Infrastructure First TIF Plan

What is Tax Increment Financing?

Tax Increment Financing, or TIF, is a financing tool authorized under Michigan law. It is not a separate tax or an additional millage. Instead, it determines how a portion of existing property tax revenue generated within a defined district is distributed.

When a TIF district is established, a base taxable value is set. Taxing jurisdictions continue to receive the tax revenue associated with that base value. As taxable value within the district increases above the base, eligible property tax revenue generated by that growth—the “tax increment”—can be captured and used for purposes identified in the approved TIF and development plan.

For a Downtown Development Authority, TIF revenues can be used for eligible public improvements and activities identified in the plan. In the City of Traverse City, TIF has supported public infrastructure and improvements including streets, sidewalks, streetscapes, parking infrastructure, riverfront improvements, public spaces and other eligible downtown investments. 

TIF and the City

For approximately 40 years, TIF has been a primary funding tool for public infrastructure investments in downtown Traverse City. The City’s first downtown TIF district was established in 1985, followed by TIF 97 in 1997. Since then, TIF revenue has funded streets and streetscapes, parking structures, bridges, sidewalks and pedestrian improvements, public restrooms, riverwalks, Clinch Park, City Opera House improvements, and other public infrastructure. 

TIF 97 is scheduled to expire December 31, 2027.  City Proposal 1 would amend and extend the existing plan for 20 years.
 

Infrastructure First TIF Plan Ballot Proposal

The Infrastructure First TIF Plan is a proposed financing plan for eligible public infrastructure in the downtown Traverse City. Under the proposed structure, 70% of the applicable tax increment in the definded district would be captured for the TIF plan and 30% would be distributed to participating taxing jurisdictions, including a share to the City’s General Fund. The proposal plan will go before voters at the November 3, 2026 election. 

About TIF and the Proposed Plan

• TIF is a public infrastructure financing and tax revenue-sharing tool available to the City; it is not solely a DDA funding mechanism. 
• TIF should be discussed within the City's broader financial structure alongside the General Fund, utility funds, grants, bonds, state and federal resources, and other funding mechanisms.
• The DDA is a component unit of the City. Its budget is approved by the City Commission, and infrastructure projects under the plan require City Commission approval.
• The proposed plan changes the revenue-sharing structure: 70% of the applicable tax increment would be captured for the TIF plan and 30% would be distributed to participating taxing jurisdictions. The City’s portion of that 30% would flow to the General Fund and the Act 345 Police Fire Pension Fund
• The plan is focused on eligible public infrastructure in the urban core and includes a dedicated source of funding for eligible stormwater management investments within the district—something the City has not historically had.
• The plan aligns eligible infrastructure investments with the City’s Strategic Action Plan and City Commission OKR Work Plan. As the City develops long-term financial plans and three-year projections, strategic initiatives must be matched with funding sources; the General Fund cannot independently fund every infrastructure and strategic priority.

 

Frequently Asked Questions

Millage Rate 

The green line represents the City’s maximum allowable operating millage under the Headlee Amendment. While the City’s Charter limit is 15 mills, the Headlee Amendment has reduced the maximum rate the City may levy without voter approval over time. Returning to a higher rate, up to the Charter limit, would require voter approval.

The blue line represents the operating millage actually levied by the City. Where the blue line is not visible, the City’s actual levy and maximum allowable Headlee rate are the same.

Beginning in 2009, Act 345 began to be calculated separately, which is shown in red.

The important distinction is that TIF does not levy an additional tax or increase the City's millage rate. TIF determines how eligible property tax revenue generated within the district is distributed.

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Ballot Proposal One 

The City Charter of the City of Traverse City provides that the City or City Commission shall not adopt or approve any proposal to create a Tax Increment Financing (TIF) plan, or to modify, amend or extend an existing TIF plan until such proposal is approved by a majority of city electors at a regular or special election held for that purpose. The City of Traverse City has received a recommendation to amend and extend a TIF plan from Traverse City Downtown Development Authority, which TIF plan is on the City Clerk’s web page and on file at the City Clerk’s Office and available for public inspection. The proposed amended and extended TIF district will remain the same and is generally described as being bound by the following streets and landmarks: Lake Michigan Shoreline, East Front Street, Railroad Avenue, Boardman Avenue, Washington, Cass, the Boardman/Ottaway River, and Gillis Street, with a projected total capture of $ 139,959,327, which is an estimate only, to be used for the purposes allowed under Michigan’s Tax Increment Financing Act.

Shall the Traverse City Downtown Development Authority Infrastructure First Development and Tax Increment Financing Plan, submitted by Traverse City Downtown Development Authority, be amended and extended to be in effect for a term of twenty (20) years beginning January 1, 2028, and ending December 31, 2047?