Cities await potential state tax changes that could affect tax increment financing

By: Sherri Kolade | Farmington Press | Published September 18, 2013

FARMINGTON/FARMINGTON HILLS — The state’s potential elimination of personal property taxes in 2014 could impact a local tax increment financing district, which would capture taxes from the Grand River Corridor stretch in both cities.

The Grand River Corridor Improvement Authority plans include mixed-use district of business and residential communities along stretches of Grand River Avenue, from the eastern boundary of the Downtown Development Authority to the eastern boundary of Farmington Hills.

The ultimate plan is for both cities to have side-by-side corridor improvement authorities that operate as one unit through an interlocal agreement.

Corridor improvement authority boards plan and implement improvements within the corridor’s boundaries. The city councils appoint the boards and retain control through those appointments, and approval of major plans and budgets. Corridor improvement authorities have the ability to enter into contracts, acquire properties, operate buildings and acquire fees. Such authorities bring in money for improvements through donations, by borrowing money and issuing bonds, and via special assessments and tax increment financing.

The Farmington Hills Planning Commission has two years before redoing its master land use plan, which would include those changes.

According to a published report, the original setup was to create a tax increment financing authority by Dec. 31. By then, a baseline would be set to decide the growth of property values in the corridor district, some of which would be captured for use by the Corridor Improvement Authority.

Nate Geinzer, assistant to the Farmington Hills city manager, is working to establish the area as a tax increment finance district, similar to a downtown development authority, where the cities can capture tax growth on developments to help fund the project.

“Essentially, we would be capturing the growth on the value increases in properties,” Geinzer said earlier in the year. “So if a property is worth $100,000 this year, and next year it is worth $110,000, we would be able to capture the taxes on that $10,000 to re-invest within the district.”

Last December, the state Legislature entertained a bill that would repeal personal property tax in Michigan.

Senate bills 1065-1072 were amended multiple times and eventually passed the House.

The potential law outlines the gradual elimination of PPT, phasing out through a three-year period. It has provisions for a 100 percent reimbursement for PPT funds that support public safety, and an 80 percent reimbursement of non-public safety losses through redistribution of the state’s Use Tax in regional essential assessment districts.

The Use Tax is a companion tax to the sales tax, according to A Use Tax of 6 percent must be paid on the total price of all taxable items brought into Michigan or purchases by mail from out-of-state retailers. Regional assessment districts, or as described on the state Legislature’s website, are regions of the state composed of several counties, over which a regional marketing organization operates, and a statewide referendum on such districts isn’t slated to appear on ballots until August 2014.

Michigan voters have yet to decide on regional assessment districts — or as described on the state Legislature’s website, regions of the state composed of several counties, over which a regional marketing organization operates — and a statewide referendum on such districts isn’t slated to appear on ballots until August 2014.

During an Aug. 26 Farmington Hills City Council meeting, council members approved 6-0 the resolution to support the continued use of TIF. 

City Councilman Randy Bruce was absent.

“(We) still have some decisions to make when we do this,” City Manager Steve Brock said of developing the Grand River Corridor. “There are a lot of aspects to it and what the state is doing, or not doing, with the personal property tax situation.”

Brock added that if the authority captured 100 percent of property value increases in the corridor district, it would amount to roughly $9 million; a 50 percent capture would equate to roughly $4.5 million.

“(We) want to learn as much as we can on what the state is or isn’t going to do,” he said. “We don’t want to do something to put us in the red.”

Geinzer said during the Aug. 26 meeting that TIF is an important tool in the redevelopment efforts of both cities.

“There has been a number of rumblings up in Lansing of some discussions they are having now about possible TIF reforms,” he said.

Farmington adopted a similar resolution July 15, he said, essentially informing various parties of the cities’ support for TIF.

“Also, suggesting some potential reforms and some of the ability to create flexibility in terms of how personal property tax is dealt with in TIF,” he said.

Geinzer said after the meeting that although he hasn’t heard anything official out of Lansing, he has heard about groups meeting regarding TIFs and reforms.

“If we move forward with TIF and set our baseline, and part of the taxes fall off, we (would be) starting the TIF process in the red,” he said. “It is going to slow down our ability to implement a division plan with personal property tax in the mix.”

For more information, contact Kevin Christiansen at (248) 474-5500, ext. 2226; Nate Geinzer at (248) 871-2507; or visit

Former Staff Writer Sara Kandel contributed to this report.