DDA May Surrender Tax Capture

July 10, 2006
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GRAND RAPIDS — Downtown Development Authority Vice Chairman Paul Mayhue led the board last month in unanimously voting to go on record as supporting the renewal and increase to the Senior Millage, a key issue on the Aug. 8 ballot.

And when the DDA meets on Wednesday, board members will get a chance to put their money where their vote is — but only if they are certain state law allows them to do that.

The DDA is expected to decide then if it can legally waive the portion of the Senior Millage that it captures. Two individuals affiliated with the Kent County Senior Millage Steering Committee told the board at its June meeting that the DDA could do so, and they requested that board members agree to a waiver of that capture.

“Other DDAs have waived this in the past,” said Don Souter.

Souter said backers of the measure want the DDA to take an official stance on the tax capture, the second such request to come before the board. An earlier and more informal request led the DDA to answer that its state charter didn’t allow it to refuse those dollars.

But Souter said the Wyoming, Walker and Plainfield Township DDAs have agreed to waive those funds, which lets the dollars go directly into the Senior Millage Special Revenue Fund that is administered by Kent County. The Grand Rapids DDA gets about $77,000 a year from the millage and uses that money for building improvements in the district.

“It’s obscene that you’ve taken $500,000 over eight years from the Senior Millage,” said Souter.

Kent County voters approved the millage in 1998 for eight years. The funding of key services began in the summer of 1999, which means this year will be the final year for those benefits if the levy isn’t renewed.

Slightly more than half of those tax dollars go to aid seniors with in-home help through delivered meals, homemaking and personal care. Day care, medication assistance and transportation also are part of the “primary” services the levy funds. The rest of the tax revenue is used for a variety of needs that includes weather-related emergencies and health prevention programs.

Kent County estimated that $4.53 million should go into the fund this year, with nearly $4.47 million coming from the levy itself and another $65,000 from interest on the fund’s investments. Should that projection hold true, it would mean that revenue to the fund this year would have grown by roughly $500,000 since 2003.

Still, expenditures from the fund have been projected to exceed revenues by $500,000. If that happens, it would be at least the fourth consecutive year that expenses topped income (see chart).

While the tax is expected to pull in $4.53 million in revenue this year, $4.83 million has been budgeted to provide services. Another $212,000 has been budgeted to administer the program.

The ballot proposal not only will ask voters to renew the millage of 0.25 mills, but also to raise it by 0.08 mills to a third of a mill. The increase has been forecast to add an additional $1.6 million to the tax, which would push revenue to the fund past the $6.6 million mark. An approved measure would extend the life of the millage through 2013.

Should voters pass the millage next month, the property tax on a home valued at $160,000 would go up by $26.40 next year.

Two state laws primarily govern and regulate DDAs. Public Act 197 of 1975 authorizes a DDA to levy and collect taxes, while Public Act 450 of 1980 sets the legal parameters for tax increment financing authorities. A DDA is a TIFA within a defined downtown district.

PA 197 does allow a DDA to modify a tax-increment financing plan after public hearings are held and the governing body approves the change. The act also lets a DDA exclude the captured portion of property taxes that rises solely from inflation.

Funds from the millage reach an average of 12,000 low-income seniors age 60 and over each year.

“I was astonished to learn, when I was asked to serve on the steering committee, that this millage reaches every corner of Kent County,” said Tom Appel, who joined Souter to make the request to the DDA.

“It’s a millage that is non-partisan and is supported by most everyone.”   

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