Petitioners Seek to Defund Lake Orion Downtown Development Authority

Jan 10, 2024

Petitioners Seek to Defund Lake Orion Downtown Development Authority

(Crystal A. Proxmire, May 22, 2023)

Lake Orion, MI – Downtown Development Authorities (DDAs) are organizations that were created across Michigan to help revive and sustain downtowns during a time when urban sprawl and suburban shopping malls were leaving many downtowns deteriorated and full of vacancies.

The groups, governed by a board of business owners and residents and approved by the local municipalities, are able to "capture" increases in property tax revenues to use for reinvestment in maintaining these community cores. The idea is that using the money wisely will result in more revenue so that communities can continue building on their successes.

In Lake Orion, this has meant a number of things from the day to day upkeep of the area, and the cost of administration who are there to help businesses and residents, connect businesses to grant opportunities, promote the downtown locally and regionally, connect with other Downtowns for education, ideas, and collaborations, coordinating volunteers, and creating events that draw in shoppers and visitors, as well as supporting events that are organized by others.

Some more tangible successes have been reinvesting funds into things like new downtown streets, sidewalks and parking spaces, the Paint Creek Trail Trailhead, a business incubator project, signage for parks, monuments and wayfinding, Children's Park playground equipment, COVID-19 support to businesses, a first responder boat dock, seasonal flowers and holiday lights, and the creation of a social district that made Lake Orion the example as it was the first in Michigan. The DDA also covers some expenses the Village would otherwise be paying for, including $243,000 in annual funding to the police and public works, and in administrative services.

There are some residents in Lake Orion who want defund the DDA. They’ve begun circulating a petition to repeal the ordinance that funds the DDA, and to direct the "captured" property tax dollars back to places it would be sent if no DDA existed.

According to 2023 captured values, this would mean $494,963 to the Village, $196,988 to Orion Township, $9,133 to NOTA, $170,259 to Oakland County, $8,157 to HCMA Parks, and $58,795 to Oakland Community College, based on Oakland County Equalization's Point of Beginning Report in May 2023.

Of the money going to the Village, $322,851 would be used to pay for village costs currently covered by the DDA, leaving a gain of $172,112.

Tom Patterson is leading the petition effort. He told Oakland County Times that the objective is "not to disband the DDA, but to remove the TIF capture and use the money for higher priority projects."

He suggests the DDA could seek grant funding and donations to make up for the lost revenue, or suggests asking business owners to pay for membership (over and above what they are already paying in property tax).

Under the current system, all businesses and residents in the DDA district are covered, and the DDA efforts are funded by the taxes they already pay.

If the petition is successful, it would go on the ballot for residents to decide. If it passes, the money property owners pay will still be collected. Taxes will not go down. The difference is that money is sent to the other taxing authorities.

"We’d be giving up so much. Not only the $450,000 that would be sent outside of Lake Orion, but all the benefits we’re able to leverage – the grants, the services, the increase in sales for our local businesses because of the events and promotions. This is giving up so much, for so little," DDA Director Molly LaLone said.

Patterson told Oakland County Times, "I feel that the Committee for Equitable Tax Distribution petition is not trying to disband the DDA, but change how it is being financed. We, like many others, feel that the DDA has done a great job since its inception in 1985! We have a downtown to be proud of and those involved should be very proud of their work! That being said, we don't feel that the priorities of the Village Citizens are being serviced properly.

The petitioners are concerned with increasing infrastructure costs for things like roads and sewers. "It has already been voted by the Council to raise water bills to cover some of the cost of [sewer] pump replacement," he said.

Patterson also is opposed to plans to purchase the Lumber Yard property to develop with mixed uses that would include parking and public event space.

"Recently the Village DDA asked the Village to cosign a bond issue for $5,000,000 to purchase the old Lumber Yard to make it the Gateway to the Village! This property is highly contaminated with no known costs given by the DDA for cleaning up the grounds. The total cost of this project, to my knowledge, is unknown! The DDA asked for this to be cosigned by the Village whom can't even afford to have their attorneys attend the by-weekly meetings. The Village is barely able to pay its day to day expenses on the taxes paid. God forbid if we have an emergency! I guess we will have our taxpayers sitting in sewage while the 8 block business district buys fans to blow the odor onto the lake!"

The DDA is excited about the opportunity to take a large piece of property and design the space in a way that has benefits for the community, parking, and greenspace, as well as community event space. The purchases enables them to work with developers to create plans that fit in with the downtown rather than a private sale that would likely turn the space into high-density apartments without the amenities.

Repayment of the bond would come from DDA revenues, including those from working with a developer to either sell or lease part of the land.

"Having the DDA manage this piece of property means that the community has a say in getting the features they want there," said Molly LaLone, DDA Executive Director. "If this petition goes on the ballot it can put the project at risk, even if it doesn't pass."

LaLone told Oakland County Times that "the DDA board does realize the village has infrastructure needs, and they want to do their part in that. That's why earlier this year the board passed a resolution to put 75% of future tax capture increases to village infrastructure projects…. Removing TIF funding takes away so much, for the village to gain so little. It just doesn't make sense."

