The recently adopted City Charter of Marquette requires a strategy for creating economic opportunity. The City Economic Development Plan will include a funding approach utilizing resources and tools from public and private partners, including State funding available through a Local Development Finance Authority (LDFA). The City recently revitalized this process, expanding boundaries originally identified in 1983 in order to meet contemporary development needs. This process has not, and will not, change the existing tax millage, or otherwise create any new tax impacts for City property owners.
The City of Marquette’s Local Development Finance Authority (LDFA) is a primary means of making tax increment financing procedures available to assist industrial development. Utilizing Tax Increment Financing (TIF), the authority captures any increases in property valuations above a base level established before the redevelopment process begins. The LDFA is a public corporate body created primarily to plan and finance the development and redevelopment of the designated facilities, agricultural processing facilities, and high technology activity, LDFAs are typically used to finance the infrastructure and public improvements necessary to attract these types of businesses to an area. LDFAs are able to finance their activities through a variety of methods including:
- Accepting contributions for the performance of its functions (for example: municipal contributions).
- Owning, leasing, operating, and licensing property and buildings. The municipality can acquire property by eminent domain and transfer the ownership to the LDFA, if considered necessary for public purposes.
- Generating revenue by establishing a tax increment financing (TIF) plan. TIF revenues can only be used for public facilities (as defined in the Act) for eligible properties that generate the tax increment or are in the same certified industrial park.
- Issuing tax-exempt TIF bonds based on an estimate of anticipated tax increment revenue to be generated. Revenue bond proceeds are subject to the same restriction mentioned above.
- Borrowing money and issuing revenue bonds. The municipality may pledge its full faith and credit to support the authority’s revenue bonds if it desires.
The primary purpose of the Local Development Finance Act is to “encourage local development to prevent conditions of unemployment and promote economic growth.” Different from other economic development tools enacted prior to the LDFA, job creation (vs. reduction of urban blight) is the primary goal of the Act. The LDFA achieves this goal by providing a financing mechanism for public facility construction and improvements necessary to attract and support manufacturing, agricultural processing, and high tech industry.
A public member board is selected (a director and other employees may be hired by the board). The duties and powers of the board include, but are not limited to:
- The study and analysis of the economic situation of the area.
- The development of long-range plans.
- The planning and implementation of public facility construction and/or renovation.
- Land improvements.
- Site preparations.
Frequently Asked Questions
SmartZones are designed to help municipalities and regions support the growth of technology-based firms through collaborations with entrepreneurs, researchers, universities, industry, research organizations, government and other community institutions to create and grow technology-based businesses and jobs. The State of Michigan authorizes the establishment of SmartZones and provides funding support.
Michigan’s 15 SmartZones include technology business accelerators and services that provide help to commercialize technology emerging from collaborations with Michigan universities and private companies.
The MTEC SmartZone, located in Houghton and Hancock, approached the City of Marquette to become a Satellite Smart Zone. Michigan law permits existing SmartZones to select Satellite partners. MTEC has approached the City of Marquette to consider establishment of a Satellite.
MTEC is one of the leading SmartZones in Michigan, creating 590 direct and indirect jobs, 60 new companies and has developed 4 incubators by revitalizing historical landmarks in Houghton/Hancock and leveraging over $4M in infrastructure grants. MTEC partners with Michigan Technological University to provide technology transfer and commercialization services and support regional entrepreneurship and business expansion.
In recent years, Marquette has become a nationally recognized location to raise a family, with an outstanding quality of life. Marquette provides great schools and a university, attractive neighborhoods and a diversifying commercial and business base surrounded by a unique natural environment. Yet for several generations of young people, the regional economy has not provided enough options, forcing many to seek improved employment and career opportunities elsewhere.
To reverse this trend, the SmartZone Program will foster an environment where new technology firms and employment can grow by developing an eco-system of business relationships, innovation, talent and university research to create and build companies and encourage entrepreneurship.
The potential closure of the WE Energies Plant and relocation decision of MGH Duke LifePoint are reminders that the City of Marquette faces uncertain economic challenges. SmartZones have helped buffer communities like Houghton and Hancock from external economic decisions and the Satellite program addresses a requirement of the Marquette City Charter to institute an economic development strategy and program. The SmartZone Satellite program gives the City new tools, funding and partnerships to shape its economic future and sustainability and provide new opportunities for our young people.
Northern Michigan University, Michigan State University, area technology companies and MTEC and Michigan Tech University have expressed willingness to partner with the Marquette Satellite.
MTEC has approached the City of Marquette to become a Satellite SmartZone. Satellites are required to provide a minimum level of funding set at $200,000. In turn, the State Treasurer is empowered by State Law to provide a full reimbursement of any local and state school tax captured by the municipality to provide additional funding for Satellite operations.
The City of Marquette can utilize a Local Development Finance Authority (The LDFA Act, 281 of 1986) to capture certain taxes, through Tax Increment Financing (TIF). This provides a source of funding to meet the local funding match requirement. Also, the City of Marquette becomes eligible for additional funding through State of Michigan reimbursement of all captured local and state school taxes. The State will award and fund up to three Satellite SmartZones. Marquette is competing statewide to be one of the three selected.
The City of Marquette recently expanded the boundaries of its LDFA, originally created in 1988 to include the River Park Complex, where RTI Surgical and other companies have located. The state allows a municipality to have only one LDFA.
The LDFA has prepared and approved a TIF plan, and has forwarded it to the Marquette City Commission for review and consideration. The City Commission will hold a Public Hearing on Oct. 14 at 7 p.m., in the City Commission Chambers in City Hall. A letter (available here) was sent out to all property owners in the LDFA in order to notice the meeting.
The schedule for meeting and hearings will be posted on the city’s web site.
There will be no costs to the residents. The LDFA permits the City of Marquette to capture future increases in local property tax revenue to fund some operational costs of the Satellite SmartZone and leverage State of Michigan funding. There will be no change in the millage assessed to property owners.
The LDFA will host a public forum to answer questions about the proposed TIF plan and to discuss the plans for a Satellite SmartZone. That meeting is scheduled for 5:30 p.m. on Oct. 9 and will be in the City Commission Chambers at City Hall (300 W. Baraga Ave.)
For more information contact: Gary Simpson, Marquette CFO - firstname.lastname@example.org