Don't Push So Fast On DDA Terms

March 27, 2006
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Kent County commissioners are predictably peeved about revenue cuts creating havoc in the county budget, resulting in service cuts … but such emotion turns to outrage as it watches Tax Increment Financing Authorities, like the Grand Rapids Downtown Development Authority, grow its annual revenue to more than $3 million.

County Commissioner Dean Agee believes he county should push state legislators to rewrite TIFA rules, to provide “opt-out” clauses or sunsets to the TIFA districts. Kent County includes 18 such districts, including Smart Zones and brownfields, and Agee complains those districts are capturing too many dollars, not always used for what the county considers to be economic development.

That governmental units war over pots of gold is not new, and one could expect the cries of foul. Those individual governmental units, however, should not be given authority to rewrite the rules, especially under the duress of tough times.

The Grand Rapids DDA, for instance, has since 1980 invested more than $120 million in a wide variety of projects (most recently the JW Marriott hotel under development) and leveraged well more than $1.9 billion — billion —  in private and institutional investment. The DDA is currently watching a billion dollars worth of construction projects take shape. The benefit in leveraging those dollars is obvious, and should be counted as blessings to county coffers (not even including the fact that the county hotel/motel tax revenue continues to build as a result of some of those DDA projects).

The Grand Rapids DDA is the most successful in the state of Michigan, and has been prudent in its spending and deliberate in its consideration of projects. It is not randomly spending money on frivolous goods or services. The DDA has put back more than it’s taken.

With the benefits clearly stated, the Business Journal concedes there is room for compromise. Limiting the amount of time a DDA might exist discounts that such authorities do have long-term impact in communities and cannot predict when the world might show up at its door, as is the case in the current downtown project involving the sale of 30 acres of property along the riverbank. Agee may have an opening in the ability to compromise on the limits of the amounts such authorities can collect. GRBJ believes the integrity of such limits is in the purview of economic development specialists and analysts, not warring governmental units.

If the county is honestly concerned about its ability to contribute greater funding for Grand Rapids Community College and the ITP, it should declare its intention with resolution to provide funding for those entities as compromise is reached. 

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