In spite of this agreement, Patterson and fellow supporters are moving forward with the petition. "After all isn't the primary purpose of local government to serve the taxpayers and spread the costs," he said.

A similar petition was circulated in 2022, but it was rejected by Oakland County because according to Lake Orion's charter citizens have 45 days to petition to remove an ordinance after it has passed.

Lake Orion's Village Council has mixed feelings about the DDA, with husband and wife members Michael Lamb and Nancy Moshier being vocal about wanting to defund the group, while others on Council see the value of keeping it.

Village Council President Jerry Narsh, however, supports the DDA and the work they do, and is offended by the rumors that the Village is in financial peril.

"I have listened to the defund the DDA folks’ comments about the Village financial status, either they completely don't understand the facts or they are being deceived by others, or they are outright lying. The Village Manager, our financial documents, and others in Village government continually state that we are not broke, in fact we continually pass responsible balanced budgets year after year. We have not raised taxes in at least the past three years, although we have the ability to do so if needed. It's not needed.

"We pay our bills and all of our departments and budgets have very healthy fund balances. This is false information being used to create fear or panic to people who do not deserve to be deceived.

"We are in the process of creating a Capital Improvement Plan that has been needed, we are assessing and implementing a plan to repair our streets and sidewalks. We have been awarded a $5.8 million-dollar federal grant to replace our failing sewer lift stations. We have replaced half of our 4 phases of water main improvements and if the DDA is successful in purchasing the lumberyard, we will have a new 137 space parking lot infrastructure and community event space that will be paid off over the next 17 years with tax dollars that but for the DDA would never be usable or spent in the village. 100% of the Lumberyard project paid for by money that would otherwise leave the village."

Narsh has a long history in Lake Orion, starting out as a patrol officer and working his way up to Police Chief before recently retiring from that position and running for Village Council.

"The DDA has continually improved our village streets, sidewalks, lighting and other infrastructure in the tax capture area since 1985. I patrolled this community from 1982 to 2019 and remember the deplorable conditions of our streets, sidewalks, lighting and commercial buildings along M24 and in the Downtown district. It was awful. In addition, we had several bars, few restaurants and our retail consisted of mostly clothing resale shops and hair salons. Those are great businesses and we need them, but we were not a destination community. Fast forward to today and consider the quality Street Scape improvements, the business facade improvement program and the diverse dinning, music, retail and entertainment district that employs hundreds of people, many who now live in the area. We are a destination location to the extent that professional parking engineering studies tell us we are fast approaching the maximum (85%) available parking. I have never heard of a community publicly complain about their success. DDA money has funded, fueled and helped create the economic engine the Village is blessed to have today."

Narsh also spoke of another benefit of having DDA management of the downtown district. "The Michigan Liquor Control Commission (MLCC) issues Class C or by-the-glass beer, liquor, wine permits based on population. The Village has been maxed out with permitted Class C licenses for many years. The Michigan legislature was determined to assist communities with economic growth and created a new liquor license knows as the Economic Redevelopment License, or DDA license. These are ONLY issued in a DDA district community; if we defund the DDA, the following businesses would not be here and their liquor license would end with their closing: Fork and Pint, Oat Soda, Wine Social, Anita's Kitchen, 313 Pizza, and the new Orion Boathouse… Not only would these not exist, if we defund the DDA, we will be unable to open or license any additional MLCC licensed restaurants. I have heard several of the folks that want to defund the DDA brag that they don't eat, shop or come Downtown. That's ok for them, but I would venture to say that the vast majority of Village residents enjoy our Downtown, and the art, music, culture, events, festivals and markets, stores and dinning that the DDA hosts or supports. This is Community in action, it is a reason many folks live in the Village – me and my family included. anyone who would suggest that it is in the best financial interest to dissolve a DDA by defunding, they clearly do not understand the benefits or they have another motive. The Village of Lake Orion collects over $400,000.00 dollars that are captured from other taxing entities, that if there was not a DDA that money would not be captured for the village use. Can I say that again?? $400 thousand dollars."

In our questions to Patterson, Oakland County Times asked about the impact of lost revenue and did not get a response. We also asked for the source of information about the Village's financial woes and did not get a response. We asked Patterson when the deadline for the petitions to be turned in was, and he did not know. He also did not know how many signatures were needed, but told Oakland County Times that over 200 had been collected so far.

Across the state, defunding DDAs is rare.

In Pontiac, an Emergency Financial Manager removed the DDA and their tax capture about a decade ago, leaving the historic downtown without professional downtown management and funding to support revitalization efforts.

In 2021 officials in Buchanan, MI abolished the DDA and now there are efforts to bring it back. According to Leader Publication, City Commissioner Dan Vigansky said "I begged the city commission to not abolish the DDA, but they did and shot themselves in the foot." The community is working to bring the organization back.

Across Oakland County there are more than 25 Main Street organizations who collaborate with Main Street Oakland County, many of which have a Tax Increment Funding (TIF) model like Lake Orion's, or similar tax captures like CIP (Corridor Improvement Programs) or PSD (Principal Shopping Districts).

The Michigan Economic Development Corporation often works with DDAs across the state, and they have a guide for communities interested in starting one.

Learn more about Downtown Lake Orion at https://downtownlakeorion.org/