In Tough Economic Times, Avoid the Money War - Sell Teamwork and Leveraging

By Joe Borgstrom, Director
Specialized Technical Assistance
& Revitalization Strategy (STARS) Division
Michigan State Housing Development Authority

It seems like every paper everyday is shouting at us that we are in poor economic times. To make matters worse, you might have a council member or city manager eyeing your Downtown Development Authority (or other Tax Increment Financing- or TIF- mechanism) budget wondering how they can get that money “back” into the general fund. Maybe you’re a non-profit where the city or village is thinking about yanking their funding to pay for “core services." You probably feel like you and your budget are under attack by some of the very people who were singing your praises just two or three years ago. How do you fight that?

First off, you don’t fight, you educate. Fighting creates sides: yours and theirs. You want no part of a win-lose situation. Even if you win in the short term, you lose in end. The education you need to provide involves two keys areas: teamwork and leverage. Let’s look at both of these and how you can use them to continue to do the “core service" of downtown revitalization in an era of shrinking public (and private) funding.

Teamwork
Sometimes you just have to take one for the team. The reason your budget or contribution is being eyed is because it is needed. Tax revenues, especially in Michigan, are providing less and less for units of government to operate. If you’re sitting on a large amount of uncommitted TIF, you would be wise to chip in to help cover costs the local police, fire or DPW folks have normally just provided free of charge in the past (such as security and response to downtown events, barrier set up for parades, etc.) Most TIF laws in Michigan allow for the reimbursement of public services. If you can afford to do it, then you should. Better to give up a little now then have a ton of envy and ill will for years to come.

Possibly in lieu of or addition to partially reimbursing, your organization may also want to consider what services (or other value-added) can be provided for the revenue being contributed. For instance, if the city allows you to send your newsletter out with the water bill, see if your organization can lend volunteers to help stuff the envelopes instead of city staff. That will free up city staff to spend their time doing other things that could contribute revenue to the city. Be creative.

Leverage
One of the easiest mistakes councils and the general public make is the fact that not all of the TIF capture that a downtown organization captures is the local unit of government’s. Many times, the TIF is capturing county, library, transportation, community college and other taxes. If a council were to disband a TIF organization they would not get anywhere near the amount of money into the general fund they think. The money goes back to the taxing jurisdictions themselves. That means if Michigantown’s DDA captures $200,000 in TIF and the council decides to disband the DDA, the general fund may only get $100,000. That means $100,000 LESS will go directly to improve their community. Most of that money will leave the community’s immediate borders and may even fund competing communities. Add that to the fact if that TIF organization had any outstanding bonds, the city or village is then liable for their repayment.

The direct financing leverage education aside, the most powerful education a downtown professional can provide to their council and citizens is the leverage their organization provides by way of results, or in other words, their return on investment. How many businesses has your organization brought to town? How many have you retained? How many new jobs? How many people come to your events? How many buildings have been rehabbed? How many new residents are downtown? There a tons of measurable results your organization could and should be recording and reporting. Never assume everyone knows the good work you do. Like thrifty investors looking to buy stock in a company, councils are evaluating why they should give you any of the public’s precious resource. Prove you are good investment.

One last note: If your downtown organization doesn’t have a presence at your city or village council at least once a month, you should. Many times the lack of communication between downtown organizations and councils lead to the biggest fights over resources. Make sure they realize that the downtown revitalization efforts your organization provides are a "core service." Open and honest communication will help smooth relationships in even the roughest of economic times.