Oakland County lawmaker to introduce TIF reform legislation

Michigan state Capitol in Lansing at twilight

Michigan lawmakers may soon consider legislation related to Tax Increment Financing (TIF) districts.

(AP File Photo)

When Tax Increment Financing (TIF) districts in Oakland, Wayne and Macomb counties were poised to capture a portion of Detroit Institute of Arts and Detroit Zoo millages, it didn’t sit well with Rep. Eileen Kowall, R-White Lake.

She sponsored legislation to specifically exempt the DIA and zoo millages from tax capture, which Gov. Rick Snyder signed in June of last year.

There are various authorities across the state empowered to use TIF districts, by which they can capture a portion of taxes and millages to fund economic development activities.

Kowall first became aware of what she described as TIF "abuses" in her time on the Oakland County Commission. Now, she's leading the charge on a piece of legislation that would completely overhaul how those districts are handled.
Her goals in crafting this legislation were broad.

“We’re looking at accountability measures, transparency measures, better definitions, getting back to the original intent and consolidation,” Kowall said.

A draft of the bill circulated today would make major changes to how the state organizes TIF districts. First of all, it puts most of the different types of TIF authorities under the same statute and re-terms them “municipal development authorities.”

Although an annual report from TIF districts is currently required, a recent study found that as few as 20 percent of authorities are actually reporting. Currently, the state and Department of Treasury have no way to compel local authorities to do so.

The new legislation addresses that, giving the state some leverage. Remember Proposal 1 from last August's primary? It enabled legislation that repealed the Personal Property Tax and came up with a replacement mechanism – the local community stabilization authority is in charge of distributing funds to communities. Authorities that don't report may be penalized by having that money withheld.

The legislation also urges the combination of authorities in jurisdictions with more than one TIF collector; limits the capture of special millages; establishes more finite time periods for TIF plans; and requires TIF authorities to proportionally share tax increment revenues with all area taxing jurisdictions.

It also limits the size and scope of special TIF capture districts. The total cash value of all taxable real and personal property within TIF development areas couldn’t exceed 35 percent of the total true cash value within the municipality. In terms of a physical footprint, the total land area couldn’t be more than 50 percent of the land area in the municipality.

The legislation comes after Kowall spent months meeting with interested parties and collecting information.

“My suspicions, I guess, of abuse and of straying from the original intent were proven out in some cases,” Kowall said.

She said the issue of TIFs was extremely complex. She’s open to changes, and is sure the items she has proposed won’t sit well with some folks.

“It’s been a heavy lift so far. It’s like playing chess on 10 different levels. You move a rook on level one and a bishop moves on level seven,” Kowall said.

Coming up:
• Reaction to the legislation from opposition and proponents
• Downtown economic development over the years

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