Local Development Finance Authority

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.