Rural Libraries and Legal Issues. An overview that focuses on district library formation, tax capture issues and ballot language for millage elections. Our Story. Two millage failures: August 2006 and November 2006
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An overview that focuses on district library formation, taxcapture issues and ballot language for millage elections
A tax capture plan (also called tax increment financing) is a government financing program that contributes to economic growth and development by dedicating a portion of the increase in the tax base resulting from economic growth and development to facilities, structures, or improvements within a development area thereby facilitating economic growth and development.
These programs allow municipalities to create separate taxing authorities within their community. Existing taxing entities (such as libraries with a separate voted millage) continue to receive taxes on the original value of the property in the taxing district but all new tax growth is captured by the authority and used for development in the taxing authority area.
Downtown Development Authorities (DDAs) and other authorities have been in existence since the mid 1970s. The legislation that created DDAs gives local municipalities a tool for improving the quality of downtown areas.
Sounds like a good thing, right?
These authorities are funded, in part, by capturing funds from special voted millages, like library millages or other voted millages. School district millages are often exempt from capture, and in some communities, library millages are exempt, too.
It is difficult to estimate how much library funding has been captured. One estimate, from 2000, stood at $9.4 million dollars, state-wide.
From 1996 to 2006, the Lapeer District Library lost $112,886.67 to tax capture.
MCL 211.24f – A law, effective in 2001:
(1) If a taxing unit submits a proposal on the question of authorizing the issuance of bonds, imposing a new millage, or increasing or renewing an existing millage, except an ad valorem special assessment millage for police or fire protection under 1951 PA 33, MCL 41.801 to 41.813, the ballot shall fully disclose each local unit of government to which the revenue from that millage will be disbursed
We sent the fact sheet out to all of our municipalities, and highlighted it in our quarterly newsletter. Most people did not completely understand the captures.
The fact sheet caught the attention of one of our DDAs and started an important conversation.
Legally, we had to include the disclosure in our ballot language. But the voters told us they didn’t like this.
This brought about the question?
What if we ask the DDA to not capture? Could we? Would they?
The Lapeer District Library serves 13 townships and the City of Lapeer. We have eight branches and one administration building. There are FIVE Downtown Development Authorities in our service area. Two of them do not capture any special voted millages. Three did. All five DDAs are in communities with library branches.
We went to each DDA and explained how the capture impacted the previous elections. We showed them the letters to the editor and shared the things we heard from the voters. Many wanted to support the library but did not want library dollars going to the DDA.
The first DDA we visited voted unanimously to waive capture. We sent out press releases and made the front page of the local newspaper.
The second and third DDAs initially voted not to waive, but after explaining the direct impact a losing election would have, not only on the entire library system, but particularly on the branches located in their communities, they agreed to waive capture.
Designed & approved ballot language without the tax capture language.
Our legal counsel advised leaving the capture language intact.
We got the waiver in writing from each DDA.
On August 7, 2007, the voters in the Lapeer District Library’s service area overwhelmingly voted to approve our new millage. 71% of the votes were YES!
Very important:Not only did we pass the millage, we forged new working relationships with our DDAs and continued to educate the community about the importance of their library.
Join ‘em! Some DDA’s will not waive tax capture. Don’t despair.
Is your library within the DDA’s boundaries? If the boundaries don’t include your library and they are close, work to get the boundaries changed so that your library cantake advantage of the DDA’s programs and projects.
Don’t forget your city, township, village or county clerks, as well as your DDA or other authority members. Make sure they get your newsletter, e-mails, Tweets and other important information about your library.