Commissioners say no to new taxcapture district

April 30, 2012
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By an overwhelming 15-to-2 vote, Kent County commissioners decided last week not to let the newly established North Quarter Corridor Improvement District capture a portion of its operational, corrections and senior property-tax millages.

Commissioners denied that request and opted out of the North Quarter Corridor, a tax-increment financing district formed by the Creston, Cheshire Village and a portion of the Monroe North business districts in Grand Rapids. The corridor runs along North Monroe Avenue from Colfax Street to Coldbrook Street, and on Plainfield Avenue from Coldbrook to Beechwood Street on the city’s northeast side.

City commissioners authorized the new corridor, the city’s third, in March.

State law gives the county the right not to take part in the corridor, and the county’s Finance Committee earlier recommended that the full commission go that route last week. The county took the same action with the city’s two previous CIDs — Uptown and Madison Square — and offered another scenario in return.

Kent County Administrator and Controller Daryl Delabbio said the county does retain the right to enter into an agreement with the authority to allow it to capture a portion of the tax increment, but only if the city’s percentage of its total tax-roll that is abated or captured is 10 percent or less.

“Currently, the city’s percentage of tax-roll abated or captured is 14.50 percent,” he said.

Delabbio also said the county contributes roughly $6 million annually to economic development efforts, which is about 7.2 percent of its tax levy, through tax captures and cash support. In addition, the county reported that Grand Rapids captured $2.17 million of the $3.27 million that was collected by all the tax-increment authorities in the county from its three millages in 2010.

Commissioners Carol Hennessy and Jim Talen, who represent the city on the commission, tried to convince the county not to opt out. Talen said the county was being shortsighted about the North Quarter Corridor because other tax-capturing authorities in Grand Rapids are phasing out and shouldn’t be collecting portions of county taxes for much longer. He felt the city’s share of captured and abated tax revenue could fall below the county’s 10 percent policy in the near future.

“Some of the tax-capture districts can be beneficial to the community,” said Talen. “The idea is to encourage growth, and the county seems to be saying, ‘We don’t encourage growth.’”

Talen also suggested that the county should review its policy, which is about six years old. “Policies need to be looked at and re-examined. The 10 percent limit may have been a good one at one time, but we need to take a look at it,” he said. “I wish we could look at this as an economic development item and not as an expense to the county.” 

But Delabbio said Grand Rapids has captured and abated between 13 and 14 percent of its tax roll for years and has a long way to go to dip below 10 percent.

“I think it’s important that we opt out and we can come back when things change,” said Commissioner Roger Morgan. “If we vote to support this, we’ll be in it forever,” said Commissioner Jim Saalfeld.

When the county enters into an agreement with a tax-capturing authority, which it has done on  several occasions, the contract normally is for a set period such as 10 years with a possible option for 10 more. “Failure to exempt Kent County’s tax levy from capture in the new district will subject all growth in tax levy to capture for an indefinite period,” said Delabbio.

Also, the county’s agreement usually prohibits an authority from collecting a portion of its corrections and senior millages because both are dedicated levies, not general millages like its operational millage. Commissioner Harold Voorhees said revenue to the senior millage has fallen the past three years and participating in the new corridor would result in more lost revenue.

Earlier this month, commissioners unanimously approved the county’s participation in the new West Michigan Economic Partnership, a coalition of governments in Muskegon and Kent counties. WMEP wants to attract businesses with multiple transportation needs to parcels in the counties that can service those companies.

The partnership can offer tax incentives to firms that locate on a qualified property, but state law gives a local unit of government the right to opt out of all tax breaks that are offered within its jurisdiction.

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