The Midland Downtown Development Authority learned this week that the state's proposed personal property tax reforms would reduce its funding over the next five years.

Midland City Assessor Reid Duford told the DDA that if the current bills pass with an amendment to write off base values, the DDA's tax capture from personal property would drop from $138,809 in 2012 to $104,213 in 2013, and gradually drop each year until hitting zero in 2018.

The bills being considered in the Michigan Legislature would offer exemptions beginning in 2013 to owners of properties that have a combined personal property taxable value of less than $40,000. That would exempt 117 of the 123 active personal property parcels in the DDA boundary.

The bills would make any new personal property purchased in tax year 2012 and later exempt from taxes in tax year 2016. There also would be a rule exempting property 10 years old or older. Duford said in five years, all personal property would be exempted in the DDA district.

"It's a phase out program so it doesn't all become exempt at once," he said.

DDA Chairman Marty McGuire said the change would have a "significant" impact on the DDA's funding. The DDA decided not to make a recommendation to the Midland City Council in support of efforts to replace the funding.

"We're not at a point right now where we want to take a position, but want to stay apprised and have a new appreciation of the issue," McGuire said.

If the city receives replacement funding from another source, the DDA could request that a portion of that funding be given to the DDA to make up for its portion of lost revenue, member Mike Hayes said.

Duford said additional revenues captured from improvements to real property within the DDA boundary also could help.

"Hopefully that will help offset some of the loss from personal property," he said.

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Midland DDA facing revenue losses if personal property tax reforms pass