We’ve heard this whole song and dance before coming out of Walled Lake, where some on the City Council are resurrecting efforts to disband the city’s Downtown Development Authority (DDA). A variety of squabbles between the city’s governing body and the DDA over the last decade or so have left the authority teetering on the brink of elimination more than once. We get that there are factions on the council butting heads over the matter, but the city is not flush with the cash needed to do the valuable things the DDA does throughout the community for the city’s businesses — and yes, its residents — so the members of the city’s governing body who want to nix the DDA need to give up that ill-advised effort and resume working with the DDA in a productive manner.
In a 4-2 vote last week, City Council members voted to approve on a first reading an ordinance that would effectively dismantle the DDA. A final vote on the ordinance is expected on Tuesday, June 19.
Some on the City Council argue that the DDA is costing the city money by capturing some of the city’s tax revenue through its funding mechanism, tax increment financing (TIF), which helps pay for redevelopment and community improvement projects by allowing a DDA to capture tax revenues within a defined district from certain local and county taxing authorities. This secures tax revenues from property improvements and assessment increases above a base taxable value for use on projects in the DDA district.
For example, if the base year’s total taxable value of property in the DDA district is $1 million, and the next year it’s $1.25 million, the DDA is permitted to “capture” from other taxing authorities the property tax revenue collected on the increase in total taxable property value of $250,000 to pay for DDA projects. The other taxing units would receive only the tax revenue on the initial $1 million in taxable value in the district. Schools are exempt from all TIF arrangements, and the Walled Lake Library has been exempted from the DDA’s TIF.
In addition, some argue that the DDA has accumulated a significant fund balance and not used that to pay for more events, leading a few on the council to say that the DDA has “lost their way.”
Total revenues for the DDA during 2012-13 are expected to come in at $647,000. DDA expenditures for the new fiscal year are estimated at $501,850.
Yes, the argument about the city losing a chunk of cash to the DDA is true — to a point. Here’s the rub: The DDA pays back to the city most of the money it “captures” in city tax revenue through TIF, so Walled Lake isn’t losing much of anything to the DDA. And according to some, the city stands to lose $170,000 a year from outside funding sources — like Oakland Community College, Oakland County, Oakland County Parks and Recreation, and the Huron-Clinton Metropolitan Authority, all of which give up a portion of their tax revenue as a part of the Walled Lake DDA’s TIF financing mechanism — if the DDA is neutered.
While that isn’t technically money going directly to the city government and its proposed $3.9 million budget for the 2012-13 fiscal year, it still is money that helps the city, its residents and its businesses through any number of efforts, including events the DDA puts on like Pet Awareness Day, a 5K run, Season to Remember and the Beach Party, just to name a few; and through its business facade and sign rehabilitation program that helps improve the city’s aesthetics not only for residents, but also for patrons and those passing through town.
We can’t image the city can afford to forego $170,000 a year that can be spent on behalf of the community, especially not when the city may well raid the kitty to the tune of about $500,000 in fund balance money to equalize its ledgers for the 2012-13 fiscal year, as is being considered.
So while other communities are scrambling to balance their budgets with depleting revenue streams, some in Walled Lake seem just fine and dandy letting slip away a substantial chunk of change that benefits the city in any number of ways. Entertaining that option is, at best, misguided at this point in time, and letting it come to pass would be downright foolish.
Although difficult at times, with a variety of personalities and priorities in the mix, those on the City Council who wish to disband the DDA should step away from those efforts and let the DDA go about doing its business on behalf of the private sector, Walled Lake residents, and the city itself.