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Why does the city need a special group like the DDA to address the revitalization of the downtown?
In the 1960’s, 70’s and 80’s downtowns throughout the country experienced a drastic decline and abandonment as businesses moved to malls and large-box retail centers. Since the downtown is usually a reflection of the health of the community - vacant storefronts, deteriorating buildings and low-rent businesses communicated a “city in trouble.” In response to this trend, the Michigan Legislature created a “self help” program that allows communities to establish a group (the DDA) to develop plans and programs to address the deterioration and stimulate economic development of the downtown. The law also lets the DDA’s become developers and landlords. To fund the DDA efforts, the legislature provides an option to self tax, receive donated property, and capture the taxes generated from “increase value” resulting from the success of DDA efforts to revitalize and rebuild the downtowns. In other words – the more effective the DDA is in revitalizing an area – the more the property value increases. Those increases and the taxes generated can then be used to fund projects and make the district even more attractive to new businesses and developments.
The Clawson Council decided only two years after the Michigan Legislature established this self-help program to establish a DDA in Clawson in 1977. It was their feeling that the downtown district needed help to revitalize.
If the DDA has been around for almost 20 years, why isn’t downtown revitalized by now?
Downtown revitalization is a complicated process and does not happen over night. However, it was not until 2002 that the DDA started following a revitalization approach that has a proven track record of success – the Main Street program from the National Trust for Historic Preservation. Nationally over 1500 downtowns follow this program. Main Street requires the development of programs and projects in Organization, Design, Promotion and Economic Restructuring. It also requires an approach of accountability. Each year the DDA prepares a detailed Work Program and Budget which describes what projects will be undertaken in each of the areas (Organization, Design, Promotion and Economic Restructuring) and the funding or budget required to accomplish the projects or programs. The annual DDA Work Program and Budget is available on the website. Even following a successful approach, it will usually take 5 – 10 years to see a substantial turn around of a downtown.
Why should Clawson homeowner tax dollars be used to support programs that benefit downtown businesses?
First let’s clarify that unless you are a resident within the DDA district, your taxes do not go to the DDA nor have they been allocated for DDA projects.
It is important for residents to understand that Commercial and Industrial property tax payers are traditionally “donor” tax payers. What that means is that they not only pay proportionally more but they require fewer services from government or the city. It is much more costly for the city to provide services to a residential dwelling than it is a commercial or industrial property, more specifically: commercial and industrial properties do not have children to educate; their garbage is usually collected in one or two locations for a large area using a dumpster and requiring only a truck and driver; there are fewer fire and police calls to these properties than to residence. Because they are taxed at a rate usually higher than a residential property – their taxes collected actually subsidize the residential areas of the community.
So exploiting this phenomenon there is a great benefit to residents to have the Commercial and Industrial properties flourish. The better they do, the more valuable the property, the more personal property to tax and in turn this generates more taxes which subsidizes the amount needed from residential property or reduces the tax burden to residents.
Before the ballot issue in May I received a flyer stating the millage, if approved, would go to the DDA and that the city spent hundreds of thousands of dollars on Downtown Development Authority consultants including a 20 year, $500,000 “bail out” of the DDA. How do you respond to those statements?
It is unfortunate that someone would print information that takes a grain of truth and twists it into a deceitful UNtruth. The City or Council has not “given” the DDA any money for consultants, studies or surveys. In fact – the DDA has helped the Council pay for the development of zoning ordinances (which is a city responsibility). The DDA Board gladly assisted with this financial contribution because they understand that city finances are tight and the ordinances would eventually benefit the district and community.
The DDA has two basic sources of income:
• One is a 2-mill tax levy on all properties within the DDA district. Only properties within the DDA pay this levy.
• The second source of income is what is referred to as Tax Increment Financing (TIF). 1991 was established as the “base year”. All taxes collected within the DDA district for the community college, county and regional parks, transportation, the city general fund, and Oakland County continue to be distributed to those sources at the same amount as in 1991. The tax “growth” since 1991 goes to the DDA for spending within the DDA district. So as an example, the approximate $25,000 of growth in county taxes within the district from 1991 to 2006 is sent to the DDA for spending not to Oakland County. The same is true for taxes which would go to SMART, Oakland County Parks & Recreation, Huron Clinton Metro Parks, Oakland Community College and the city general fund.
The DDA has used their 2-mills (from the properties within the district) and TIF monies (which if it did not go to the DDA would have gone to the County, SMART, Oakland County Parks & Recreation etc.) to fund staffing, projects including grants, studies and plans.
The so called “bail out” is actually a loan which the City made to the DDA during the Phase I Streetscape project in the mid-1990’s The DDA did not have the money to supplement the grant and additional projects costs, so they approached the city for a loan. A payment schedule was set up to repay the city over a 20 year repayment schedule with interest. It is important to understand that the DDA could have bonded instead of borrowing from the city. Evidently those in the decision making positions at the time felt there was benefit to paying the interest to the city instead of to an outside lending institution.
Did the DDA make a public request for funds from the road bond proposal?
At a public meeting -- which was televised and covered by the press - the DDA made a presentation to the Council and asked them to consider the possibility of using proceeds from the potential road millage to provide the necessary cash to match a state enhancement grant from the Michigan Department of Transportation (MDOT). For every 2 dollars the city contributes, we could potentially receive 8 dollars of federal grant money through MDOT to make public space improvements downtown – such as safety improvements for pedestrians to cross 14 Mile and Main Street. The DDA – if grant funds become available – would like to make downtown improvements (such as safety improvements for pedestrians and a protected bike lane) at the same time that the streets and infrastructure are being rebuilt to take advantage of the potential cost savings and avoid having construction projects at two different times.
The DDA presented the following justification to Council as part of the request:
• DDA properties will be taxed under the potential millage like all other properties contributing to the bond proceeds;
• The DDA will fund the writing of the grants,
• The DDA will provide the funding for the final design and engineering,
• The DDA will fund improvement to the extent possible with the funds available.
The Council approved wording as part of the ballot language that would allow, if they decided later, to provide match dollar for potential grant funding. The Council made it clear to the DDA that there was no commitment to the DDA by adding the language, however they wanted to provide the opportunity if grant funding became available. Council was very upfront about their decision. It was done at a regularly scheduled Council meeting. It was an agenda item and there was substantial discussion.
How are DDA members selected?
Just like all city boards and commissions, if someone has an interest in serving they go to the Clerk’s office and fill out an application to express interest. When there is an opening on the DDA Board, the mayor recommends a candidate to the Council and the City Council decides whether the appointment is made. The ordinance which sets up the DDA requires that at least 6 of the 10 members have an interest in property within the DDA boundary but several seats are filled by Clawson residents. Also by law, the chief elected official of the city (mayor) automatically serves on the DDA Board.
What oversight or control does the City Council have over the DDA?
The City Council appoints the DDA Board members. They also annually review and approve the DDA’s budget. The DDA can not spend any money until the Council reviews and approves their budget. In addition, the Council approves the DDA plans such as the Clawson Urban Design Framework Plan. The Council’s approval of the plan makes it city policy.
The DDA views the Council as an important collaborative body in the revitalization process. Along with the Planning Commission and Design Review Committee, the Council’s partnership and support of the DDA’s efforts are imperative for overall success.
When does the DDA meet and where?
The DDA Board meets the third Wednesday of every month at 8:00 a.m. in the Community Center of City Hall. The meetings are open to the public and all are welcome to attend.
Updated Monday, September 17, 2007