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TRAVERSE CITY — City Manager Benjamin Marentette will present four scenarios Monday for the future of Tax Increment Financing District (TIF), which is set to expire in 2027.
The presentation, supported by City Treasurer and Finance Director Heidi Scheppe, outlines the budgetary implications of maintaining, resetting or ending the downtown tax increment financing district that currently captures $4.5 million annually.
TIF 97 encompasses 2.6% of the city’s geographic area but represents 13% of its taxable value, with the district’s 2025 total taxable value at $213 million. The mechanism captures tax revenue generated by property value growth above a 1997 baseline and reinvests it within the district rather than distributing it to the city and other taxing jurisdictions.
The city’s share of the current annual increment totals $2.6 million, while non-city taxing entities contribute $1.9 million.
Scenario 1 would allow TIF 97 to expire, returning $1.32 million annually to the city’s general fund while eliminating the $1.9 million in non-city contributions. The city would assume sole responsibility for all downtown projects, capital investments, and maintenance.
Scenario 2 would reset the district in 2028, starting with an estimated $117,000 in year one and projecting $64.5 million in total capture over 30 years, including $36.5 million for the city and $28 million from non-city sources.
Scenario 3 would extend TIF 97 for up to 30 years, projecting $213 million in total capture — $121 million for the city and $92 million from non-city sources.
Scenario 4 would extend the district with reduced capture percentages. Using a 50-50 split example, it would return $50 million to the city’s general fund and $46 million to non-city taxing jurisdictions while capturing $106 million over 30 years.
Since its creation, TIF 97 has funded approximately $21 million in downtown improvements, including streetscape enhancements, riverwalks, the Pine Street pedestrian bridge, the Larry C. Hardy parking structure, and Clinch Park improvements.
Current maintenance includes a $630,000 annual service agreement that increases 1.5% yearly to offset city services and $80,000 for trash and recycling.
The city’s capital improvement plan identifies $29.5 million in potential TIF-eligible projects, including $11.6 million for the Lower Boardman/Ottaway Riverwalk Phase 1, $7.6 million for East Front streetscape improvements, and $3.7 million for Parking Lot B reconstruction, including a new pavilion for the farmers’ market.
A 2024 charter amendment requires all tax increment financing plans and amendments to be approved by voters. The City Commission can no longer authorize or amend TIF plans without a public vote.
Marentette said commission direction is needed for forecasted budgeting, fund balance strategy, and long-term planning, including how the city funds core services and strategic investments tied to commission objectives.
The presentation notes that without TIF funding, additional millages could be needed to fund downtown projects, raising taxes for all city taxpayers.