County To Follow Policy On DDA Plan

December 21, 2007
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GRAND RAPIDS — Grand Rapids Township Supervisor Michael DeVries thanked Kent County commissioners for approving a tax-sharing agreement the county, his township and Plainfield Township negotiated for the Plainfield Avenue Corridor Improvement District.

DeVries said he was also speaking on behalf of Plainfield Township when he made his comment prior to the commission’s vote on the contract, which was based on the economic development and tax-capturing policy commissioners established last spring.

Under the agreement, the county will match the tax dollars the townships capture for the CID. But if that amount ever equals or exceeds 7 percent of the county’s taxable value in the district, then the amount captured would stay at the previous year’s level. And if the capture reaches 10 percent of that value, then the county can suspend the agreement. (Lowell, Cedar Springs, Bowne Township, the city of Grand Rapids, Walker and Rockford already capture more than 10 percent of their districts’ taxable values.)

In addition, if tax revenue to the county’s general fund doesn’t increase by 3 percent in a year, then the captured amount will stay at the previous year’s total. Taxes can’t be captured from either the senior millage or corrections millage. The agreement is for 10 years, with an option for another 10 years.

“It’s given us an avenue to participate in those corridors,” said Roger Morgan, county commission chairman, of the policy.

Morgan told the Business Journal that his commission will follow the same policy when the board votes on the Grand Rapids Downtown Development Authority expansion plan, probably next month now that city commissioners have ratified it. He said the county will opt out of the plan, or choose not to allow its tax dollars to be captured in the new areas, and then try to negotiate a separate agreement with the DDA. It’s the only way the county can try to iron out a deal with the DDA.

“We opt out and we negotiate back in,” he said.

The Grand Rapids DDA has offered an incentive to jurisdictions like the county to participate in the plan, one that lowers its tax take in the entire district from 100 percent to 75 percent over 25 years by capturing 5 percent less every five years beginning next year. A 5 percent cut in 2008 would return $72,000 to the county. But the county doesn’t consider that a big enough incentive to participate in the expansion and wants the DDA to sweeten the pot.

“We keep 5 percent of our own money,” said Daryl Delabbio, administrator and controller for the county.

The county said another obstacle to its participation is the Grand Rapids DDA captures taxes from the senior and corrections millages. Delabbio said voters dedicated those dollars to specific purposes, and the use of that revenue should be restricted to the voter-defined purposes and not be spent on economic development activities.

When representatives of the senior millage approached the DDA last year and asked members to stop collecting that revenue, the board said they were legally bound to capture 100 percent of the tax-increment revenue as part of the commitment they made to buyers of the Van Andel Arena bonds in 1994.

Yet, County Fiscal Services Director Robert White pointed out that the rebate incentive the DDA is voluntarily offering jurisdictions means the board won’t be capturing all the tax-increment revenue available to the panel, dollars the DDA said last year that it was legally required to collect.

According to the county, tax-capturing districts collected almost $2.1 million in 2005 and nearly $2.4 million in 2006.

“We will be following our policy,” said Morgan of the upcoming DDA vote.

The Comstock Park Downtown Development Authority is the only tax-capturing district in Grand Rapids or Plainfield townships. The Comstock Park DDA hasn’t captured taxes from the county’s senior millage and has agreed to stop capturing revenue from the county’s corrections millage because of the new taxing-sharing agreement with Plainfield Township.

Grand Rapids and Plainfield townships still have to vote on the agreement. The Plainfield Avenue CID, which runs from Lamberton Lake to Airway Drive across both townships, has 152 properties and a real and personal property value of $62 million.

Tax Captures Grow

The capture of real and personal property taxes by state-qualified governmental units in the county rose by 14 percent in 2006 from the previous year to nearly $2.4 million, a gain of $285,000.

What follows is a list of the units that captured taxes for economic development purposes in the county, the amount each unit captured in 2005 and 2006, and the percentage change of each capture across the two years.

Governmental Unit

2005

2006

Percent Change

Grand Rapids  

     $1,221,146    

    $1,353,106    

+11%

Cascade Township 

$262,547

$318,193

+21%

Walker   

$150,340

$194,539

+29%

Grandville   

$91,467

$98,076

+7%

Plainfield Township 

$80,053

$85,178

+6%

Lowell  

$73,976

$87,048

+18%

Wyoming   

$65,779

$74,336

+15%

Sparta Township  

$49,910

$55,337

+11%

Rockford   

$27,829

$36,768

+32%

Byron Township  

$24,942

$30,571

+23%

Bowne Township  

$28,986

$32,225

+11%

Cedar Springs 

$11,948

$8,424

-29%

Tyrone (Kent City)  

$8,207

$8,385

+2%

Totals   

$2,097,130

$2,382,186

+14%

Source: Kent County Fiscal Services Department, December 2007

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