Right now, sitting in the Lansing City Clerk’s office for all who wish to inspect them is a resolution that would establish a Corridor Improvement Authority for a part of Michigan Avenue and another one for a part of Saginaw Street.
The Corridor Improvement Authority is a relatively new and, so far, little-used economic development tool in the state that has the unique power to spread across municipal borders.
If approved, the Saginaw Street authority would stretch, west to east, from Lansing Township to Pennsylvania Avenue. The Michigan Avenue authority would span from the Pere Marquette rail crossing in Lansing to the western edge of downtown East Lansing, crossing three municipalities — Lansing, Lansing Township and East Lansing. The authorities have the ability to include property anywhere up to 500 feet on either side from the centerline of the corridor they occupy.
But authorities have other powers. Authorities, which are run by a board composed of appointees from whichever municipalities are involved, can apply for grants and — perhaps its most useful ability — create a tax increment financing district within its borders.
But at a time when the economy is still in poor shape, and taxable values on properties are not projected to rise, a TIF — which is expected to be put in place along both the Saginaw and Michigan corridors — might take a while to generate revenue to finance improvements to the corridors.
A TIF, which is laid over a specific geographic area, captures increases in property taxes and millages each year after the district is created. The pre-TIF taxes that were going toward their respective uses remain frozen until the TIF is removed. The theory behind TIFs is that the captured taxes will improve an area, raise property values and, when the TIF is removed, create a more valuable tax base from which to draw.
Bob Trezise, CEO of Lansing’s Economic Development Corp., says that a TIF in an authority is basically the spirit of the tool — to create money to increase development — but its creation is not a given. He says that these authorities would probably be limited in their abilities to use TIF revenue in the beginning.
“In the end, in 10 or so years, the (TIF) will prove beneficial and a profound economic development tool,” he said.
Because of the 1994 Proposal A, taxable values on properties are determined by the rate of the Consumer Price Index or 5 percent, whichever is less. Since May, the index has been below zero.
Alex Rossean, a consultant with the Anderson Economic Group, said that creating a TIF now might not capture much money, but it would not be useless.
Rising taxable values are “sort of like a freebie built into the system,” Rossean said. “But a TIF can make sense with zero inflation.”
Different taxing entities can opt out of a TIF, but Trezise said that the most important one, Ingham County, has basically agreed to participate in a possible Michigan Avenue authority TIF.
Jessica Yorko, head of the Westside Commercial Association, which is behind the Saginaw authority as part of a long-range plan to revitalize the west side, said that the Saginaw authority is moving toward using a TIF, too. However, the Saginaw authority would only include commercial property.
City Council can vote on the resolutions to create the authorities in October. From there, Trezise said, the authorities have a deadline of spring 2010 to create their respective plans, which would include the creation of a TIF.
City Assessor Maria Irish said that her office has not yet studied the feasibility of a TIF along the roads the authorities would encompass. From information she has received, the index is expected to be zero next year. She could not comment on whether creating a TIF during an economic time such as this would be beneficial.
“They may want to get it in and start it at a low base,” she said. “Hopefully it has nowhere to go but up.”
Correction: Due to a reporting error, an earlier version of this story should not have indicated that taxing entities outside of Ingham County had agreed to not opt out of the Michigan Avenue authority TIF.