Construction, Economic Development, and Government

County could opt in to DDA tax capture districts

Development agency offers Kent County a 10 percent gain-sharing opportunity.

January 20, 2017
| By Pat Evans |
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For the first time in more than 20 years, Kent County might not opt out of Grand Rapids Downtown Development Authority tax capture districts.

Kent County Administrator/Controller Daryl Delabbio sent a memo in December 2016 to the county board of commissioners outlining potential changes to the DDA’s gain-sharing provisions. The gain-sharing will be from the DDA’s tax increment financing districts, which earmark property tax value increases and help subsidize redevelopment and community improvement projects.

Last week, the board’s Finance and Physical Resource Committee recommended three actions to the board, which will be voted on Jan. 26.

The DDA offered the county a 10 percent gain-sharing opportunity in December, when the city ratified an approximately 200-acre expansion of the DDA districts. The percentage of gain-sharing would increase in five-year increments up to 25 percent in 2033.

The first two recommendations are to change the county’s policy of automatically opting out of new or expanding tax capture districts and to rescind two previous opt-outs of DDA tax captures.

The third recommendation is a three-way agreement the city of Grand Rapids, DDA and county will not amend the plan related to gain-sharing and capturing special millages without consent of the county. The first two recommendations are contingent on the third, Delabbio said.

Tax capture districts have been a piece of Michigan’s development strategy since 1974 and provide revenue from taxes to help public improvements. Prior to 1995, taxing jurisdiction could not opt out of the districts.

Entities, such as counties that spread over more than one taxing body of government, suffered with revenue bleeding to other entities. When the state policy allowed entities to opt out of tax capture districts in 1995, the county consistently opted out of new or expanded districts before formalizing it in policy in 2007. During the period of opting out, there were some districts the county could not opt out of because of statutory requirements.

The county opted out of two DDA expansions in 1995 and 2007. According to Delabbio’s memo, the county missed out on $146,000 in revenue in 2016-17 by not taking part in a gain-sharing offer in 2013.

The DDA has offered gain-sharing in the past, but at that time, the county was not offered the opportunity to keep its special millages, Delabbio said. The newest offer allows the county to keep those millages. The county has until Feb. 6 to opt out, if the board chooses to do so.

“That’s a different ball game all together,” Delabbio told the Business Journal. “What they’ve done is say they’re not collecting the zoo and museum millage, and once the bonds are retired at Van Andel Arena [in 2024], they will no longer capture the veterans or senior services millages.”

Delabbio said the DDA originally proposed the change while still collecting the senior and veterans millages following the bond retirement, but the release of those two millages was something he knew the board wouldn’t allow. The DDA still will collect on the jail millage.

“I knew what the DDA wouldn’t bend on, and they knew what we wouldn’t bend on, and we found common ground and found that to be in the best interest of everyone to pursue this,” Delabbio said. 

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