As communities and other taxing authorities continue to grapple with declining property tax revenues, many may not be as inclined as they once were to forfeit a portion of those funds to a downtown development authority (DDA), according to the sponsor of a proposal that would give municipalities and other taxing jurisdictions already agreeing to let those dollars be captured by the authority to opt out of the pact after a DDA’s bonds are fully paid off.
House Bill 4317, which was introduced by state Rep. Mike Callton (R-Nashville), would revise state law to allow communities that let a DDA capture a portion of their property tax revenues under tax increment financing (TIF) to opt out of that agreement after a DDA’s bonds are fully paid off.
TIF permits the authority to annually capture tax revenues attributable to increases in the taxable value of real and personal property in the authority district after a baseline taxable value is established.
In order to exempt itself from the tax capture, the governing body of the taxing jurisdiction would have to adopt a resolution and file a copy of it with the clerk of the municipality that created the DDA.
Callton said “changing financial needs” of communities and other taxing authorities prompted him and co-sponsor state Rep. Earl Poleski (R-Jackson) to introduce the legislation.
“This is just trying to provide an opt out,” Callton said. “This is one of those things where you don’t want to destroy the DDAs, but at the same time, trying to provide a tool for them to opt out.”
Commerce Township Supervisor Tom Zoner said that, while the Commerce DDA has 30-year bonds for a total of about $84 million in debt and it would be “a long time before that even affects us,” the legislation would likely mean big trouble for DDAs.
“If they create that law, they might as well dissolve the DDAs,” he said.
Walled Lake DDA Director Charlene Long said the DDA has been doing things to make itself more self-supporting so authority officials aren’t completely reliant on TIF dollars.
“I think, regardless of whether this gets passed, we need to continue trying to do that,” she said, adding that the DDA’s bond debt will be paid off “in the next couple months.”
The other lakes area communities with DDAs are Milford, Highland and Wixom.