Proposed Bills May Prevent Dearborn from Keeping Taxes Earmarked for Zoo, DIA

A plan to divert a portion of voter-approved tax levies for the Detroit Zoo and Detroit Institute of the Arts to Dearborn's two Downtown Development Authorities may be in jeopardy following the passage of a new bill in the Michigan House of Representatives on Tuesday.

According to the Detroit News, the bill prohibits the city and other Metro Detroit communities from using a portion of the zoo and arts museum millages for tax increment finance authorities that fund downtown development projects.

Tax authorities for the East Dearborn DDA and West Dearborn DDA have received a combined $4,349 this year from the approved 0.1-mill zoo tax in 2008 that was intended for Detroit Zoo upkeep and operations. Both entities also received a combined $8,762 from the DIA tax voters that voters in Oakland, Macomb and Wayne County approved last year.

State Rep. George Darany, D-Dearborn, who voted for the legislation, said the diversion of tax dollars away from the zoo and DIA is not what voters intended.

"One of my main priorities has and will continue to be to make sure that the wishes of the voters are not only represented, but respected. Voters approved the Zoological Authorities Act and the Art Institute Authorizes Act with the intent that any revenue generated would go to the Detroit Zoo and the DIA, not downtown development projects throughout Metro Detroit," Darany said.

"While the status of capturing these taxes is currently part of a legal dispute, moving forward, this package of legislation will help clarify the original intent of the voter-approved millages."

Different Interpretations of Tax Law

In February, nine communities, including Dearborn, filed a lawsuit in Wayne County Circuit Court, asking a judge to decide whether the practice of collecting a portion of the millage to help fund their DDAs is legal. The communities include Dearborn Heights, Wyandotte, Northville, Plymouth Township, Romulus, Taylor, Belleville and Van Buren Township. 

The lawsuit was filed against Wayne County Treasurer Raymond Wojtowicz and the two taxing authorities set up to oversee the DIA and Zoo millages.

According to state law, communities are permitted to establish specific development districts within their city limits. Increases in taxes for properties within those specific downtown development districts beyond a base year are captured by those districts to use locally.

Dearborn Mayor John B. O'Reilly, Jr. said since the DIA millage and zoo millage weren’t in place when those development districts were originally formed, any money collected for those millages — or any millage in the future — can legally be kept locally.

City documents show that the Tax Increment Financing Authority (TIFA) — the chief funding mechanism for the East Dearborn DDA — was founded in 1983. The TIFA for the West Dearborn DDA was founded in 1982.

"The whole idea was if you could get people to invest businesses in the DDA, you could capture a portion of that revenue that can then be used to revitalize and preserve a healthy downtown," O'Reilly said.

The Wayne County Treasurer's Office disagrees, stating that communities can't legally capture tax dollars from the zoo and DIA taxes years after their individual tax capture districts or downtown development authorities were created.

"Our contention is that we believe we are following the state law as its written," O'Reilly continued. "If the law changes, we will follow that new law."

O'Reilly said he feels the House bill is a "knee-jerk reaction" based on misinformation.

Mary Laundroche, director of public information for Dearborn, said the portion of taxes the DDA collects from the voter-approved millages affect a very small number of households.

The East Dearborn Downtown Development Authority begins on Michigan Avenue and includes Oakman to Roemer streets, and on Schaefer Road from Ruby to Bryan streets. The West Dearborn Downtown Development Authority boundaries begin on Michigan Avenue from Military street to Oakwood street, and Howard, Mason, and Monroe streets.

Money collected by those DDAs can not be spent outside of the district's boundaries.

"Homeowners who do not live in either the city's west DDA or east DDA will continue to see their money help feed the polar bears," Laundroche said.

The legislation still has to clear the Michigan Senate. O'Reilly said the bill will not affect the city's lawsuit, which is scheduled to go before Wayne County Circuit Judge Daniel Ryan on May 30.