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Wyandotte Joins Other Communities in Lawsuit for Right to Keep Tax Money Earmarked for Zoo, DIA

Wyandotte is one of nine cities asking a judge to decide a dispute they have with the Wayne County treasurer.

Now that voters have passed special millages for the Detroit Institute of Arts and the Detroit Zoo, all Wyandotte residents must pay the tax. 

However, the money collected from about two-thirds of the city’s population never gets to the DIA or the zoo. Instead, it’s kept locally to help fund the city’s Downtown Development Authority and other special taxing areas.

And that’s by design, according to Wyandotte City Administrator Todd Drysdale, who is now trying to defend those actions in court.

But he’s not the only one.

Leaders of nine communities have banded together to file a lawsuit in Wayne County Circuit Court, asking a judge to decide whether the practice is legal.

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

The matter began when Wojtowicz told the communities that their practice was not allowed and that they were forbidden from continuing the practice.

Now that the lawsuit has been filed, Wojtowicz said he’s convinced his interpretation is the correct one.

"I remain convinced the voice of the voters should be heard and these taxes should benefit the zoo and the art institute,” he said in a written statement.

Drysdale said he’s just as convinced that his interpretation of state law is correct.

“The law requires us to capture the money and send it to the local tax increment financing authority that it belongs to,” he said. “We’re following the law. That’s what we’re supposed to do.”

According to state law, communities are permitted to establish specific development districts within their city limits. In Wyandotte’s case, there is a DDA, a TIFA (tax increment financing authority) and a Brownfield redevelopment area.

According to state law, increases in taxes for properties within those specific districts are captured by those districts to use locally, Drysdale said.

Simply put, 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, Drysdale said.

“If you take the opinion of the zoo authority and the Wayne County treasurer, there would be no tax increment financing at all,” Drysdale said. “Every tax collected in a tax increment financing district is intended for another use. … That is how tax increment financing works. The law allows you to take a portion of all tax millages to use for local economic growth.”

In Wyandotte, Drysdale said, the city collects about $50,000 a year from residents for the zoo millage. Of that, about $18,000 is kept locally and the rest is sent to the zoo.

Those numbers are doubled for the DIA millage, Drysdale said.

“The danger isn’t the $18,000 that the city is capturing now,” he said. “The danger is allowing someone to unilaterally say you can’t capture any taxes. Soon you won’t have any tax increment financing.”

While the DIA and the zoo have gotten the most attention in this battle, Drysdale said, the issue is actually much deeper. In Wyandotte, for instance, money earmarked for SMART, Wayne County Community College and a separate solid waste fund also are captured and kept locally in those special development districts.

"We have captured the zoo millage in the prior two years and the law appears to support our case that we should continue to capture that millage and any other millage passed by voters," Drysdale said.

"The Zoo millage is roughly around $18,000 that would go to our DDA and our TIFA and when you add in the new Detroit Institute of Art millage, that would double that amount. So, we're really talking close to $50,000 we would lose annually to use in our tax increment districts if this interpretation of the law is allowed to go unchallenged.”

Patricia Mills Janeway, communications director at the Detroit Zoo, said officials there have consulted with their legal counsel as well.

"We’re in ongoing dialogue with the Wayne County Treasurer’s Office, the State Attorney General and our legal counsel, and have been pushing hard to get the DDAs to follow the legal opinions of the AG and others. Most are in compliance," she said in a previous interview.

While voters in Oakland and Macomb counties also approved the zoo millage, only a handful of Wayne County communities have opted to hold onto a portion of the tax.

Drysdale said he isn’t sure why that is, but he has his suspicions.

“Practically speaking, they probably don’t have a lot of large tax increment districts so the money collected is nominal,” he said. “Plus, some of those elected officials also are members of the zoo authority. It’s hard to serve two masters.”

While the suing communities haven’t yet discussed how they’ll respond should a judge rule against them, Drysdale said he thinks he knows how Wyandotte would respond.

