Kent County commissioners will decide Thursday whether to allow the recently created North Quarter Corridor Improvement Authority to capture a portion of the county’s property-tax revenue.
“I know everybody’s budget is strained. The capture could be zero. If the property tax is going to go up, it will go up slowly,” said Thomas Cronkright, chairman of the North Quarter CIA, to the county’s Finance Committee last week.
Cronkright, CEO and co-owner of Sun Title Agency at 1410 Plainfield Ave. NE, said it took businesses and neighborhood groups in the Creston, Cheshire and North Monroe areas about seven years to create the corridor improvement district that Grand Rapids city commissioners established in December.
He added that the responsibility to increase property values in the district — the main purpose of the new organization — belongs solely to the CIA.
“It is really going to fall on our shoulders,” said Cronkright.
Creston Neighborhood Association Executive Director Deborah Eid told committee members there are 275 businesses and 10,800 properties in the CID.
“It’s a model for an economic stimulus that has been successful in other parts of the city,” she said, referring to the Uptown CID on the city’s east side.
Eid also pointed out that the projected tax capture over 30 years in the North Quarter was $88,000. “That’s not a lot of money for that period,” she said.
The general theme of the North Quarter supporters who addressed the committee was the CID would be a good investment for the county and Kent would get its captured tax revenue back over the long run.
However, by a 5-3 vote, committee members recommended the full commission opt out of making its tax revenue available to North Quarter. If commissioners come to the same conclusion, the CID wouldn’t be able to capture the new property taxes created by investments that raise property values in the district.
Such a vote would also mean the commission would adhere to the county’s six-year-old economic development policy, which committee members agreed needs to be reviewed. They will begin doing that at their next meeting.
Sending the vote to the board also means commissioners can raise issues to amend the policy, something that can’t be done at the committee level.
“If we turn it down here, then this moves to the board. I think this policy has worked very well for us,” said Commissioner Roger Morgan. “I think the onus is on the city. I think we should vote (to opt out), then we can negotiate. That’s the only leverage we have.”
The county’s policy, which was established in 2007, limits its participation in tax-capturing districts to 7 percent of the county’s tax levy. Currently, about 5.9 percent of that levy is being captured, largely by Grand Rapids. County Administrator and Controller Daryl Delabbio said Kent contributes $5.7 million of its tax levy annually to economic development.
The policy also stipulates that for a taxing jurisdiction to be able to capture county tax revenue, its total tax capture and tax abatement amounts can’t top 10 percent of its tax levy. Right now, Grand Rapids exceeds 14 percent.
If commissioners decide not to take part in the CID, the county could enter into an agreement with the city and its taxing authority that would allow North Quarter to collect some of Kent’s tax revenue, but only with some key concessions from the city.
The county has formed two such contracts: with Grand Rapids Township for the Plainfield Avenue CID, and with Gaines and Byron townships for the Division Avenue corridor. Those contracts run for 10 years, with options, and the townships have agreed not to capture portions of the county’s senior and corrections millages. The millages are crucial to Kent, which sees both as dedicated revenues voters have repeatedly supported. Also, the three townships were below the 10-percent mark that Grand Rapids exceeds.
Commissioner Jim Talen pointed out that Grand Rapids would have to quit capturing revenue from the millages before the county could enter into an agreement with the North Quarter CID, something the city is unlikely to do. The Downtown Development Authority reportedly captures the largest share of that millage revenue in the city, around $1 million each year.
The county approached the DDA years ago and asked the board to stop collecting that revenue. But the DDA said its contract with buyers who purchased the bonds that built Van Andel Arena prohibits it from doing that, although it refunds captured tax revenue to agencies like The Rapid that didn’t opt out of its expansion several years ago.
The millages collect about $24 million, with about $8 million going for the care of county seniors and roughly $16 million going to the jail.
Talen, who is the county’s representative on the DDA board, said by not participating in the North Quarter CID, the county is missing a chance to support an economic development project that will have a positive net effect on its property-tax base and tax revenue. He added that the Uptown district was the only city sector that has had its property values rise over the past few years.
The county has consistently chosen to opt out of new or expanding tax-capturing districts.
“In a sense we’re pitting one part of the county against another part of the county,” said Commissioner Dick Vander Molen., who acknowledged that the 30-year capture estimate for the North Quarter CID isn’t a lot of money. “Either we have to stick with the policy or change it. We have to treat everyone equally.”
“A lot has changed since the county adopted its policy,” said Commissioner Carol Hennessy.
Finance Committee Chairman Harold Voorhees said the panel would begin its review of the policy at its next meeting. “I think that will be coming at our first meeting in February,” he said.
“I think there is going to be more and more of these things coming,” said Morgan about tax-capturing districts. “We’re going to need a good policy.”