Restructuring thoughts

Dissolve the Downtown Development Authority
at least, reduce its scope

Earlier DDA-focused material which appears below this tinted table provides background and context.
Also see DDA News       And See DO NOT dissolve the DDA

Carthago delenda est -- Cato the Elder
Sell Normandy Oaks Golf Course and Dissolve the DDA
-- FJV  

PART TWO

Recommendation

Dissolve the Downtown Development Authority, a restructuring step which will not require a reduction-in-force. Transfer the DDA's assets and liabilities to City Hall control. Begin the process by immediately returning to City-control the area north of Eleven Mile which was added to the original Downtown District. [See Glossary, at right.]

Objections

1. The DDA is established by State law, and the City cannot unilaterally dissolve the body.

2. If the DDA is dissolved, the City will acquire debt, not just assets.

3. The DDA, by collecting TIFA funds [see Glossary, at right], serves as a transfer station to relay taxes to other government units, like the School District.

4. The DDA frequently contributes to other City needs and projects, like the Lafayette Parking Structure, the Farmer's Market, moving the War Memorials, even donating $4,000 to enable this year's Christmas Tree-lighting Ceremony.

5. The DDA has been visibly successful. Downtown has revived. The Woodward-696 area is largely developed. It helped the City balance its budget.

6. TIFA financing has proved to be an effective and fair way to encourage selective development.

My Reply

1. State law permits, it does not mandate, establishing a DDA. [See Glossary, at right.] There may be some legalistic cumbersomeness in dissolving the DDA, but that inconvenience will prove transitory.

2. The DDA is able to service its debt with its income; so will the City. The debt ends in a specified number of years. The income is there in perpetuity.

3. The City already collects taxes for other government units like the school district. After DDA is dissolved, the City will simply have more money to distribute.

4. Think of DDA money as just another "enterprise fund." The money ultimately belongs to the City. For bookkeeping reasons the funds are allocated to a separate account. (Well, more than one account; DDA's operating budget is separate from the DDA/TIFA budget.) Dissolving the DDA will make it a bit easier for laymen (and, frankly, city commissioners) to understand the City's financial reports.

5. The DDA was successful in its early years. In recent years its performance has been less than stellar:

  • VersagiVoice has previously labeled as a "debacle" the DDA's search for a Downtown Manager, a position which probably has outlived its usefulness anyway.
  • The City Commission is openly impatient with the DDA's slowness in developing a new Master Plan for itself.
  • The DDA has failed to make effective use of the Main Street Program and of that program's mandated committee structure.
  • The DDA's most visible activity of late has been the re-funding of a marketing study which largely duplicated an earlier study.
  • The successful promotional activities created and implemented by DDA's Marketing Consultant result, not from DDA direction but from the consultant's creativeness and self-motivation, once given a budget. The contractor-consultant can report directly to City Hall.

6. Cities around the country are having second thoughts about TIFA.  Some residents have come to resent what they see as preferential diversion of taxes to the business community. (In Royal Oak, downtown property owners -- and business owners? -- pay an additional 2 mills.)

Cities report, too, that the TIFA/DDA approach to development follows the classical S-curve. Once the curve flattens, a DDA moves into a "maintenance mode," and further need for the body becomes problematic. That has happened in Royal Oak.

Ergo

Dissolve the Downtown Development Authority, save jobs, and hold City Hall directly responsible for every incoming and outgoing dollar.

Glossary

CBD 
Central Business District
Originally, in 1976, the area was that between West and Troy Streets, north of Lincoln and south of Eleven Mile.

Boundary adjustments in 1977, 1980, 1992, and 1994 extended this "Downtown District" which now includes 2 blocks between Main and Troy Streets, north of Eleven Mile and south of Pingree; the area referred to as the Woodward-696 Development Area, and the Civic Center between Eleven Mile and Fourth Street, Troy Street and Knowles.*

DDA
Downtown Development Authority

Essentially this is the State-authorized local governmental body assigned authority over property in the CBD or Downtown District. Royal Oak's DDA was established in 1976. Its assignment: The City commission of the City hereby determines that it is necessary for the best interests of the City to halt property deterioration and increase property tax valuation where possible in the business district of the City, to eliminate the causes of that deterioration and to promote economic growth by establishing a Downtown Development Authority pursuant to Act 197.

TIFA
Tax Increment Financing Act 

This concept "captures" increases in tax revenues over those in effect at the time the concept is applied to property under DDA control. The City continues to collect directly the tax revenue already in place before TIFA. 


*Boundaries are confusing: CDB, DDA, DDA/TIF; then there are partially excluded properties, like some apartment buildings; and Skylofts condo owners pay the pay a DDA fee.

Sell Normandy Oaks Golf Course

We must always remember that no human activity-- and certainly no governmental operation - is ever perfect. There are always trade-offs, compromises, imperfections tolerated for the greater good. To help my management consulting clients --  family businesses, multinational businesses, trade and professional associations, private clubs -- focus on the pluses and minuses of proposed changes to whatever exists, I use an FFH matrix. 
Thinking through the interrelationships among
Functional, Financial, and Human helps one focus simultaneously on the overall picture and on the details which might otherwise be forgotten or overlooked.


The DDA-focused FFH matrix below was drafted before the 19 Sep 05 meeting of Royal Oak's City Commission. During that meeting, Commissioner Andrzejak offered "friendly" and "hostile" approaches to DDA, seeking help with the city's financial problems. And Commissioner Drinkwine repeated his impatience at the DDA's non-response to his year-ago request for a Master Plan. Drinkwine characterized the DDA as spending its time "merely going through processes."

