Traverse City Weighs Options for Downtown Tax District's Future

City considers extending, reducing, or letting expire TIF 97, which captures $4.5 million annually for downtown improvements

Published on Feb. 10, 2026

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Traverse City officials are debating the future of Tax Increment Financing District 97, which is set to expire in 2027 and has captured $4.5 million per year for downtown infrastructure and maintenance. The city manager presented four scenarios ranging from allowing the district to expire to extending it for 30 more years, sparking debate over whether the downtown tax mechanism subsidizes tourism or provides crucial funding for the entire community.

Why it matters

The decision on TIF 97's future will have significant financial implications for Traverse City, determining whether $1.32 million in annual revenue returns to the general fund or if downtown infrastructure continues to be subsidized through the tax capture district. Residents are divided on whether TIF 97 benefits the broader community or primarily serves tourists and seasonal residents.

The details

Under Tax Increment Financing, property taxes based on an original property value baseline continue flowing to the city, county, and schools as normal, but any additional tax revenue generated by rising property values is captured and reinvested only within that district. TIF-97 encompasses 2.6% of Traverse City's geographic area but represents 13% of its taxable value at $213 million. The four scenarios presented range from letting TIF 97 expire to extending it for 30 more years, with projected total captures between $0 and $213 million.

  • TIF 97 is set to expire in 2027.
  • In 2024, a city charter amendment was passed requiring voter approval for any TIF plan, which will likely be on the November ballot.

The players

Benjamin Marentette

Traverse City Manager who presented the four TIF 97 funding scenarios to city commissioners.

Fred Denver

A Traverse City resident who challenged the city's claim that TIF does not raise property taxes, arguing that the diverted revenue puts a hole in the city budget that all taxpayers must make up.

Heidi Scheppe

Traverse City Treasurer and Finance Director who supported Marentette's presentation and noted the need for direction on forecasted budgeting, fund balance strategy, and long-term planning.

Traverse City Downtown Development Authority (DDA)

An ad hoc group working with the DDA will develop initial proposals for the TIF 97 plan, which must be approved by voters before the City Commission can act.

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What they’re saying

“The tax revenue that's diverted by TIF 97 puts a hole in the city budget that all city taxpayers have to make up through higher property tax rates. The TIF 97 district does not pay its fair share towards common city basic expenses like police, fire, ambulance, parks, and streets.”

— Fred Denver, Traverse City Resident (9and10news.com)

“The TIF 97 district does not pay its fair share towards common city basic expenses like police, fire, ambulance, parks, and streets.”

— Fred Denver, Traverse City Resident (9and10news.com)

What’s next

An ad hoc group working with the Traverse City Downtown Development Authority will develop initial proposals for the TIF 97 plan, followed by a joint session with the City Commission for feedback before any plan goes to voters in November.

The takeaway

Traverse City's decision on the future of TIF 97 will have significant financial implications, with residents divided on whether the downtown tax capture mechanism subsidizes tourism or provides crucial infrastructure funding for the entire community. The city must balance the needs of downtown with the concerns of taxpayers citywide.