Slow Down, You're Moving Too Fast

January 21, 2008
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The expansion of the boundary of the Grand Rapids Downtown Development Authority is a sensible plan to extend the already established economic benefits accrued from having a strong city core. But the process merits careful, deliberate discussion and input from all involved. And that hasn’t happened.

It’s widely understood the DDA expansion could very well lead to additional investment in pursuit of the highly sought creative class. Investment in an expanded downtown certainly could deliver jobs and economic growth to the larger region.

In an effort to achieve the aims of a stronger downtown district, city commissioners may have put too much faith in its own staff in order to unnecessarily bulldoze their way through approval of the expansion plan (see story page 1).

The DDA Act of 1975 requires a governing body to wait at least 60 days from the end of a public hearing before it makes any adjustments to the size of a DDA district. That much is clear. The intent of the law is to regulate and give sufficient pause to the significant powers given to DDAs to manage and manipulate the tax collection procedures within such districts. It is a meaningful and essential element of public governance and was not followed appropriately by city commissioners. They should have waited a minimum of 60 days, and because they did not — and upon an inquiry initiated by the Business Journal — they will re-vote next month to ratify their previous action.

One need look only as far as the Kent County Board of Commissioners chambers to understand the impact of the DDA expansion on other taxing units. For the county to successfully arrive at a tax-sharing agreement with the DDA, the city agency would have to stop collecting revenue from the senior and corrections millages. The county correctly maintains that voters dedicated specific uses for those revenues when they passed both millages, and economic development wasn’t one of them.

“(City officials) want to do economic development with our money, the seniors’ money, the jail’s money and the community college’s money,” noted County Vice Chair Richard Vander Molen, who chairs the Finance Committee. That panel voted last week to “opt out” and not allow the DDA to collect county tax revenue in the new district. Their vote follows the economic development policy commissioners established last May.

The county’s policy is a good one. It protects the interests of its constituents by restricting the county’s revenue loss from tax abatements and captures in a specific city or township to 10 percent of the total taxable value in that district. The county commission has opted to negotiate such tax-sharing agreements, evidenced by successful talks with Grand Rapids and Plainfield townships when they chose to opt out of the new corridor improvement plan for a stretch of Plainfield Avenue.

The county still has plenty of time left to opt out of the DDA commitment, and will likely do so. Whether future negotiations on such issues can take place with the city may hinge to a large degree on the city’s openness regarding the process. Jumping the gun on public votes to expand the district dampens such possibilities.

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