More County Revenue Taken

June 9, 2008
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GRAND RAPIDS — A new report shows that Kent County contributed about $7.3 million last year toward various economic development activities undertaken by cities and townships in the county through tax captures and tax exemptions offered by those units.

The county's 2007 contribution, revenue taken from its property-tax roll and two millages, was up by 9 percent from 2006, when $6.7 million was either captured or exempted.

Nearly $2.7 million was directly captured last year, while another $4.6 million was abated.

"Kent County does contribute to economic development, to the tune of $7.3 million a year," said County Vice Chairman Richard Vander Molen last week.

The county's main source of tax revenue, its operating levy, lost $5.86 million last year to captures and exemptions, 9 percent more than in 2006. The county correctional millage lost $1.05 million in 2007, up by 8 percent from the previous year. The senior millage lost nearly $430,000 last year, also up 8 percent.

"It's a significant portion of your tax roll," said County Fiscal Services Director Robert White to the Finance Committee last week.

The report, presented to the committee last week, was the first since commissioners adopted an Economic Development Participation Policy in May of last year. The capture and exemption figures in the report are sent to the county from the 35 local taxing units in the county and are compiled by the county's Fiscal Services Department.

There are 26 tax-increment financing authorities in the county, such as downtown development and brownfield redevelopment authorities, empowered by state law to capture a portion of property-tax payments and millages funded by property taxes. The state also gives standard units of government, like cities and townships, the power to exempt property taxes to industrial firms and developers in return for jobs and projects.

The county created its policy out of a concern that it has lost too much revenue to captures and abatements over the past three years. The policy limits county participation to 7 percent of its yearly tax roll and prohibits taking part in any activity that captures or exempts millage revenue. Commissioners have chosen not to let expanding or new TIFAs capture county tax revenue five times since they've expressed concerns about the issue.

"On most, we do not have the option to opt out," said White. "If you don't opt out, you're in and you're in forever."

The policy also calls for commissioners to opt out of a TIFA when a township or city the authority is located in is capturing and exempting 10 percent of the unit's taxable value. Six units topped that figure last year.

The county's policy set $1.6 billion last year as the 7 percent taxable value that could collectively be captured and exempted by governmental units. The year ended with all but $213 million of that ceiling amount being captured and exempted. The ceiling was $243 million in 2005.

As for this year, White said he expects the ceiling amount will get smaller because many of the new developments that have been completed or are nearing completion are in tax-capturing or tax-exempting districts. At the same time, he doesn't think the overall taxable value in the county will rise enough to offset the expected revenue loss.

Captured Tax Revenue

Thirteen governmental units in the county captured almost $2.7 million worth of Kent County property tax and millage revenue for economic development purposes last year.

Here is a detailed breakout of that tax capture for the last three years.

Governmental Unit
City of Grand Rapids
Cascade Township
Walker
Grandville
City of Lowell
Wyoming
Plainfield Township
Sparta
Rockford
Bowne Township
Byron Township
Tyrone Township
Cedar Springs
Totals

2005 Capture

$1,217,290

$260,662
$150,340
$91,467
$73,976
$65,779

$80,053
$49,910
$27,829
$28,986
$24,942
$8,207
$4,295
$2,083,736

2006 Capture

$1,351,069

$318,193
$194,539
$98,076
$87,048
$74,336

$85,178
$55,337
$36,768
$32,225
$30,571
$8,385
$8,424
$2,380,149

2007 Capture

$1,571,892

$366,943
$202,796
$109,109
$87,680
$84,023

$78,034
$60,819
$49,479
$30,539
$28,893
$12,030
$8,998
$2,691,236

Increase 2005-2007

29%

41%
33%
19%
19%
28%

(3%)
22%
78%
05%
16%
47%
109%
29%

Source: Kent County, Economic Development Annual Report, June 2008

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