The Downtown Debate

Spectator

By Stephen Tuttle | June 15, 2024

In 1978, Traverse City established a Downtown Development Authority (DDA) in accordance with a Michigan statute passed in 1975. The DDA is a component of the city government and is primarily financed by tax increment financing (TIF) districts, in which baseline property tax values are established when the TIF district is created and revenues beyond that baseline are then “captured” by the DDA. Some property tax revenues intended for Northwestern Michigan College, Grand Traverse County, the Traverse Area Library District, and Bay Area Transportation Authority are also captured by the DDA.

(Think of it this way: Assume the property tax on a particular property is $1,000 at the time the TIF district is created. That money will mostly continue to flow to the city’s general fund, but as the property value and accompanying property tax increases, those taxes beyond $1,000 will be captured by the DDA for as long as the TIF district exists.)

Now we’re having a debate about whether or not to extend one of those DDA TIF districts—TIF 97. At the same time, the city commission has failed to approve an overall DDA budget, which would include funding for projects in both TIF 97 and the TIF in Old Town Traverse City. That might have changed by the time you read this, but the votes did not exist as this was submitted.

The TIF 97 extension is likely to be on the November ballot along with a second proposition requiring a public vote on most DDA projects.

When this all started, downtown Traverse City was not exactly thriving. It was not, as some DDA advocates want you to believe, a boarded-up ghost town full of empty storefronts and little more, but it was certainly in need of help.

Enter the DDA with a built-in, long-term funding source and a portfolio to revitalize downtown, which they did. When charismatic leader Bryan Crough eventually took over and started pushing buttons, twisting arms, and leading the way, projects came to life and so did downtown. (It should be noted the DDA was not the only significant actor in the revitalization; Rotary Charities was also instrumental, as were other organizations and individuals.)

At one point, the DDA said extending TIF 97, which expires in 2027, was critical for the creation of their third parking garage. But the public seemed less enthusiastic, and the DDA started to change their plans on the run. The parking garage became a parking garage that could be repurposed to additional uses if needed, which became a mixed use development including housing, and now it's not clear how much of a garage there will be as the adjunct to some kind of multi-use housing plus retail development. They now also say they will return money to the county, NMC, BATA, and the library.

It’s not clear whether those selling points will be enough, as some believe the DDA has assumed too many city responsibilities and acquired too much power. Others are displeased by the direction taken lately by the DDA, and it’s a safe bet the late Mr. Crough, popular enough there is a statue dedicated to him, might be surprised by the current downtown and the debate.

The pro-DDA side points to the downtown revitalization, including housing and a host of additional projects, as reasons to extend TIF 97 and continue fully supporting the DDA in the future. They point out downtown Traverse City is the engine that drives the local economy, but that will be true with or without TIF 97.

What is troubling is the direction some of the pro arguments are now taking. Neither downtown nor the rest of the city will collapse if TIF 97 is not extended. (They’ve rebranded the campaign Moving Downtown Forward but we all know it’s an extension of TIF 97.) The tax revenues the DDA captures will not vanish absent that extension or, in fact, absent the DDA altogether.

Those property taxes will still be fully collected and most will go to the city’s general fund, where it can be used, if the city commission so chooses, to complete most of the same projects the DDA now proposes. The same grants are available, and since millions more would be flowing into city coffers, they could hire some of the same employees and bid out to the same contractors. Downtown Traverse City need not become moribund if TIF 97 is not extended unless the city commission abdicates their responsibility to fill in any leadership, planning, and implementation gaps

Traverse City’s future is not totally dependent on the DDA or, at least, it shouldn’t be. While they have done consistently good work, the question remains as to whether or not their work within the TIF 97 district, downtown having been pretty thoroughly revitalized, is still necessary…or if voters decide we could better use the funds citywide.