After they decided last year not to let Gaines and Byron townships capture property-tax revenue for the Division Avenue Corridor Improvement District, county commissioners will consider next week whether to enter into a tax-sharing agreement with the townships to help fund the CID.
If approved, the agreement would be like the one the county made two years ago with Plainfield and Grand Rapids townships over the Plainfield Avenue CID on the county’s northeast side.
Back in February 2008, commissioners chose to exempt county property taxes from capture by the townships for the commercial district that runs along Division Avenue from 60th to 84th streets on the county’s southeast side.
Gaines and Bryon townships proposed then to invest $2.4 million into the tax-increment financing district for public infrastructure improvements to the corridor over the next 15 to 20 years to lure private investment to those blocks. Gaines plans to invest $1.4 million, with Byron contributing $1 million to the CID.
Had county commissioners gone along with the townships’ request back then, Gaines would have been able to capture $670,000 from the operating millage, $123,500 from the corrections millage, and $50,723 from the senior millage over 20 years. Byron Township would have captured smaller amounts from those millages after improvements were made.
The Division Avenue CID features retail shops, banks and other service businesses, and restaurants. More than 3,400 residents live in the corridor.
County Fiscal Services Director Robert White told members of the Finance Committee recently that approving a tax-sharing agreement with the townships wouldn’t create havoc for the general fund.
“It will not cost you anything. You will gain less, depending on what gets built out there,” he said.
White also said that neither Gaines nor Byron townships capture much in the way of county property-tax revenue, as both are well below the 10 percent capture threshold the county set three years ago for municipalities with tax-increment financing authorities. Gaines captures about 3 percent of the yearly tax roll, while Byron is below 2 percent.
The Finance Committee recommended that the commission approve the agreement.
The tax-sharing agreement the county established in late 2007 with Grand Rapids and Plainfield townships is for 10 years with a 10-year renewal option. The county is matching the millage amount that the townships are capturing from their property taxes for the CID along Plainfield Avenue.
But the agreement prohibits the townships from collecting revenue from the corrections and senior millages, as the county views those two property-tax millages as being dedicated to specific purposes and not available for economic development funding.
The agreement also allows the county to freeze the amount of revenue captured by the CID to the previous year’s level if the county’s total property-tax receipts that year fail to rise by 3 percent. The county’s revenue from property taxes is expected to be off by $3.5 million next year from this year.
The county has chosen not to participate in tax-increment financing and tax-exempting proposals since 2007 to slow the erosion of its property-tax receipts, which fund a majority of the services it provides through its general fund. The county has set a property-tax limit of 7 percent that can be captured by municipal tax-increment financing districts, like CIDs, SmartZones and downtown development authorities. There are 28 TIFAs in the county. At last report, nearly 6 percent of the county’s property-tax roll was being captured.
Commissioners will also adopt the 2010 general fund at next week’s meeting.