Economic Development and Government

Transformation Fund purposes

February 26, 2016
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More than five years ago, Grand Rapids officials created a financing tool to improve operations and services to follow through on its commitments to city voters.

In fiscal year 2011, the city established a sub-fund of the General Operating Fund known as the Transformation Fund. The financing tool was created through a temporary income tax rate increase that was approved by city voters in 2010 to invest in a three-phased plan aimed at transforming operations, providing sustainable asset management and working toward continuous improvement and innovation.

Since its establishment in FY2011 through June 30, 2015, nearly $67 million has been allocated to the Transformation Fund to invest in a number of initiatives: restoring community police officers, deploying an additional fire squad, improving city services and restoring “fiscal resiliency.”

The city released an update on the fund in summer 2014 indicating the fund allowed the city to invest in “large impactful areas that would not have otherwise been possible.” Some of those areas included the city’s customer service 311 program; maintaining police and fire personnel; storm water and street lighting; and business planning for city departments.

On March 24, 2015, city commissioners adopted the third phase of the Transformation Plan, which is focused on continuous improvement and innovation in four key areas: economic, social, environment and governance.

More than 155 actions were identified in the segments, some of which highlighted strengthening financial management, reporting, analysis and control processes; promoting quality neighborhood infrastructure; communicating decision making process outcomes in a clear and understandable manner; and facilitating a balanced transportation system.

Most recently, commissioners approved a $350,000 investment from the Transformation Fund to work on financial and logistical planning for relocating city departments at five properties along the Grand River, and ultimately marketing them for redevelopment.

The investment is anticipated to have operating savings for the General Operating Fund, Major Street Fund and Local Street Fund, according to a Feb. 23 city memorandum. The specific amount is undetermined until after the evaluation of city operations is completed through the project.

Although the Transformation Fund was initially set to expire as of FY2015, the city’s Final Fiscal Plan FY2016-2020 recommended assigning 1 percent of income tax receipts on the first 1.3 percent of city income tax revenues to the Transformation Fund.

The reallocation would allow the city to “sustain (its) ability to innovate on an ongoing basis and will further permit completion of significant strategic investments,” according to the FY2016 Fiscal Plan.

This recommendation was based on the City Commission’s approval of moving one-half of Statutory State Shared Revenues to the Capital Improvement Fund to support “sustainable asset management,” and another suggestion of reassigning the second half of the SSSR to the General Operating Fund to increase investment in police and fire services.

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