Council Considers Record-Breaking 60-Year TIF to Avoid Sharing Revenues

Tuesday, October 28, 2014, 10:00 pm
By: 
Alice Dreger

Council is hastening to vote to extend the Tax Increment Financing (TIF) plan on the Marriott University Place property as much as 30 more years at a 100% level of tax capture, bringing the TIF plan at this location to a record-setting 60 years. The current 30-year plan is not set to expire until December, 2016, but City staff fear that if Council waits to extend it, new rules at the State level will restrict what they can do in terms of TIF at this location.

Tonight at the City Council work session, City staff indicated they want Council to act quickly to capture all the taxes it can, rather than letting some of the tax revenue go, as it otherwise would when the TIF plan ends in 2016, to other local public bodies, including Ingham County, Lansing Community College (LCC), and CATA (public transportation). This is not a TIF case where funds are going back to the developer of a property, as was the case with the controversial Trowbridge Plaza TIF. Rather, this is a TIF case where the City is seeking to capture and keep tax revenues that would ordinarily be earmarked for county-level services, public higher education, and local public transportation.

The extension plan would include financing for repairs and updating of the underground parking garage at University Place, work on the hotel-area plaza, creation of a Maker space, public art, and business "acceleration." The proposed TIF extension plan keeps the “original” taxable value of the property at $0, meaning that all of the taxes on the property could be captured for this particular set of projects.

At the meeting tonight, Council member Ruth Beier pointed out that if the University Place property stopped being covered under TIF, as it is now set to do in 2016, not only would those other entities get the taxes they are due, but the property would become the sixth largest taxpayer in the City and those tax revenues for East Lansing would go to the general fund, rather than having to go to the special projects named in the TIF plan.

The City could elect to do any or all of the projects named in this TIF proposal (the parking garage repairs, Maker space, public art, and business boosting) out of the general fund. But in that case, the earmarked projects would be more openly in political competition every year with other City needs, including other infrastructure concerns and other services like those provided to families and seniors.

Ralph Monsma, who was on City Council when the original 30-year plan was passed, spoke about the issue during Public Comments tonight. He alluded to the under-funding of services like the Bailey daycare while this TIF plans targeted special projects. He raised questions “about the length, amount, purpose, where it fits in,” and so forth.

Council appears likely to approve some version of the TIF plan extension and to do so soon. City Manager George Lahanas warned them tonight that the situation at the State level is unpredictable with regard to possible legislative reform.

For background on TIF in Michigan, see this article at mLive:

http://www.mlive.com/lansing-news/index.ssf/2014/09/tax-capturing_author...

UPDATE: This TIF extension was approved. See this article.