SmartZone process

MARQUETTE – The city of Marquette on Tuesday held the first of four public forums on its plans to revitalize a local development authority that would use captured local taxes, state funds and private contributions to expand an economic development program into the city.

Marquette is vying to be one of three new satellites of the Michigan Economic Development Corp.’s SmartZone program.

SmartZones are government-chartered nonprofit corporations that partner with Michigan universities to help nascent entrepreneurs and aspiring businesspeople identify potential markets, expand their businesses and develop an economic strategy. They also offer “incubator spaces,” which fledgling companies can use as headquarters as they get up and running.

“What the SmartZone does is what nobody else does, and that is taking people who haven’t made any money yet, but have a great idea and have a potential for building jobs and surrounding them with the skills and resources so that they actually make money and create jobs in that community,” said Marilyn Clark, CEO of the Michigan Tech Enterprise Corp., a SmartZone in Houghton and Hancock partnered with Michigan Tech University. “Nobody else works on that. That’s the only thing we work on.”

MTEC has been one of the state’s most successful SmartZones since its creation in 2002, according to Clark, having created more than 400 jobs. With a 15-year limit on the life of SmartZones, MTEC recently contacted Marquette in hopes of creating a SmartZone satellite here.

Proponents said doing so would allow Marquette to reap the economic benefits of the program, while MTEC would get its lifespan nearly doubled, rather than expiring in 2017.

Marquette City Manager Bill Vajda said the partnership between MTEC and a potential SmartZone in Marquette will be “organized separately, but very collaborative,” adding that while MTEC and MTU tend to be focused heavily on engineering and technical research, Northern Michigan University places more of an emphasis on applied engineering.

“So where you might have research on materials or research on different engineering techniques going on in Houghton, you’re far more likely to have people looking at how they can turn that material into a bicycle,” Vajda said. “Or, ‘How can I use that to help plants grow?’ So there’s a real complementary relationship.”

There are some challenges to getting the satellite established in Marquette, however, most of them financial and logistical, and MTEC and the city hope to take the necessary steps to satisfy those prerequisites as soon as possible.

The first thing Marquette needs to do is revive its Local Development Finance Authority, which Vajda called dormant. Similar to Brownfield and Downtown Development authorities, an LDFA uses tax increment financing to fund improvements and spur economic development and investment.

Tax increment financing freezes the taxes on properties within an established TIF district and then captures any increase in taxable value on those properties. If Marquette becomes a SmartZone satellite, that tax capture – as well as funding from NMU, MTU, Michigan State University, the cities of Marquette, Houghton and Hancock, numerous private financial, in-kind and in-lieu contributions and 100 percent reimbursement from the state of Michigan for the capture of 9 mills from the school district – will go to fund the satellite.

However, a TIF district can only be created within the boundaries of the LDFA. Marquette’s LDFA, created in 1988, does not currently have a board and includes only the River Park area, where RTI Surgical is located.

The Marquette City Commission has already held a public hearing about expanding the boundaries of the LDFA to include the entire city – an expansion that would allow for a new LDFA board to designate a TIF district anywhere in the city, a necessary step for the creation of a SmartZone.

Following a second public hearing, the city commission would decide whether to approve the LDFA expansion. If expanded, the commission would then need to appoint new board members to the LDFA.

Once the LDFA is reassembled, its members would need to meet and decide where in the city they would like to create the TIF, discussing strategies by which they can help insulate their funding sources – perhaps not including certain areas, for example, where the economic future is uncertain and taxable values could be more volatile.

Once the LDFA has decided on a TIF district, it would need the city commission to go through another public hearing process before the commission could give it final approval.

Provided the MEDC chooses Marquette as one of the three satellites, the LDFA would also work to put together the actual SmartZone nonprofit corp., and then hire people and put together its programs.

Vajda was quick to point out that none of this would raise taxes on the citizens of Marquette, nor would it mean less money for the schools or annexing any new city property – all questions he said have arisen since the SmartZone concept was first proposed.

The city has scheduled three more public hearings, all at the Marquette Commons, to address questions from the public. The forums are set for 5:30 p.m. June 2, 6:30 p.m. June 10 and 5:30 p.m. June 23.

Vajda said he is hoping they can complete all the necessary requirements and receive the SmartZone satellite declaration as soon as possible.

“It can’t take years to get done,” he said. “It’ll take months to get done, it can’t take years to get done.”

Clark referred to the SmartZone program as a perfect example of “economic gardening,” or cultivating the financial resources that will allow smart, capable and ambitious people with an emotional connection to the Marquette area to stay and achieve success here.

“That’s why economic gardening, from a SmartZone perspective, is such an attractive item, … because it is really focusing on people who have a geographic passion,” she said. “We only work with that very smart person who is passionate about changing the world with their invention.”

Zach Jay can be reached at 906-486-4401.