Scottville Main Street Crime

[XLFD]

The TIF Thieves are Back in Town!

According to the MCP's Chief Editor Rob Alway, the Scottville Downtown Development Authority (DDA) has been stealing more money than it should from our local governments-- who have been taking that same money away from you in taxes, a more legitimate theft.  In the last three years the Scottville DDA has taken over $50,000 extra than what it was entitled to primarily because an 'error' in the equalization department's computer program showed the value of property's in the downtown area were more stable, while the values of those properties were actually significantly decreasing. 

This could be a confusing article in the MCP if you don't undertand tax-increment financing (TIF) schemes, where authorities like DDAs raise a substantial amount of money at the expense of operating revenues of other more meaningful government bodies, like municipalities, counties, colleges, schools, transit authorities, etc.  Back in our Development of Authority series, we looked at how the Ludington DDA took money from the operating budgets of WSCC, the City of Ludington, the County of Mason, WSCC, LMTA, and other entities in part two where we noted the severity of the TIF's thievery in this chart:

We revisited the onerous way that these TIFs take your taxes away from other taxing authorities and received a primer with this video out of North Dakota in part 8.

The main thing to understand is that TIF freezes rates in a certain district for all taxing authorities, so that even when these other jurisdictions have their own operating costs rise (sometimes dramatically) due to inflation, population growth, major projects, etc., the rates for the TIF district remains the same while their own discretionary revenues grow ever larger.  Their tax burden does not go up, so their share of the extra tax burden is shared to everyone in the county outside the district.

So what Scottille Planning Commission Chairman Rob Alway fails to tell you is that the TIF scheme created by the Scottville DDA, who essentially 'tax' our taxing authorities and take money away from our police pensions, soldier relief funds, libraries, senior citizens, etc., have been allowed to take what wasn't theirs for three years. 

While the Ludington Torch has criticized the Scottville Main Street program, and reprinted other's critiques, SMS cannot be blamed for this as the DDA is the collector of the TIF and use it for the SMS program and other uses.  Main Street may, however, find itself on the cutting room floor due to the lack of funds in the revised figures for the DDA which really can't support a $50,000 salary for an administrator of a fluff program.

Most interesting about this development is how the blame has all been placed on an innocent-enough computer program at the equalization department that sent about $18,000 a year in overpayments to the Scottville DDA for three years, when there is likely some other human error or shenanigan going on due to the localization of the errors in a special assessment area like downtown Scottville.  Our officials as usual seem unable to own up to any improprieties, nor suffer any disciplinary measures when they suffer such lapses.  It's either a computer's fault or an unintended clerical error.

SCOTTVILLE — The Scottville Main Street portion of the city’s Downtown Development Authority may cease to exist after June due to an error in distribution of its funds. The DDA is a specially assessed part of the city’s central business district.

Typically, Scottville property owners pay taxes that are distributed into millages for the city, the Mason County Rural Fire Authority, Ludington Mass Transit Authority, West Shore Community College, Mason County Central Public Schools and West Shore Educational Service District. With the exception of the two secondary schools (MCC and the ESD), a portion of the taxes collected within the DDA can be distributed into the DDA rather than to the other entities, above a capped amount, which is $2.4 million. That distribution is contracted by the city to the Mason County Equalization Department.

The property owners also pay an additional 2 mills in taxes.

The DDA is responsible for the economic sustainability and development of downtown. It pays for infrastructure improvements, such as paving parking lots and beautification, and it also holds special events such as Scottville Harvest Festival and Summerfest.

Recently, the Mason County Treasurer’s Office noticed that over the past three years, the Scottville Main Street/DDA has been receiving about $18,000 a year more than it should’ve received, meaning an overpayment of over $52,000.

City Manager Amy Williams said that she was surprised to find out about the discrepancy. She said a different base amount of value had been programmed into the equalization department’s computer program, which showed the property within the Main Street/DDA had a higher taxable value than it actually did.

“Honestly, I didn’t question this because we have seen a lot of investment in our downtown the last three years,” Williams said. “Smith & Eddy Insurance built a new building and several businesses improved their interiors and exteriors of their buildings. It seemed like our taxable value should have been increasing.”

But, in fact, the downtown’s taxable values have decreased, making the error even worse.

