In 2002 the Board of Trustees created the Downtown Development Authority (DDA) to improve the Whitmore Lake business district. The other reasons it was created are outlined on pages 6-7 of this document, a document created a year later to define the DDA's Tax Increment Financing authority. You can read the document online at the above link or download a copy from the township website here.
The DDA is an unelected body, a special interest group unaccountable to the taxpayers from whom, by the DDA's own optimistic spreadsheet projections (p.18, pp.23-30), it would eventually have captured and spent $58 million in tax receipts.
"If normal infrastructure bonds were issued outside of a TIF district, they would generally have to be approved by a taxpayer vote, and receive 60 percent or more support. The property taxes of all citizens would be increased to pay for the bonds. Following development, the increased property taxes from the new appraisals would be divided among all taxing authorities, as normal
However, as Americans have learned over the past five years – all financial decisions, even magical things, involve risk. Not every project or idea is a success just because one wants it to be. There is no free money.
The potential moral hazard of TIF is becoming apparent. Many people, both taxpaying citizens and elected officeholders, are asking questions about TIF benefits. In many ways the questions reflect the local impact of negative bailout and crony capitalism decisions at the national level."
The source of this study has vanished from the earth.
Policy Study, Deborah Thornton, Public Interest Institute, 2012
The link is dead. It was:
http://scholar.googleusercontent.com/scholar?q=cache:xGvZpA8GvKQJ:scholar.google.com/&hl=en&as_sdt=80000005&sciodt=0,23
"School taxes captured by tifas are funded by every single school in the state. Public education dollars are skimmed off to fund economic development to the tune of tens of million of dollars annually. If AA loses $1 million to the LDFA and Lansing makes it up, that’s $1 million lost that would have been otherwise available for school spending somewhere, whether AA, Bridgman, Detour or Ontonagon.
While the state says they hold the local schools harmless, the reality is that the pot of money to provide public education is smaller because of it. That’s the dirty little secret of tifas."
- Mary Eastcreek, The Ann Arbor Chronicle, June 25, 2014
"Tax increment financing (TIF) is currently the most important fiscal instrument for local development initiatives in this country. In theory, a TIF project requires no new taxes, and pays for itself by expanding the value of the tax base. However, many state TIF programs have the potential to encourage misallocation of resources, with both specific legislative provisions and larger institutional factors providing incentives for unproductive investments. Three common structural elements of TIF can be especially problematic: The interpretation of, “blight,” the assumption that future increases in property value are caused by the TIF project, and the ability of a TIF district to appropriate the future tax base growth of other, overlapping jurisdictions, most notably school districts. Clarity and transparency are essential to citizen oversight, but many TIF programs are largely hidden from taxpayer notice. Debt limits and a requirement of voter approval constitute a deliberate check on municipal borrowing, but legislatures and courts have generally agreed that bonds secured by tax increment financing do not constitute debt for these purposes. Yet the earmarking of taxes on future increases in property values can function as a type of unrecognized municipal debt, presenting problems of accountability and repayment capacity common to state and local borrowing of all kinds."
Download the rest of Joan Youngman's paper here: TIF at a Turning Point: Defining Debt Down (2011), Lincoln Institute of Land Policy Working Paper No. WP11JY1.
This contains some enormously interesting details on Chicago style TIF use and abuse.
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