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LDFA

The Local Development Finance Authority is a body created under the authority of P.A. 281 of 1986, as amended, to encourage local development, prevent conditions of unemployment and promote growth, create and implement a development plan, acquire interests in real and personal property, and to utilize tax increment financing.

Meetings: As needed.

The Term of Office for the Commissioner Members are Three and Four Year Terms.

Board Members:

Brian Ross – Chair
Mike Mills
Ben Dancer
Richard Freer
Dave Wilson
Chrystal Murphy
Erich Chagnon
Denise Perkins

If you’re interested in becoming a member, please contact our City Clerk, Kristy Reinecke at (517) 663-8118.

LDFA History

The Local Development Financing Act (LDFA), Public Act 281 of 1986, was enacted by the Michigan Legislature in the Fall of 1986 and became effective February 1, 1987.  The purpose of the Act was to provide for establishment of Local Development Finance Authorities and to authorize the authorities to create and implement plans to prevent conditions of unemployment and promote economic growth.  In addition the Act authorized and permitted the use of tax increment financing.

Tax increment financing allows a local government to finance public improvements in a designated area by capturing a portion of the property taxes levied on any increase in property taxes within the area.  In order to become effective, a tax increment financing plan must be adopted by the governing body, which in the case of the City of Eaton Rapids is the City Council.  After adoption of the plan, the Board of the Local Development Financing Authority may implement the plan and direct the use of the tax increment revenue generated by the plan.

In 1993 the City of Eaton Rapids embarked upon the development of the Island City Industrial Park.  The Park had one major anchor tenant, Magnesium Products of America.  The City established a Local Development Financing Authority along with a development plan and tax increment financing plan for the Park area.  The Authority was charged with overseeing the implementation of the plan which included purchasing land and constructing roads and utilities to serve the Park.  The work was financed through the sale of bonds and state and federal grants.  Tax increment revenues were pledged to fund repayment of the bonds and cover other costs.

The Park has been very successful and has produced tax increment revenue in excess of the initial costs.  Some of the excess revenue has been used to improve the infrastructure in the Park and to purchase additional industrial park land adjacent to the existing Enterprise Industrial Park, which in turn has allowed URV to come to Eaton Rapids.  The development and tax increment financing plan was amended to include the additional land.

The Board of the Local Development Financing Authority recognizes that its jurisdiction and authority over the use of tax increment revenues is governed by the Local Development Financing Authority Act as well as the development and tax increment financing plan as adopted and amended by the City Council.  In order to fulfill its duties in a manner which is both beneficial to the City and within its jurisdiction and authority, the Board has determined that it is necessary to adopt a policy for its use of tax increment revenues.  The policy is meant to guide the Board in making decisions on the funding of activities and projects, as well as to communicate to the City Council and the citizens of the City the criteria used by the Board in making its funding decisions.

Policy Statement

The Board shall consider the following criteria in determining how tax increment revenue will be used or spent:

  1. Is the project or activity for which tax increment revenue is to be used a project or activity which is authorized by the Local Development Financing Act, Act 281 of 1986, and specifically provided for in Section 7 of the Act.
  2. Is the project or activity identified, or in keeping with projects and activities identified, in an LDFA development and tax increment financing plan adopted by the City Council for the City of Eaton Rapids.
  3. Does the project or activity provide for job creation and economic development.
  4. Does the project or activity involve real or personal property located within the boundaries of an authority district.
  5. Does the project involve public facilities which serve or are meant to serve eligible properties located in an authority district.

The Board shall consider the following criteria in determining how other revenue will be used or spent:

  1. Is the project or activity authorized by the Local Development Financing Act, Act 281 of 1986, and specifically provided for in Section 7 of the Act.
  2. Is the project or activity identified, or in keeping with projects and activities identified, in an LDFA development plan adopted by the City Council for the City of Eaton Rapids.
  3. Does the project or activity provide for job creation and economic development.
  4. Does the project or activity involve real or personal property located within the boundaries of an authority district.
  5. Will the project or activity be funded with revenue other than tax increment revenue.

The Board has developed the policy on the use of tax increment revenue only after a thorough examination of the statutory and common law which governs the Board’s actions and after having consulted with experts in the field.  The following is a summary of the research performed and the application of the findings in the determination of the policy.  Since there is little common law to guide the Board on the issue of acceptable use of revenues, the Board has elected to take a conservative position on its jurisdiction and authority.