There is an unknown government in Blissfield.
This unknown government currently consumes 10% of all property taxes – it can be created without the vote of the citizens affected. Unlike other governments, it can incur bonded indebtedness without voter approval. Unlike other governments, it may use the power of eminent domain to benefit private interests. This unknown government provides no public services. It does not educate our children, maintain our streets, protect us from crime, nor stock our libraries. It claims to eliminate blight and promote economic development, yet there is no evidence it has done so in the half century since it was created. Indeed, it has become a rapidly growing drain on public resources, amassing enormous power with little public awareness or oversight.
The above graph shows the concept of how Tax Increment Financing is a creative way to pay for something without letting the taxpayer know they are actually paying for it. Tax Increment Financing (TIF) was developed in California and is used by our Downtown Development Authority. Our DDA’s capturing taxes (diverting, or dare I say “stealing”) from all the basic services taxpayers voted to be paying for. Since revenue increases every year and the cost of basic services increase yearly, the DDA captures a larger and larger portion with no maturation date…basically, forever…in perpetuity. Instead of the district tax base revenue paying for the basic services, the DDA uses it to pay for whatever they want. Click on the images to view larger.
The graph is an honest representation of most uses of TIF. It has been fully vetted by lawyers and TIF experts. It is precisely accurate to refer to the missing revenue as red ink – that is the funding hole left behind by diverting the increment property taxes.
The Downtown Development District consists of the entire commercial district, from the Dollar Store on the west side of the Village to Schmidt & Son’s Pharmacy on the east. Almost one-third of our Village is paying 1992 tax rates for basic services while the rest of us pay 2011 tax rates, plus we have to make up for the district’s shortfall (this map was on the previous DDA website – Michael, since you are the DDA/MMS director, I suggest putting this map up somewhere).Since 2001, the DDA has spent a great deal of money giving select businesses matching grants for exterior upgrades on commercial buildings. Not on the list is another $23,650.00 that’s been slated to go out the door for grant funds promised but not issued at the time this document was printed. The lowest amount awarded to one business in one year was $374.00 and $33,375.00 was the highest amount awarded in one year from the DDA not including the state contribution of $31.625.00 for the Packrat’s third grant). Many recipients use the grants as a building maintenance fund. The Hathaway House has used their last grant to paint Art Weeber’s residential properties. Click on the document to view it at a readable size or follow this link to the source.
Below, Village officials pretty much claimed failure that they couldn’t halt the economic deterioration of the Downtown core (the reason the DDA was formed in the first place) so they signed up with another government agency to do the same thing. They sold it to us as free in the Blissfield Advance and the Village Newsletter.
I would have assumed they really meant “free for them” but they actually said for “us” (business or property owner). Diverting taxes is not free.
As per the contract signed with Michigan Main Street, they were required to hire a Main Street Manager or Executive Director. The next document below is the FY 2009/2010 DDA budget before they hired a director. The document states they had $20,000.00 dollars in the budget to hire for this position. They hired Michael Sessions at $28,000.00. Not only did they magically find an extra $8,00.00 in the budget but, they also gave him a raise a couple of months into his position, which raised his salary to $30,00.00 plus $15,000.00 in benefits. He had done nothing at this point to earn or deserve a raise, it wasn’t even as a result of a favorable six month or yearly performance review.
To review the entire document above at the source follow this link.
After being hired, Michael Session wrote the DDA budget draft for FY 2010/2011 and wrote his salary into the budget at $50, 750.00 and the DDA board approved it.
The far right 2 columns were added by me. Michael Sessions did not add correctly…and the DDA neglected to review the numbers, they just approved the budget. To view a similar document as the one below, click here (somehow, I couldn’t find the original).
Below, James Wonacott’s FY 2010/2011 DDA Budget was included in the Village Council”s agenda packet before the recommended budget was adopted by Council.
The budget shows $184,000.00 as “captured” Tax Increment Financing in this fiscal year term. The document also shows that this steal-and-spend program’s administrative costs…excuse me, only wages, are a whopping 30% of the program. This is unacceptable. Click here to view this document from the Village website.
We, the voters of Blissfield, have the power to redirect redevelopment funds back into serving the public, either through legislation or ballot initiative. We should do so. The alternative is allowing the current direction to benefit select people (corporate welfare) and higher property taxes. You are involved whether you like it or not, not making a stand is making a stand.
Understanding Tax Increment Financing better: Municipal Officials for Redevelopment Reform
Recommended reading from our DDA– proposing a Commercial Rehabilitation Zone
Impact of Tax Increment Financing and Tax Abatements on Michigan Community Colleges – a report by the Auditor General
The report states:
“Statutes authorize TIFAs to “capture” the property tax revenue associated with the increases of the State equalized valuation within a TIFA’ boundary. Captured revenue is to be used to promote economic development. In its report dated February 17, 2000, ORTA estimated that TIFAs captured community college tax revenue totaling approximately $3.9 million, $4.7 million, $5.6 million, $6.4 million, $7.8 million, $8.2 million, and $8.7 million for calendar years 1994 through 2000, respectively (Exhibit 1).
Tax abatements are used as an incentive to owners of both real and personal property to promote economic development. Pursuant to Act 198, P.A. 1974; Act 255, P.A. 1978; and Act 385, P.A. 1984, a local governmental unit may grant property tax abatements that reduce the taxes levied on certain property for up to 12 years. The recipient of a tax abatement pays specific taxes in lieu of property taxes. In its report dated February 17, 2000, ORTA estimated that tax abatements reduced community college tax revenue by approximately $6.6 million, $6.7 million, $6.3 million, $7.0 million, $7.4 million, $7.9 million, and $8.4 million for calendar years 1994 through 2000, respectively (Exhibit 2).”
Recommended reading of related posts: Blissfield
- DDA Dilemma
- Wasting Time, Money and
- Selling Blissfield
- Cave People
- Elite Force Favoritism
- Customer Appreciation or Popularity Contest
- We Can Just Watch Ourselves Sink
- The Grants Go Marching On
- Board Reaffirms Other Things Too
- More Bang for the Buck
- About the Downtown Development Authority
- Things You Should Know, The DDA Threat
- Tax Increment Financing
Here is the link to access all the Downtown Development Authority/Michigan Main Street documents, http://bit.ly/blissmain