Dissolve the DDA
Whether or not that saves money, it streamlines government a bit.
The Downtown Development Authority has accomplished its original mission.*
The DDA is in maintenance mode, and its responsibilities can be met directly by City Hall.**
Functional Financial Human
Monitoring recent DDA meetings and announcements shows:
  • Very little substantive work is accomplished at DDA meetings.
  • The DDA has been only marginally  successful at implementing the Main Street Program.
  • Its search for a replacement for the resigned Downtown Manager has been a debacle. Any new Downtown Manager should report directly to city hall (the position's office is already there); there is no functional need for a Third Party between city hall and the contract employee.
  • The DDA's work is really accomplished at city hall, so much so that Planning Director Tim Thwing used that workload as partial justification for requesting an additional body in his department.
  • One relatively successful ongoing program is the use of a contractor as marketing coordinator. That, too, can be managed directly from city hall.

All that being so, there is no need for a separate, quasi-independent governmental entity to perform any remaining Central Business District duties.

City Hall continues to insist that, overall, the city and its citizens are best served by keeping the current DDA in place.

Yet, after what seems like half a dozen attempts to explain the convoluted flow of revenues, expenditures, grants, debts, pass-through transactions -- and talk of TIFA, CBD assessments, bonds -- most non-government observers (and some of them) remain in a haze of incomprehension.

So:

  • Dissolve the DDA.
  • Make whatever legal moves are needed relative to redirecting TIFA transactions.
  • Reconsider TIFA, itself. Other cities are questioning the use of such funds for the benefit of only one part of town -- and of businesses.
  • Let the downtown merchants, who have long complained about both the functional and financial performance of DDA, decide whether they want to assess themselves to develop or promote downtown-specific services.
  • Make whatever procedural moves are needed to pay for a Downtown Manager, if one is still needed after restructuring.
For whatever reason, it often happens that in a group of dedicated and competent individuals, the competence of the whole is less than the sum of the competence of the parts.

That has happened with the DDA.

There are good people up there, several of them also serving civically in other arenas. And there is always one or two city officials taking part.

But, because the DDA has accomplished its original mission,* its monthly agenda too often degenerates into friendly and quiet and rambling conversations about such matters as:

  • the kind of and placement of promotional banners
  • the shape of downtown benches
  • facade improvement
  • reviewing repetitive marketing studies which add little new to the knowledge-pot (was a new study needed to confirm the obvious fact that Barnes & Noble has  become the most popular downtown destination?)
  • The non-performance of Main Street Committees
  • Website development

These dedicated and competent people have better things to do with their time. 

 * From City Ordinance No. 76-26
The City Commission of the City hereby determines that it is necessary for the best interests of the City to halt property value deterioration and increase property tax valuation where possible in the business district of the City, to eliminate the causes of that deterioration and to promote economic growth by establishing a Downtown Development Authority pursuant to Act 197.

** Although the DDA meets most months, the latest minutes posted on the city's website are dated February 23, 2005.[have since been updated]


Dissolve the DDA - 2
DDA Chairman Barbara Bos ran an effective meeting on 21 September. Bos managed well the unusual  vigor, contention, even a little testiness -- from a group whose meetings usually take the form of quiet and friendly conversation. Paradoxically, the well-run meeting reinforces the case for dissolving the Downtown Development Authority.

Routine business moved right along: approval of minutes and of expenses . . . a Promotions update by Marketing Coordinator Peggy Goodwin . . . a report from and dialogue with Police Chief Quisenberry about the 2-cop downtown patrol, being paid for by the DDA . . . the Parking Study . . . the decision to conduct a renewed search for a Downtown Manager. There was a bit more contention while discussing  who qualifies for inclusion in a listing agreement concerned with some  Woodward/Washington property.

It was the almost hour-long discussion concerning who-pays-how much when the DDA's (City's?) Streetscape Policy is enforced that helped make the case for dissolving the DDA. The convoluted comments approached wrangling as DDA directors, Planning Director Tim Thwing, and City Manager Tom Hoover tried to sort out where policy responsibility/authority lies and, separately, where the multi-party financial obligations fall (DDA, Developer, City). One director commented that the DDA has been dealing -- rather, not dealing -- with this issue for years.

Proof-enough that having the DDA exercise third-party control of (some) funds  confuses policy and complicates decision-making. 

As suggested in VersagiVoice's 20 Sep 05 recommendation to dissolve the DDA and take the necessary legislative/legal/political steps to reallocate/discontinue TIFA funds, competent volunteers serve as directors; it is the organizational/procedural loss of mission which has diminished the group's effectiveness.

Since all the DDA's work is done by city staff, anyway, we can keep those dedicated and competent individuals by replacing the DDA with a more typical advisory committee -- equivalent, say, to the Traffic Committee. All of the routine business mentioned above can properly be performed by such a committee, and all the staff work and financial accountability will be centered in the Administration. -- 25 Sep 05


Planning director defends DDA
is the Trib's 02 September headline on a Q&A report during which Tim Thwing repeats for a wider audience the defense he presented at two Town Hall meetings. [See] 

More forcefully in the column than in his oral presentation, Thwing makes the point that "tax revenues would be lost to other entities besides the city."