“Think of nearby cities with similar neighborhoods that don’t have thriving downtowns” when VersagiVoice readers question whether a thriving downtown benefits neighborhoods. That’s how Kevin Kalczynski, Chairman of the Downtown Development Authority, began his reply to that question, a bit more vigorously than he spoke during the rest of our conversation.

I had asked a double-question which reflected the indifference and antagonism of some neighborhood spokespersons and repeated a resident’s challenge during Public Comment at a recent CITCOM meeting. Paraphrased:  “We are short of police officers and firefighters. How in good conscience can you guys spend $4 million for parking?” The thrust of that argument, of course, is that benefiting downtown does not benefit the overall community. In the words of one anonymous published comment, “Providing parking for barhops.”

Kalczynski, 34, is a partner in the Detroit-based law firm of Barris, Sott, Denn & Driker, PLLC, a full-service business law firm, where he practices primarily business litigation, real estate and corporate law. Kalczynski became DDA chairman in 2007 and is the DDA’s third leader. He follows Tom King and Barbara Bos, each of whom served over a decade.

Kevin strongly disagrees that investing in downtown does not benefit the rest of the City: “Houses in Royal Oak are worth more than similar housing stock in nearby cities that do not have significant downtowns such as Madison Heights or  Hazel Park. Why? Because people pay a premium to be close to an attractive downtown. In that way, a thriving downtown  boosts the property values in a city. Those higher house values in turn generate more tax revenue for the city’s general fund, and it is from the general fund that police and fire are paid. Therefore, it makes economic sense to invest in our
downtown."
 

So, in Kalcynski’s view, providing adequate parking fits into the DDA’s charge “to promote economic growth in Royal Oak’s Central Business District (CBD) . . . and enhance the viability of not only the downtown, but the entire City of Royal Oak.” He acknowledges that he has not searched for statistical “proof”  that neighborhoods benefit from a thriving downtown, “but the anecdotal evidence is pretty convincing.  For example, many nearby cities that have historically stable and higher home values also have thriving downtowns, including Birmingham, Rochester, and Ann Arbor.  I don’t believe that is a coincidence.” 

That led me to ask why there are three downtown “boundaries:” CBD boundaries, DDA boundaries, and DDA/TIF  boundaries. (TIF refers to Tax Incremental Financing, the mechanism through which the DDA captures funds for its work.) One former DDA member tells me a building at Sixth and Washington “is in the CBD and in the DDA but not in the DDA/TIF boundaries,” as an example of the muddle.

Kevin explained that the “CBD” or Central Business District is a zoning ordinance designation that has no direct connection to the DDA or its activities. The “DDA District” refers to the overall boundary of the DDA. The DDA tax levy (approximately 1.6 mills) is applied to all property within the DDA District. The “DDA/TIF District” is within the DDA District and establishes the boundary within which the DDA captures its tax revenue from all eligible taxing jurisdictions. The DDA does not capture tax revenue generated by other taxing jurisdictions from those properties outside the DDA/TIF District but within the DDA
District.

Parts of the DDA District have other zoning designations. For example, the Woodward/696 property is zoned for a regional business, the area north of 11 Mile commonly referred to as the “Freed Project” or “Main North” is zoned for a planned unit development, and the Fresard Property north of 11 Mile is zoned as a special redevelopment district.

I asked whether there are any plans for the DDA to undertake development of Main Street south of Lincoln, since the DDA/TIF boundaries run down the middle of Main to 696, forming the “hockey stick” district that is laughed about by some observers. Kevin said there are no such plans at the moment, although the DDA does invest in streetscapes south of Lincoln along Main Street to create an entrance into downtown.  Kevin confirmed that none of the businesses along Main south of Lincoln to Kenilworth are required to pay the extra 1.6 mils that businesses within the DDA District pay.

Boundaries would be important, too, if the May 2005 attempt to raise interest in a Principal Shopping District is renewed. A PSD would impose yet another fee (tax) on businesses within the boundaries. I got the impression from my talk with  Kalczynski that it will be a while before the matter is raised again. (See map at the bottom of this page.)

Threaded through our conversation was our mutual awareness of my advocacy to dissolve the DDA, but that seemed not to cause Kalczynski to treat the tough questions as adversarial.  (See a comprehensive defense of the DDA by Sandy Johnson.)

As one example, in VersagiVoice I have both criticized the DDA for moving too slowly (“glacial pace” is the term I’ve used) and I have praised Kevin for running a tight but friendly ship. He doesn’t arbitrarily shut off debate, but he does not wait very long before bringing rambling conversations back into focus. Much of the slow pace, he says, is caused by two factors: “Getting seven minds to agree” and “Decision-making in government simply cannot be conducted at the same pace as in the private sector because it is a deliberative process whereby everyone on the board has their own analysis and a vote. In the
private sector, at least in my business, usually one person has the final say.”

He addressed my complaint that items appear on and disappear from the agenda for no reason discernible to observers. I mentioned the search for a new downtown manager and the decision about disconnecting from Main Street Oakland County as examples.

Kevin was on the subcommittee which created the job description for the downtown manager. Then a committee worked through over 30 applicants to come up with three finalists. Then every board member insisted on participating in the final interviews. The series of decisions which needed to be made – job description, compensation, employee or contractor, where and how to conduct the search – apparently all had to be run through seven minds.

