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AI- 3341   12. B. 2.    
BOC Regular
Meeting Date: 10/15/2020  
City of Marshall South Neighborhood Improvement Authority Plan
Submitted For: Kelli Scott
FROM: Kelli Scott, Administrator/Controller, Administration
Department: Administration  

Resolved:  That the Calhoun County Board of Commissioners approves the City of Marshall South Neighborhood Improvement Authority Development Plan and Tax Increment Finance Plan as presented and authorizes the  Administrator/Controller to approve the Plan as already adopted by the City of Marshall, including the estimated tax capture from the County.
It is the recommendation of County Administration that the City of Marshall South Neighborhood Improvement Authority Development Plan and Tax Increment Finance Plan be approved as submitted.
The Recodified Tax Increment Finance Act, Public Act 57 of 2018, as amended, authorizes the establishment of neighborhood improvement authorities and provides for the capture of taxes from certain local units of government, among other allowed sources of funding, for development projects within the authority district. 

This statute includes the following provisions:
1) Notice must be given of a public hearing by publication and mail to taxpayers within a proposed district and to the governing body of each taxing jurisdiction levying taxes that would be subject to capture of tax increment revenues; and
2) Certain taxing jurisdictions, including counties, have the opportunity to negotiate the terms of, or opt out of capture, within 60 days of the public hearing establishing the TIF plan.

The City of Marshall held the required public hearing in late 2019, and on January 21, 2020, adopted an ordinance establishing the Northeast Marshall Neighborhood Improvement Authority (NMNIA) and appointed a Board for the authority.  The County, as a taxing jurisdiction levying taxes that would be subject to capture of this tax increment revenues, did not receive the required notice and did not have the opportunity to negotiate the terms of the TIF plan within the 60-day period before the plan was established.  The NIA Board approved the Authority's Development and TIF Plan on February 10, 2020.

City Manager Tom Tarkiewicz and Finance Director Jon Bartlett hosted a meeting in September 2020 with County Administrator/Controller Kelli Scott and officials from Kellogg Community College along with the developers of this proposed residential site, to describe the proposed development project and their anticipated benefits to the City and to the County.  The NIA Board approved the Authority's Development and TIF Plan on February 10, 2020.

The proposed Development and TIF Plan would fund an estimated $9.4 million in proposed improvements including streets, sidewalks, water and sewer, electric, among other public infrastructure, in the South Marshall neighborhood that is north of Brooks Field, south of Kalamazoo River, east of Mudica Street and west of Marshall Avenue.   This development would stimulate private investment within the District and increase the supply of residential housing within the City and County.  The City of Marshall is planning to issue bonds under its full faith and credit to provide up front financing for the improvements. 

Because of the needed residential housing this project would provide and the indication by the developers that they would be unable to achieve the marketable price points for the housing without the use of the NIA to fund the public infrastructure components, and the fact that the County will receive a portion of the incremental new taxes that the development is expected to create, County Administration is supportive of the proposed Development Agreement and TIF Plan as presented.

Tax capture is one funding mechanism proposed to pay back the bonds, with a proposed 65% capture of the County's taxes on only the growth in taxable value within the District for 20 years, totaling an estimated $2.1 million or an average of $105,000 per year.  The District would pass through to the County the remaining 35% of taxes on the increased tax base, estimated to increase the County's tax revenues by $1.1 million over the 20 years or an average of $55,000 per year. 

The statute provides Calhoun County with the ability to exempt the property taxes it collects from being subject to capture by (diverted to) the  South NIA. The County's Tax Sharing Policy (#291) requires the Board to approve the NMNIA's Development and TIF Plan, which includes the tax sharing agreement, or else the County by default would exempt our property taxes (i.e. opt out) from capture. This resolution was required to be passed and delivered within 60 days after the South NIA tax plan was approved by the Marshall City Council, which happened in March 2020.


The County Board of Commissioners could choose to reject the proposed tax sharing agreement contained within the City of Marshall South NIA Development and TIF Plan and request a different tax sharing agreement or exempt 100% of the County's taxes from capture, which would deny the District the ability to fund its proposed improvements for the purposes of residential development.  It is unclear what process would follow if the Board of Commissioners does not approve this Agreement, since the City of Marshall has already approved this TIF Plan to include the proposed tax sharing arrangement with the County.

It is recommended that the Board of Commissioners approve the proposed tax sharing agreement by approval of the City of Marshall South Neighborhood Improvement Authority Development and TIF Plan as presented.  This action will support the proposed improvement project in South Marshall, and its intended long-term benefits to the local economy including new residential units and long-term tax growth.

Fiscal Impact
Over the 20 year development period, the estimated incremental tax revenues generated within the District is approximately $9.5 million. Approximately $3.2 million of that amount would be attributable to County taxes. The proposed tax sharing agreement of 65% capture/35% pass through would mean the County would keep approximately $1.1 million over 20 years or $55,000 per year and the NIA would capture $2.1 million over 20 years or $105,000 per year. After the Neighborhood Improvement Authority's 20 year development period ends, the property tax will no longer be captured and will increase property tax revenues to the county by 100% of the increased tax base into the future.

Marshall South NIA
NIA summary
Tax Sharing Policy

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