DDAs a good deal for development

Rick Charmoli | Cadillac News Alisha Price, 21, and her son Auden walk in downtown Evart recently. Evartีs Downtown Development Authority funds streetscape improvement projects such as Victorian and sidewalks along Main Street.

When driving through downtown Cadillac, do you notice the colorful hanging baskets?

How about when you are looking for a parking spot in downtown, do you find yourself thinking back 10 years ago when some lots weren't paved?

These are some of many projects courtesy of the Cadillac Downtown Development Authority. DDAs, created by a Michigan public act in 1975, are a tool used to promote the economic growth in the downtown area and halt property value deterioration.

“The DDA's purpose is to use its various resources to invest in the Downtown Development District and fund public improvements that will spur additional private investment and development in the downtown area,” said Precia Garland, assistant city manager for the City of Cadillac. “The DDA is constantly working on initiatives to revitalize the downtown area.”

In Cadillac, the DDA was responsible for the clock tower on Mitchell and Cass streets; paving the downtown area parking lots; buying and maintaining the downtown hanging flower baskets; bringing new businesses to the downtown area; and offering a low-interest loan for fa็ade improvements.

To pay for these projects, Garland said the DDA uses captured taxes from downtown businesses. For instance, if a building is valued at $10 million one year and $11 million in two years, the captured value is $1 million for the DDA.

On that $1 million, the local millage is applied, and that money then belongs to the DDA.

“You add up the local millages from the city, county, CWTA, library and COA (from Wexford County). It doesn't include the school or the ISD,” Garland said. “The businesses aren't paying more taxes. What it is, is a redistribution of taxes gained.”

Tax increment financing is the best economic tool in Michigan, according to Dan Elliott, director of the Evart DDA. “Nothing comes close to it,” he said.

In 2006, Evart's DDA captured $113,000 in revenues. Since implemented in 1987, projects have included streetscapes, parking improvements, land acquisition and relocation of the post office. DDA-funded improvements have far-reaching benefits, according to Elliott.

“The city gains. The county gains and everyone else by the economic development and growth,” he said.

Evart's DDA is effective through 2023. Elliott anticipates the city would renew it.

“They would be crazy not to,” he said.

Reed City's DDA is fortunate to have located within its district the General Mills' Yoplait plant, the company's largest producing yogurt facility in the nation and a major contributor to the community's DDA revenues. In 2006, the DDA captured $500,000.

“One of the major benefits for having the DDA is that taxes otherwise going to the county remain here where the money is generated,” said Jim Thompson, DDA chairman.

Funds are directed toward projects helping to maintain existing business, increase commercial activity and attract tourism.

One of the key benefits of the DDA is that it provides greater flexibility than the city has for use of the tax dollars. Currently, the DDA is supporting construction of a $1 million multipurpose building at the staging area of the Rails to Trails in the heart of downtown.

The project is hoped to get underway this season. Federal grants funding will provide $200,000 for the project. The DDA has committed the reminder of the funding. Earlier in July, the DDA approved a $38,000 parking and paving project.

In deciding how to spend funds, the 13-person DDA board is conscious of the DDA's fiscal consequences upon the city.

“It has an impact on city finances,” Thompson said. “That's why we feel it's part of our responsibility to do things for the city it doesn't have the funds for - like the new city police station and a roof for city hall.”

Reed City's DDA extends through 2017. While it would be possible for city council to dissolve it, such a measure would make the city responsible for bond debt assumed by the DDA. That debt is not expected to be paid off until 2017.

Your Local Connection

Each year per the state act, DDA's are required to prepare an annual report, which must be published once in a paper of local circulation, provided to the DDA Board, the City Council, and the Michigan Department of Treasury. According to a review of Cadillac's DDA annual reports, we have captured a total of $699,623.52 since the 1996 tax year, when the DDA began realizing tax increment financing revenues. You can tell that the taxable value of the Cadillac DDA district has steadily increased each year by the resulting TIF revenues:

€ 1996: $15,585.65

€ 1997: $19,249.72

€ 1998: $23,549.00

€ 1999: $40,525.00

€ 2000: $44,183.19

€ 2001: $63,714.70

€ 2002: $58,402.35

€ 2003: $100,733.43

€ 2004: $111,556.04

€ 2005: $105,388.81

€ 2006: $116,655.44

€ Grand total: $699,623.52

news@cadillacnews.com | 775-NEWS (6397)