“If the declaratory ruling were to say we were wrong, we would probably just remit that money,” he said. “But, honestly, we haven’t even gotten to that point in our discussions.”

Rob Wirtz, who splits his time between California and Royal Oak, said Wyandotte voters likely never knew that some of the zoo and DIA taxes would never reach those institutions.

“Like the rest of us in the other Detroit communities, they voted for this money to go to the zoo and museum,” he wrote on the Wyandotte Patch Facebook page. “Either let the money go to what was promised to the voters or give it back to the voters if the city is not going to do that. …

“If the city wins the suit, does this mean that Wyandotte residents will avoid using the zoo or museum since the city is not paying it's fair share, while most other cities are paying? Doesn't seem fair that they would get the same benefits as other cities who are paying.”

In addition to Wyandotte, the lawsuit also was filed on behalf of Belleville, Dearborn, Dearborn Heights, Northville, Plymouth Township, Romulus, Taylor and Van Buren Township.

What do you think, Wyandotte? Should your taxes go to the zoo and the DIA, or should they stay locally? Tell us in the comments below.

 

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Kim Piesik February 07, 2013 at 04:55 PM
Not following your math. If $50,000 is collected and $18,000 is retained by the city, how are you figuring that 2/3 of what is being collected is being diverted? Am I reading something incorrectly? Also, I applaud Todd Drysdale for following the law and keeping as much of our money in the city as possible. All I ask is that the information about how the millage is split be presented to the taxpayers at the time the millage is proposed. (It may have been in this case; but I don't remember reading anything about it.)
Jason Alley (Editor) February 07, 2013 at 06:40 PM
You're right, Kim. That is a bit confusing. I'll give it a shot: According to Todd Drysdale, two-thirds of the city is encompassed by one of the three taxing authorities that the city has: DDA, TIFA, BRA. The money paid by those two-thirds, however, is still smaller in nature than what is collected in the other third. So geographically speaking, taxes from two-thirds of the city are kept by the city, but that doesn't mean that two-thirds of all the money collected is kept locally. Hope that makes sense.
Brandon Crupi February 07, 2013 at 07:40 PM
I think the main problem here is communication. When the art/zoo millages were put to a vote, did the DIA and Detroit Zoo know and understand that they wouldn't collect taxes in certain districts? Do they take that into consideration when they figure out how much money they are asking for? It doesn't sound like they did know, otherwise there wouldn't be a lawsuit to get the money. Also, it doesn't seem like cities that have those zones are very good about giving up information on how a millage will work if passed. Perhaps for future ballots, the city should provide better/more information, maybe with a map of the districts where the taxes won't be going to the earmarked programs the taxpayers thought. It's a win/win for the city when this stuff passes. It reaps the benefits and gets more money. Maybe a thank you plaque should be put up at the site where the $54,000 will be used that the city kept from these millages: "Thank you DIA and Detriot Zoo, we couldn't have blacktopped this road if it wasn't for you!" I understand the taxing authorities and zones, but looking at the tax sources they are keeping seems a bit odd. A transportation company, a community college, and a solid waste fund all seem like things people living in those zones benefit from locally. Wasn't it just recently the city begged SMART to keep a bus route running to take students to school so taxpayers didn't have to pay for school buses? Perhaps if SMART had been getting that tax money...
Kim Piesik February 07, 2013 at 08:09 PM
Thanks, Jason. I get it now.
Sue Czarnecki February 07, 2013 at 10:06 PM
To me, this is stealing. Shame on Wyandotte.
Don Cholette Jr February 11, 2013 at 07:18 PM
I'm not sure about the zoo, but the DIA has a slush fund worth millions. Check it out.
Mick Bo February 12, 2013 at 02:19 PM
Shame on Wyandotte and all the other communities want to "take" this money. It is NOT what we voted for! Give it back to the taxpayers IF it doesn't go where we voted for it to go. Shame, shame, shame!

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