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DO
NOT DISSOLVE THE DDA
While I agree that the DDA is
occasionally dysfunctional, as seems true of all public bodies, I disagree that
the solution is dissolution. There
is absolutely no valid reason to dissolve a body that has and continues to make
so many beneficial contributions. As
a self-proclaimed management consultant, I think we should trace the root causes
of any dysfunction and then implement necessary changes.
There
have been various reasons for its occasional dysfunction, many of which they had
little control of. During the first
years of its existence, few tax revenues were flowing in because property values
were declining, ergo declining tax revenues.
Then for more than a dozen years, the tax revenues were diverted to repay
Woodward / 696 debt and toward other politically favored projects.
When the DDA finally saw a return on its investment at Woodward / 696,
sale proceeds were diverted to shore up the City’s budget.
Of late, the uncertainty of availability of future funds has stifled
meaningful planning efforts.
The DDA was created as a
separate legal entity, in part to remove ‘the politics’, which admittedly
hasn’t happened. Too bad the Legislature didn’t have the foresight to allow
the Board to be nominated and /or selected by its stakeholders.
Its charge differs in scope from other City committees.
It’s unlike Traffic, Planning and ZBA committees, whose primary
function is to analyze petitioner and staff provided data, and after careful and
thoughtful review, vote yes or no on a petitioner’s request.
The DDA on the other hand, creates programs, initiatives, policies, etc.,
a labor-intensive, time-consuming endeavor for a volunteer Board with full-time
jobs.
Functional
As
a ‘working’ Board, it is appropriate, not dysfunctional, for the DDA to
discuss the details of streetscaping, banners, benches, events, committees,
policies and everything else at the table. This
“transparency” is welcome and valuable to the tax-paying public, versus
discussion of these topics at off-camera meetings.
In fact, I strongly recommend Podcasts of DDA meetings.
Most of their constituency does not have Royal Oak cable and this would
make meetings available to many more, plus the benefit of 24 / 7 access.
Streetscaping
The
DDA was criticized for having lengthy discussions at the table on this topic.
This remains a contentious issue, not just cost allocation, but also
which streets are selected. There
was consensus that the DDA should pay 100% of the costs to streetscape around
City owned properties, but they parted ways when deciding how much the DDA
should contribute to the cost for privately owned properties.
Much of what the DDA undertakes is precedent setting and requires
research and discussion by the Board and not just a yes or no vote.
Contentious policy issues deserve extra review.
Main
Street Committees
The DDA was criticized for
it’s handling of the Main Street Committees, in particular the Promotion
Committee. I believe as a
‘working’ Board, they are too few in number.
The experiment of a nine-member Board has slowed down their
accomplishments, evidenced by recent discussions to start meeting twice a month
to stay on top of the many items on their plate.
As a solution, I recommend that they immediately fill the four vacant
seats with downtown retailers. Have
them oversee the Promotions Committee. They
have not only the insight on which events and promotions are beneficial, but
also the execution experience. Give
them a budget to work with. Create
and fill the position of a contract events coordinator to assist them.
The DDA’s purpose for years was primarily brick and mortar projects,
and it is true their transition into other endeavors has proven challenging, but
it is not something they’re unable to conquer with a little more time to adapt
to their ever-growing role.
Financial
Parking
In
1967, the City created the CBD zoning classification to promote economic growth
by having the City assume the responsibility of furnishing necessary parking
facilities. This provided the
opportunity to achieve the more compact private development deemed necessary to
generate the intensive pedestrian activity desired downtown.
For 20 +/- years, the lions share of parking acquisition costs have been
paid for by the DDA.
The
DDA paid 85% of the cost for the parking structure at 3rd & Lafayette. Last payment in 2004.
The
DDA pays 50% (currently 100%) of the debt for the parking structure at 6th
& Lafayette.
The
DDA paid 100% of the cost of the parking lot behind Bastones.
The
DDA has fulfilled most of the City’s financial obligation to supply parking,
and flush parking revenues have provided a steady stream of cash to help the
City out during recent budget deficits. The
results of the new Parking Study aren’t back yet, but if it calls for more
parking, which I expect, who
would pay for that if the DDA were dissolved?
Who would pay the cost to replace the 30 +/- year-old Center St.
Structure when that is necessary if the DDA were dissolved?
The City is in no position to live up to its obligations right now.
Washington
Square Plaza
In
the early 80’s, the DDA agreed to lease one floor of the Washington Square
Building so that financing could be secured for renovation, although the DDA
never had to follow through on that commitment.
Many people point to this renovation as one of the catalysts for the
rebirth of downtown RO.
Baldwin
Theatre
In
the early 80’s, the DDA purchased what remained of some fire-damaged
buildings. There was great concern
who would purchase these blighted buildings, and for what use. This acquisition
and subsequent sale to Stagecrafters was another win for RO.
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Woodward
/ I-696
In
the mid 80’s the City Commission decided to capitalize on the coming I-696
expressway. They instructed the
Planning Commission to explore possibilities.
