Transit zones may be next

August 14, 2009
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A bill recently introduced in the state House calls for the establishment of a Transit Revitalization Zone, which would let public transit operations in Michigan capture a portion of real and personal property taxes from properties within a half-mile radius of a station.

The idea behind the legislation is to create an incentive for economic development along the transit routes that “promotes transit ridership.” Transit officials could use the captured tax revenue for projects, maintenance and operations.

The Bus Rapid Transit program proposed by the Interurban Transit Partnership has 17 stations on a route that runs 10 miles along Division Avenue from 60th Street to downtown Grand Rapids. According to the bill, ITP could capture any new real and personal property taxes that could be attributed to improvements made to each parcel within a half mile of each station, if the ITP established a Transit Revitalization Authority.

The bill exempts state education taxes, local and intermediate school taxes, some library taxes and obligations approved by voters from capture. A TRZ couldn’t capture revenue from another tax-increment financing district, such as a downtown development authority.

Kent County Fiscal Services Director Robert White recently testified at a hearing held on the bill, which was introduced last month, and asked committee members to include an opt-out provision in the legislation for county governments.

County governments have the ability to do that in some situations, like the expansion of a DDA or the creation of a Corridor Improvement District, but not in others.

“We want to enter into tax-sharing agreements, but we want a voice in the matter,” said White.

The county entered into such an agreement with Grand Rapids and Plainfield townships last year over a corridor improvement district along Plainfield Avenue and has discussed making similar contracts with others.

The county has said that 6 percent of its total tax roll is either captured or exempted each year for a loss of roughly $6.75 million annually. Property taxes account for over half of the county’s total revenue.

Should HB5173 make it through both chambers and be signed into law by the governor, the TRZ would become the seventh tax-capturing district allowed in the county.

Tax increment financing authorities, downtown development authorities, corridor improvement authorities, historic neighborhood tax increment financing authorities, SmartZones and brownfield redevelopment financing authorities are the others.

Six other state laws allow for tax exemptions.

There are 30 tax-capturing and exempting units in the county.

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