985, and the expiration of the Tax Increment Financing was last year.  Monday night they created a new 25 year plan for the exact same district.  This district mind you, has already benefited from the 30 year plan, but there is an addiction to TIFs that needs a twelve step program to cease.

I was there to fight it.

All of the big government players (usual suspects)  came out in support of course; some of them names you would recognize.  Then there were some strange allies I discovered, who normally would oppose my small government efforts, who also stepped up to oppose the money grab.

In the end it was clear that the decision was made long before the hearing. Made by people who have developed friendships and strong bonds with the seemingly endless leeches of government largess.  The far larger number of opponents to the TIF might well have simply danced a jig, as their appeals to the conscience of City Commission leaders was largely ignored.

After the meeting, I penned a forum piece for the local fish wrap. I had thought hopefully, it would reach enough folks in the area, so they can understand cronyism better, and who is working against them.  If they use it. (so far they have not)

By the time the renewed TIF 2, passed by the Traverse City Commission on Monday expires, half of you will be dead.

Half of you, based on the demographic of newsprint readers will likely die before the benefit to your senior millage is achieved under the new Tax Increment Thievery.

Half of you, with vehicles, half of you veterans, half of you who still read, and half of you who enjoy public transportation won’t see a benefit. The half MOST likely to pay property taxes in Grand Traverse County will be paying more for the promise TIF planners have made, short changing the things you really want.

25 years of tax capture; that special process which ignores the needs of taxing districts answerable to voters, and enduring inflationary pressures. 25 years of taxing taxes, because cronyism is alive and well in Traverse City.

25 years of special projects that, if brought to voters under a millage, would fail terribly. Experimental fish weirs, river whitewater projects, and subsidized housing as a bonus for ‘connected’ developers, and the worker drones in ‘old town.’ And because the planners admit “more projects could be added,” the 55 acres or so district might well have a zip line to favored watering holes (‘Bars’ for our millennial generation) to encourage the strange form of economic development the Don Coes, Chuck Judsons, Tim Burtons, Dave Schneiders and others who planned this heist, want to see.

Scott Hardy, a vocal supporter of the TIF, when asked after the hearing whether he would have volunteered the TCAPS’ millages to be captured said “they don’t have to.” When pressed on volunteering their millage, he said “we would work with..”

Sure. And I have a museum-turned-film-house to sell you.

The comments in support of the TIF from the city commission as well as a few others speaking in favor used the oft implied “they come to see Traverse City, so the outlying county folks should feel lucky to participate,” suggesting that without Traverse City, the county would be nothing. I would argue it is far more symbiotic.

Those of us who are not direct beneficiaries of the legislatively crafted disaster known as Tax Increment Financing might well “use Traverse City Parks,” etc, but we also buy in town, support Traverse City business, and are emissaries for the region which incidentally includes a town with a little off-putting modesty deficit.

The suggestion that an almost ‘royal’ downtown development edifice, paid for by regional money is even remotely appropriate is bizarre. Strangely, even Commissioner Shamroe, would support such royal trappings for a single area that has already reaped the prior 30 year TIF Dowry. The court trappings must soon include a performing area for jester and TIF supporter Gary Howe as well, yes?

Indeed, hats off to the dissenting two. Commisioner Lewis voted no on the passed ordinance, but only because he wanted a shorter version of the Old Town appropriation. It was Mayor Carruthers, and newly installed commissioner Howard who understand the difference between ‘appropriation’ and ‘appropriateness’ of a situation.

The time for the TIF to end was nigh, yet cronyism and the old boys prevail yet again. The DDA needed its continued slush fund.

And there was never any question they would get it.

Never any question at all.

You Betcha! (14)Nuh Uh.(0)