Downtown Grand Rapids Inc. President/CEO Kristopher Larson today testified on Tax Increment Finance (TIF) policy reform before the Michigan House of Representatives Local Government Committee The Committee is considering a package of bills - listed below - that would strengthen transparency, reporting and accountability standards for TIF districts. The proposal also would eliminate the ability of certain TIFs to capture future "special" voter approved millage taxes. DGRI manages two TIF districts - the Grand Rapids Downtown Development Authority and the Monroe North Tax Increment Finance Authority - and supports the proposed bills. Here is Mr. Larson's testimony:
Good afternoon, members of the House Local Government Committee.
Over the past two years, DGRI has worked with several partners including the City of Grand Rapids, to elevate local, regional, and state conversations about optimizing tax increment finance (TIF) tools – Downtown Development Authority TIF in particular – while recognizing the contributions that communities make to effect more prosperous futures for themselves.
We’ve done this because we believe that TIF is a tool that can inherently organize communities around a shared set of economic and community development objectives. We also recognize however that many of the existing TIF-governing statutes require some modifications to align what could be, arguably what should be, with what is allowed and required.
The draft introduced by Representative Chatfield provides several important first steps in that optimization and alignment process.
- The proposal introduces some significant upgrades to the transparency of how resources are used and where that accounting of investments can be found – such as each entity’s website. This will help to assuage substantial, pent-up frustrations on behalf of local units of government whom feel that TIF was done to them, rather than with them.
- The proposal substantially increases the amount of reporting to be provided to the state. This requirement will help the state quantify the full scale of TIF in Michigan, and where some standardization can occur – also assist in understanding how TIF revenues are being invested in local communities. This will invariably provide our lawmakers with better, more reliable information about what is and isn’t happening in TIF districts across the state.
- The proposal includes measures to ensure the accountability of TIF entities to the purposes they were established and the new, elevated reporting standards – including stronger provisions surrounding the revocation of future TIF revenues in the instance of failing to abide by the bill’s expectations. Sometimes it takes the threat of real penalties to help incentivize the good behavior you are seeking from hundreds of TIFs across the state.
- Perhaps most importantly, the proposal provides language that would address the issue of special millage capture by TIF districts. We support the elimination of capture, but believe there is still some minor work to do in perfecting the definition of special millages. Following this hearing, we will send the Committee a proposed revised definition vetted by several TIF districts in West Michigan.
On behalf of DGRI and our coalition of like-minded communities throughout West Michigan, we appreciate the opportunity to appear before you today. We recognize this proposed bill provides improvements to TIF management procedures, and that there may be more work to do in the future.
We stand ready, willing, and able to assist this Committee and other lawmakers by providing the reliable insights of experienced practitioners – ultimately wanting to protect the integrity of the tools for the needs of this and future generations. We look forward to continuing to be a part of this good effort.
Proposed TIF Reform Legislation
The following bills were recently introduced in the Michigan House of Representatives: