The History & Purpose of the Tax Increment Finance Authority
Tax Increment Finance Authorities
Tax Increment Financing (TIF) in Michigan began with the Downtown Development Authority (DDA) Act, Public Act 197 of 1975. The act aimed to stimulate downtown development in the wake of suburban growth. It was created to function as a tool for large municipal governments.
The Act introduced TIF as a mechanism to capture increases in property tax revenue to fund public improvements. The assessed property values at the time of the TIFA’s establishment are called the “base value” of the district. The property taxes from the base value continue to be distributed as ordinary property taxes.
If property values increase, however, the TIFA “captures” the new tax dollars and spends them in ways that could ostensibly help develop the established TIFA district in a direct way.
Subsequently, the Tax Increment Finance Authority Act (TIFA Act), Public Act 450 of 1980, expanded this framework, enabling municipalities to establish TIFAs, which can expand beyond downtowns to industrial, commercial, or residential projects.
TIFAs redistribute the captured property tax dollars back into the district from which they were collected. They are governed by boards, the members of which are chosen by municipal governments. TIFA members tend to be nominated if they have a vested stake in the success of the district itself, meaning that the proprietors of the district oversee the spending of a portion of the tax dollars from that district.
Because TIFAs draw from property taxes, they in effect remove money from the total pool collected by local governments, including cities and counties. Further, TIFAs collect portions of property taxes based not upon percentages, but based upon the absolute difference between the base taxable value of the district and the current assessed value.
In 2018, the Michigan Legislature passed Public Act 57, the Recodified Tax Increment Financing Act (RTIFA), which consolidated most TIF-related statutes into a single framework.1 This act streamlined regulations and codified them all in one place.
The Purpose of TIFA
Under Public Act 57 of 2018, TIFA enables municipal governments to:
Capture Incremental Taxes: Divert the increased tax revenue from rising property values above a baseline (set at the district’s creation) to fund TIFA projects. Theoretically, TIFA’s captured taxes could, if property values rose enough over a given time period, exceed the taxes collected from the entire city. More practically, TIFA’s captured taxes in the district already exceed the taxes collected by the city itself.
Appoint Governance Boards: Form TIFA boards (typically 7-13 members, appointed by the mayor or city council) to oversee plans, budgets, and operations, ensuring alignment with municipal goals. Hillsdale’s TIFA has 13 members.
Establish TIFA Districts: Create geographically defined areas where property tax revenue increases (the "increment") from rising property values are captured, rather than going to general funds of taxing jurisdictions.
Create Development Plans: Write long-term plans to develop the dedicated areas.
Fund Improvements within the District: Use captured tax revenue to finance infrastructure projects, economic development initiatives, and historic preservation efforts within the TIFA district.
TIFA in Hillsdale, Michigan
In Hillsdale, the Tax Increment Finance Authority was established, according to the website, to promote economic and business development in downtown Hillsdale. It operates within a designated district, shown on the map below:
The fund captures the incremental increase in property tax revenue above the base value set at the district’s creation. In 2025, TIFA captured $180,444.71 from Winter and Summer taxes, and the 2025-2026 fiscal year budget estimates that TIFA will collect $185,912 in revenue. Of this money, $121,806.60 came from the city’s tax levies. That’s the majority—53%—of the city’s total tax bill for all the properties in the TIFA district.
As shown in the map, some of the TIFA District’s funding comes from residential property taxes, particularly along the Barry Street corridor. These funds are reinvested into public improvement projects within, and only within, the district itself, such as infrastructure upgrades, entrepreneurial support programs, and other business initiatives.
The Hillsdale TIFA is governed by a board of thirteen members responsible for creating and updating a Development Plan, which outlines goals and projects for the district. Hillsdale’s TIFA has undertaken three major projects in recent years, each of which warrants its own account:
Facade Grants
The Dawn Theater
The Keefer House Hotel
Dissolving TIFA
Under Public Act 57, a municipal government can dissolve TIFA under the following conditions:
Municipal Resolution: The governing body of the municipality (i.e., city council) that created the TIFA must adopt a resolution to dissolve it. This decision typically follows a determination that the TIFA has fulfilled its purpose, or is no longer desired.
Completion of Financial Obligations: Before dissolution, all financial obligations of the TIFA—such as outstanding bonds, loans, or other debts—must be fully paid. Public Act 57 of 2018 requires that any remaining TIF funds be distributed proportionally to the taxing jurisdictions that contributed to the captured tax increment.
Termination of the TIF Plan: The TIFA’s Development Plan, which outlines the projects and duration of the TIF district, must be concluded or terminated.
Public Notification and Compliance: The municipality must comply with state reporting requirements.
Board Dissolution: Upon dissolution, the TIFA board, which oversees the authority’s operations, is disbanded, and the TIFA ceases to exist as a legal entity.
Conclusion
While the dissolution of TIFA would mean that some additional tax dollars would pass through the city to the county, it would also mean increased oversight of public money on the part of elected officials, and therefore it would allow the political process to determine the ways in which money is spent.
Due to their semi-autonomous state, TIFAs sometimes cause financial troubles for the municipalities in which they operate. In some cases, TIFAs have actually run deficits that have left taxpayers responsible for paying down the debt. According to a 2012 Bridge MI report, TIFAs in Battle Creek, Detroit, Lansing, and Pontiac have all had to dip into city monies to meet their obligations, adding additional strain to slim municipal budgets, particularly if TIFAs—or broader markets—fail to deliver the property value increases that they exist to stimulate.
Lastly, TIFAs are incentivized to support high countywide property taxes, so as to increase their annual revenues.
Jacob Bruns
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CL Real Estate Seeks to End Lease Agreement for the Dawn Theater
With the exception of Brownfield Redevelopment Authorities, which remained under Public Act 381 of 1996.
I joined TIFA because it is set up as a type of Robinhood. It takes taxes from the governments and gives them back to property owners in the form of grants.
What I found out while on TIFA is that it is being used to enrich the already rich and connected in Hillsdale. Worse yet, it is using the TIFA districts own tax money against them by spending it on competing businesses and raising the property values of certain individuals who were put on TIFA and use it to enrich themselves using their government seats. Greg Stuchell being the main offender. Once I exposed this, my businesses and those connected with them were attacked by the city administration and individuals on the city council.
I resigned and sold my building. Hillsdale is a corrupt city, with absolute horrible people in charge, this has become very apparent to everyone in the past few years.
This mass wave of people resigning because of "negative atmosphere" is a sign that the negative atmosphere that's been a cloud over Hillsdale for decades may finally be clearing. People of Hillsdale need to keep fighting the corruption, exposing it and take back their city.
Dave Mackie doesn't need a raise, he needs fired, immediately.