Brighton to Dissolve its Local Development Finance Authority
March 10, 2019
The city of Brighton is getting out of the Local Development Finance Authority business.
According to the Local Development Financing Act of 1986, which was amended in 2018, LDFAs were created ”to acquire and dispose of interests in real and personal property, issue bonds and use tax increment financing to fund public infrastructure improvements for eligible property.” LDFAs are used to promote economic growth and job creation, particularly in manufacturing, agricultural processing and high technology operations. The industries located within the boundaries of the LDFA are on the city’s northwest side, in the Challis Road-Orndorf Drive-Karl Greimel Drive area.
City Finance Director Gretchen Gomolka says it behooves the city to pay off the bond and dissolve its LDFA now. Although the city would receive $18,000 in captured tax revenue by continuing the LDFA, by dissolving it Brighton will save $30,000 in interest costs, for a net savings of $12,000. Gomolka tells WHMI that without such action, the city would be paying off the bond debt balance until the end of 2024.
When the act was created, Brighton signed on as a way to capture a portion of commercial and industrial property taxes to bring in more revenue and help finance the increasing cost of city government. LDFAs are structured so that the municipality can only capture the tax revenues that result from new growth, such as plant additions and the construction of new buildings. The bond will be paid off on the next debt service due date, which is April 1st. Gomolka says the city will also need to contact its bond counselor to formulate a resolution formally dissolving the LDFA. (TT)