After collaboration with Oakland County, the concept of clearing 18 acres
that bordered the planned expressway for a new development emerged.
The City utilized HUD loans, ULAL loans and CDBG money to acquire the
properties. A Woodward / 696 DDA, Development Plan and a TIF were created.
Eventually, control was turned over to the DDA. It was believed that the
TIF would capture the new tax revenues from the planned development to repay the
loans. Unfortunately, principle and
interest came due before any new tax revenues were available, because no
development occurred and City owned properties are tax-exempt.
It was believed that the Barton / Lafayette DDA (the downtown DDA) could
loan money to the Woodward / 696 DDA to temporarily pay the debt, but that was
not legally possible. In 1992, they
blended the districts so the downtown DDA could repay the debt.
Downtown TIF revenues were diverted for the next 12 years, the final
payment occurring in FY 2004/05.
Farmers
Market / Courthouse
In
the 90’s, Oakland County agreed to sell the Farmers Market to RO and the
Courthouse wanted a new home. The
downtown DDA boundaries were expanded to include this new ‘Civic Center’
area to allow TIF revenues to be utilized for property acquisition costs.
TEA-21 grants and TIF revenue were used for streetscaping.
Counting their $500,000 contribution in 2005, the DDA has contributed
$1,500,000 +/- to this endeavor. Many
in RO consider this a “jewel” and the DDA has played a significant role.
Some Additional Contributions
The
DDA pays $8,000 a year for maintenance of the Star Dream statue and $20,000 a
year to DTE for downtown lights. They
gave $4,000 to fund the annual Tree Lighting at City Hall and also contributed
to the relocation of the War Memorials. Also
costs of: streetscaping, trash receptacles, planter boxes, flowers, banners,
holiday lights, a downtown guide, event funding, marketing, downtown
maintenance, etc.
Other Financial Considerations
Since its inception, the DDA
has returned far more tax dollars to RO than the City would have otherwise
collected, even if you only count the ‘physical’ items.
The dollar value of the other benefits of having the DDA aren’t as
easily quantifiable but equally valuable: helping to create an environment that
has led to significant private investment in the downtown, Woodward / 696 and
contiguous areas. To a certain
extent, property values throughout the entire community flourish when a downtown
is vibrant and successful.
If
you dissolve the DDA, essentially you are stating that the purposes for which it
was created are accomplished. The
TIF lives on until it repays all bonded indebtedness, but none of the TIF
revenue can be used for other purposes such as advertising, marketing, events,
maintenance, wages etc. once you dissolve the DDA.
Then when the debts are paid off, the TIF is also dissolved.
The tax dollars now flow back to the City and all the other taxing
jurisdictions. While at first glance
that might appear to be a good thing, the City is ineligible to continue to
collect the $577,000 (in 2005/06 dollars) that the DDA was entitled to collect
and utilize. So total income
available for whatever purpose in RO will be reduced by $577,000+ yearly.
To
reduce budget confusion, maybe Don Johnson can find a way to show only the net
proceeds from the school tax revenues in the DDA’s budget.
A note at the bottom could show how that number was derived.
It
was cited that some resent what they see as a preferential diversion of taxes to
the business community. But it must
not be forgotten that commercial properties, and passed on through lease
agreements, the businesses, currently pay 13 to 15 mils more in taxes than
homeowners, thanks to Proposal A.
Human
If
the DDA is dissolved, many at City Hall will be affected.
The DDA currently contributes to the wages and fringes of 3 people in
Planning, 2+ at the DPS, 2 police officers and the City Attorney, totaling
$371,400 in the 2005/06 DDA budgets. Plus
it pays $52,000 for the Downtown Manager position.
Total - $423,400 yearly. No
DDA, no need for these positions. The
human toll is considerable.
Misc.
While
the DDA has been criticized for not having a Master Plan, in fact it does.
It is called the ‘Development Plan’, and it is available on the
City’s website. The difference is
really just a matter of semantics.
While many brick and mortar
projects have been accomplished, there was little funding available in the past
to “promote economic growth” downtown, another reason the DDA and TIF were
created. The Government felt
strongly enough about this to enact PA 196 of 2004.
In short, this amendment allows TIF revenues to be spent to create,
operate, and fund marketing initiatives that benefit only retail and general
marketing of the downtown district. Even
the Government came to the realization that brick and mortar projects alone
weren’t enough to foster economic growth.
In
closing, the contributions and benefits of the DDA are enormous and we need to
continue to capitalize on these opportunities.
Any dysfunction is easily rectified.
The DDA isn’t in “maintenance mode”, there is still much to do.
Its responsibilities cannot be directly met by City Hall and weren’t
intended to be by legislation. Dissolution
of the DDA would cost, not save jobs. The
City would also be ineligible to collect $577,000+ in tax revenues.
Utilizing the FFH matrix, I can find NO compelling reason to dissolve the
DDA, just the need to implement a few changes.
As missions are completed, sections of the DDA can be returned to the
various taxing jurisdictions, so that everyone can enjoy the benefits of the
increase in tax revenues.
Sandy Johnson |