In an email between Tom Routhier of the Mason County Equalization Department and Williams, Routhier explained that DDA has seen a decrease of taxable value of 16.66 percent over the last three years while the city as a whole has seen a decrease of $12.81 percent.

Taxable values of the DDA were:

– 2011: $3,612,908

– 2012: $3,290,940 (-8.9% compared to 2011)

– 2013: $3,319,270 (.86% increase compared to 2012)

– 2014: $3,011,059 (-9.29% compared to 2013).

The city’s total taxable values were:

– 2011: $23,175,060

– 2012: $21,272,165 (-8.21% compared to 2011)

– 2013: $20,559,183 (-3.35% compared to 2012)

– 2014: $20,207,240 (-1.71% compared to 2013)

“The difference can be explained by the disproportionate representation of personal property in the DDA compared to the city as a whole,” Routhier stated in his email.

The 2 mills collected generate about $6,800.

While taxable values may have gone down over the last three years, the Main Street program has actually seen a large amount of investment since it was created eight years ago. Since that time, there has been over $2.8 million worth of private investment into the city’s downtown, which included six facade projects, seven rental rehabilitation projects and several interior renovation programs including new businesses such as Cole’s Antique Villa and the Bottle & Can, plus improvements to Scottville Senior Center, Holden’s Home Emporium (two downtown location improvements) and Carr Communications/Star Theater building.

Williams said that she and Main Street Chair Carla Mayer met with County Administrator Fabian Knizacky, Treasurer Shirley Smith and Routhier from Equalization recently to discuss the issue.

Williams said the county will pay back the money to West Shore Community College, Ludington Mass Transit Authority and the Mason County Rural Fire Authority, which was about $20,129. The DDA will then have to make interest-free payments to the county over the next three years. The majority of the money owed, $31,296, is actually owed back to the city itself. Williams said will recommend to the city’s finance committee to allow the DDA five years to pay back that money.

While the DDA and its governing board will continue to exist, the future of the Main Street program is in question. The program is overseen by the state and requires the employment of a fulltime manager.

“When we created the Main Street program, it was agreed that the majority of the taxes collected would fund the manager position,” Williams said. “The remainder of the downtown programs would be funded from money raised at events.”

The Main Street manager has a salary of $32,000 but the position is budgeted for $47,700 with benefits. The new DDA budget would not be much more than $25,000 a year, Williams said.

The Main Street board will hold its regular monthly meeting on Thursday, May 14, 8 a.m. at city hall. Agenda items include the tax capture, amending the 2015-2016 budget and “staff.”

“The Main Street board will be meeting Thursday to look at a revised budget and consider our options, including whether the board will continue as a Michigan Main Street Program or a traditional DDA,” said Main Street/DDA Chair Carla Mayer. “Either way we remain dedicated to serving the downtown business community.”

http://www.masoncountypress.com/2015/05/11/scottville_main_street/

[Willy]

Is the formation of a DDA and other similar organizations, as well as their funding, voter approved? It also seems to me that Mr. Always position on the Planning Commission appears to be a conflict of interest as far as him being an unbiased reporter of local news. How can he report negative information regarding City politics when he is neck deep in it, which causes his credibility to come into question? 

[XLFD]

The law defining DDAs is couched within state laws that apply for planning commissions (i.e. Chapter 125, "Planning Zoning, and Housing").  A governing body (such as a city council) has the sole authority to set it up and establish boundaries.  They are mandated to have a public hearing on it, but that's about as much public input you have for it (see 1652 and 1653 here). 

Adopting a millage for the DDA, like Ludington has, requires a vote of those in the district.  Setting up TIFs, which is basically taxing other governing bodies, requires those other bodies be notified, and allows for them to comment against.  MCL 125.1664 is fairly clear on it though, these other taxing authorities have input, but cannot stop the TIF if the original governing body wants it. 

The TIF plan is a method for a city to rob all ways (MCP pun intended) from surrounding government agencies, thereby making them have less revenue and need to raise their taxes, because of the need to pay their TIFs off.  It's a sociopathic system, in my opinion.  Of course, the financier is you, the unwashed public. 

[stump]

Why would you think Mr. Alway would change colors for Scottville? You know he prints the unbiased Ludington news LOL.