Downtown Revitalization, what gives?

[drinsema-sybenga]

Two articles (obviously one building on the other) in the Press have got me thinking about downtown revitalization. Thougth throwing these questions out there would be an interesting conversation in any case.

Property tax bills up despite slump - Especially the bit at the end about the 8 inner city neighborhoods rising property values got my attention.

Medical development sparks land speculation

The issue that comes to mind is this. Now comes the question though. I have hung my hat on reinvestment and increased property values in downtown and surrounding downtown as good for the whole community, probably basically becasue I would think the increased tax base would allow for more resources that get shared with the whole community (a la NYC where Bloomberg has such gigantic budget surpluses he doesn't know what to, besides cut taxes at this point) but in GR I haven't seen this effect and actually it almost seems the opposite as the City and Schools budgets are in horrible shapes. What gives? Am I wrong in my basic assumption? Or do we need to give it some time till we see results. . .

[DJL3CDP]

Interesting question. My sense is that the rising real estate values and tax increases they cause are only partially offsetting all the job losses of the last few years. The City income tax has taken a beating with all the jobs that left. Give it time because if/when the job picture stabilizes and those revenues kick in the city should end up with a lot more money.

All just my $.02 of course...

[GRDadof3]

In addition, the massive number of jobs lost in the State has sucked a lot of tax dollars away from the state, and the city of Grand Rapids gets revenue sharing from the state as one of three sources of revenue (city income tax, property tax, state revenue sharing). It's like swimming upstream against a pretty strong current.

[ModSquad]

Very interesting question, one that has layers and layers of answers. Let me try peel into this "onion" of a problem a bit.

First of all every State has a different budgetary structure when it comes to how real estate taxes are collected and distributed. For that reason it would be hard to compare to New York. This also rings true for public school financing.

In our State's case I believe that property taxes only make up about 30% of our City's budget. The much greater percentage of our budget comes from sales tax and various business taxes. Here again I believe most of that goes to the State and they re-distribute it to the municipalities. If you talk to folks that run our city, you will often hear the words "revenue sharing" usually followed up by the statement, "we are being ripped off by the State." In plain English we are sending our revenue to LAnsing, and they are keeping too much to meet the holes in the State budget before they send us our share.

I view the raising of property taxes as an attempt by our local officials to bring up that 30%. With the real estate market in the crapper, I can't see the market values and appraised values jiving. USed to be that homes would typically sell for 2 to 2.5 times their SEV. I wonder where that ratio is now?

[foo_gr]

The real cause of the budget shortfalls is the cuts to revenue sharing that the state government has made. Essentially, local cities gave up their right to collect sales tax in return for a guaranteed percentage of the sales tax collected by the state in the area. The state has revised the "guaranteed" percentage lower and lower, essentially balancing the state budget on the backs of the communities that serve as the economic engines of the state.

I think that local governments should demand a return to the original revenue sharing. We can't have a strong state if we don't have strong communities, and we can't have strong communities unless we have the money to maintain and invest in them.

[NorthCoast]

Real estate rates and property values don't mean much if there isn't a market for businesses. Michigan Street is growing because the demand for medical facilities is high (thank you baby boomers). The demand for bars in GR is high (thank you college students). But the demand for everyday businesses seems to not to have really materialized yet...though I think it will once all the condos being built right now are completed and fully occupied.

[allbusiness]

In our State's case I believe that property taxes only make up about 30% of our City's budget. The much greater percentage of our budget comes from sales tax and various business taxes. Here again I believe most of that goes to the State and they re-distribute it to the municipalities. If you talk to folks that run our city, you will often hear the words "revenue sharing" usually followed up by the statement, "we are being ripped off by the State." In plain English we are sending our revenue to LAnsing, and they are keeping too much to meet the holes in the State budget before they send us our share. <snip!>