Kent County Not The Bad Guys

February 19, 2007
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GRAND RAPIDS — All but one member of the Kent County Finance Committee voted recently not to let the Byron Township Downtown Development Authority take a portion of the county’s property tax that will be generated in the commercial district.

Only Commissioner Harold Voorhees thought the county should give up a piece of its revenue to the township’s DDA, which was recently expanded to include a new $30 million retail development near

Burlingame Avenue
84th Street SW.

“I think Byron needs this and would use it in a good way,” he said.

But the seven other voting members on the committee disagreed with Voorhees, whose district includes the township, and the committee concluded that the full commission should deny ByronTownship the tax dollars.

“We are losing $6 million a year from all of those districts, mostly from the Grand Rapids DDA,” said County Vice Chairman Richard Vander Molen, also chairman of the Finance Committee.

“If we want to, we can go back and negotiate (with them),” he added. “We’re not the ‘bad guys’; we’re just trying to protect our general fund.”

The full commission is scheduled to vote on the matter on Thursday, and Commission Chairman Roger Morgan told the Business Journal that he expects a majority of the board will exempt the county from the township’s capture.

“We have to be consistent with everyone and not play favorites. This isn’t personal,” he said.

The county opted out of a tax capture when ByronTownship established its DDA in 2005, an action the county was allowed to take under state law. And other townships that are in the process of establishing new tax-increment financing authorities can expect the county to take the same action.

These TIFAs, which number nearly 30 in the county, can capture all the increases in property tax revenue from improvements made to parcels within a defined boundary. The county never sees those monies. The tax-capturing organizations then spend those tax dollars on upgrades to buildings, streets, parks and sidewalks in the district as an incentive to get developers and businesses to come to the area.

“The question is, what is more important: street lights and sidewalks, or child care and police protection?” asked Robert White, county fiscal services director.

The county provides child care and police protection through its general fund.

But Vander Molen, Morgan and CountyAdministrator and Controller Daryl Delabbio said they are willing to negotiate with township officials and possibly give up a portion of the total tax capture, if commissioners deny Byron’s request.

“We are very much advocates and proponents of economic development, but these tax-capture programs are killing us. Between tax abatements and tax captures, $4.5 million a year is lost from the county’s general fund to these other taxing jurisdictions,” said Delabbio.

“We don’t want to end these tax-capture programs; we just want to limit them, or put a cap on them so we can benefit eventually,” he added.

A big concern for Delabbio is that these financing authorities never expire. He said when the older ones, such as the Grand Rapids DDA, first began collecting, the county wasn’t losing $6 million in property tax revenue each year. But now it is.

Delabbio also noted that cities are partial to exemption and abatement programs because cities get the income taxes from the jobs and residents these incentives draw, which often results in more revenue than a property tax can generate. The county, though, doesn’t collect a tax on income.

“I don’t think that factors into their consideration as much as it ought to. While these tax-capture programs are great for economic development, these hurt other taxing jurisdictions, because we don’t benefit from the income tax like the city does,” he said.

Revenue from property taxes is about half the total revenue the county gets each year, while the same tax for the city is closer to 12 percent of its total revenue.

“I certainly don’t want to give the impression that we are anti-economic development, because we are an extremely large contributor to Right Place Inc. We are also losing a total tax capture of $6 million a year in the general fund alone and $4.5 million through various tax abatements, tax captures, brownfields, TIFAs and DDAs,” said Delabbio.

“We’re working on an economic development policy as we speak to present to the board on how we are going to approach this issue.”    

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