I asked why the final choice was of a person seemingly more qualified to plan events than to attract new businesses, when we already had an event planner/promoter under contract. Kalczynski clarified the sequence of events. About the same time that the new downtown manager, Stephanie McIntyre, came on board, well-known Peggy Goodwin chose to terminate her contract with the DDA. That forced Stephanie temporarily into the event-planning arena. Since then, though, Royal Oak-based Quill Communications has been retained for DDA marketing activities, freeing Stephanie to spend more time interacting with
the downtown businesses and other stakeholders, being a liaison between the DDA and other City departments, and organizing and implementing the details of the work performed by the DDA and its committees.

As an aside, I offered that McIntyre is effective at the DDA Table. She helps move the meeting along by giving brief progress reports regarding agenda items and by providing summaries of committee activities before each committee chair fills out the details and answers questions. Kalczynski agreed and indicated that allowing McIntyre to give progress reports for the Committees was instituted to help move the meetings along.

About the Main Street Oakland County matter, I expressed dismay that the County’s mandated Performance Evaluation of Royal Oak’s DDA appeared on the agenda in the Fall of 2007. Somewhere in the next two or three months, there was the first public hint of DDA dissatisfaction with the County program. The item was on and off the agenda from then until September 2008, when the decision was made to terminate the agreement and the reasoning was summarized in a memo by Executive Director Tim Thwing.

Kevin added to Thwing’s information the fact that scheduling the performance review was the responsibility of Main Street Oakland County, and that the delay “was not caused by us, although nobody was excited at the prospect at having to devote a day to the matter.” The evaluation never occurred.

The DDA chairman seemed surprised that I have received complaints about a lack of transparency about DDA’s activities. “Aside from those mandated closed sessions which deal with matters like land acquisition,” he says, “all DDA work is public.” He wishes more residents would attend DDA meetings, but each agenda and each approved set of minutes appear on the city’s website, and “all requests for information are addressed.”

I offered that part of the support for those of us who think DDA should be dissolved comes from a generic unease with any subgroup beneath the city commission. Equal suspicion is directed at such groups as ACORN, the Farmer’s Market Committee, the Parks and Recreation Advisory Board, the Charter Review Committee (on which I serve), and at enterprise funds in general. Kalczynski responded by indicating that the DDA members are appointed by the City Manager with approval
by the City Commission, the DDA’s budget is annually presented to and approved by the City Commission, and the DDA’s meetings are televised  Therefore, he maintains, the City and the DDA make every effort to ensure that the DDA’s budget and work are transparent to Royal Oak citizens.

The DDA recently conducted a survey among downtown businesses to learn how familiar those businesses are with DDA activities and responsibilities and how they rank the panel’s programs and services. “We were pleased to learn that our budget expenditures closely track the business owners’ priorities, from Parking through Streetscape Improvements to Business Assistance Programs.” Conducting that survey is part of Kevin’s focus on being fully accountable to the DDA’s stakeholders and strengthening working relationships with such organizations as the Chamber of Commerce, the Restaurant Association, and the hoped-for renewal of a Retailers Association. Downtown Manager Stephanie McIntyre is taking-point in
working with those groups.

What is the actual need for a DDA? Kalczynski comes on strong here.
“Individual businesses typically cannot make the infrastructure and other investments on a scale that a DDA can. For example, very few individual businesses have the wherewithal to build a multi-million dollar parking structure for their customers. Moreover, the DDA can and does make investments in streetscapes, maintenance, and other improvements in a uniform and organized fashion. Again, I believe it would be unreasonable to expect individual businesses or business
associations to take on such tasks. Additionally, the DDA fully funds three full time police officers for downtown.”  Therefore, according to Kalczynski, the DDA fulfills an important role by making coordinated investments in the downtown on a scale that individual businesses could not undertake. “That’s why we have several business and property owners on the DDA. In that way, we are a proxy for the downtown businesses.”

I remain convinced that dissolving the DDA will result in a handful of years of financial adjustment – including handling debt service -- after which we can operate soundly without that extra layer of quasi-government below CITCOM, but I have yet to find an elected or appointed Royal Oak city official who agrees with me. Their clinching argument, to which I have yet to find authoritative rebuttal, is that the without a DDA the city does not collect the same amount of money because, without TIF, those incremental taxes will go back to the Schools, the County, and the like. 

On this point, Kalczynski indicated that, dissolution of the DDA would negatively impact the City’s budget because, in addition to the lost TIF revenue, which would simply go to other non-City taxing authorities, the City’s general fund would also suffer because it would have to undertake a number of legal obligations that the DDA currently funds, including debt service on parking decks and the court house building. Kalczynski also pointed out that, if the DDA were to be dissolved, the City would have to make some difficult decisions on the DDA’s so-called discretionary expenditures, including the CBD police officers, maintenance of the downtown, and other infrastructure improvements. While the City could decide that it did not want to take on those obligations, Kalczynski believes the City as a whole would be much worse off if it made such a decision. The bottom line, Kevin concluded, is that “if it made economic sense for the City to dissolve the DDA, it would do so. Currently, it does not make economic sense for the City to dissolve the DDA.”

I continue to resent seeing our city manager and planning director sitting through debates about the color of newspaper boxes, or the color and shape of bicycle stands, the color and design of a promotional logo, or how to remove gum from sidewalks, and I take courage in hearing of cities around the country which are downsizing or shutting down their DDAs.

That said, it would be unfair not to recognize the sincerity and dedication of DDA volunteers who are often criticized and seldom praised. And they get paid even less than city commissioners and the mayor. DDA trustees earn . . . zero. -- Oct 2008

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