Clawson DDA Then, Now, and into the FutureWhy the DDA Existence and TIF Capture Revenue is so Important to Clawson’s Future…

The Michigan Legislation Recognizing that vibrant downtowns

mean healthy communities, the Michigan legislature passed MI Public Act 197 of 1975 outlining the establishment of a Downtown Development Authority to focus on downtown revitalization.

In 1980 the Tax Increment Financing Act was passed to assist the financing of downtown revitalization.

Establishing Clawson’s DDA Established in 1977, the DDA became

activated in 1991 with the filing of a Development Plan, appointment of a management board & bylaws and other criteria in accordance with the law.

The same year Clawson also adopted a Tax Increment Financing Plan (TIF) to fund the Downtown Development Plan as allowed by the Michigan Tax Increment Financing Act.

Explaining TIF & DDA financing

Tax Incremental Financing is a system to allow tax revenue collected within DDA’s to stay in the downtowns for their growth & revitalization

A portion of all property tax collected by the city is sent to the County for disbursement to taxing authorities outside the city which are supported by county funds such as Oakland schools, community colleges, SMART bus and others.

With the TIF plan the portion of revenue sent to the county from the DDA area is based on the property tax values of 1990, the year the plan was established

The tax revenue increase due to increased property values since 1990 is ‘captured’ and remains in the city for the downtown growth and maintenance.

In addition to TIF all properties within the DDA are subject to an additional 2mil tax levy

A bit of DDA history In 1996 a streetscape plan was completed

which involved brick pavers, decorative street lights, benches and trees.

Upon completion the DDA became inactive for several years.

Re-activated in the early 2000’s, a plan was put in place to follow the Main Street management style and seek accreditation with the National Main Street Program to ensure stability for the DDA & economic growth in the downtown

Why Main Street? Main Street is a successful economic

development program that offers a management style based upon simple principles: Celebrating & enhancing the unique

characteristics of each downtown Preserving a downtown’s history Community involvement through

committee participation Clawson met the criteria for accreditation

in 2012 and has continued to meet the qualifications each year since,

Continued improvements & Grant awards Working in cooperation with SEMCOG and

MDOT Clawson was awarded a grant of over $760,000 in 2010 to further improve our Downtown adding on-street parking, expanding the decorative street lighting, planting new trees and adding planters to the streetscape.

This public investment led to private improvement & investment by sparking several building façade improvements.

Continued improvements & Grant awards

In 2013, Clawson was also awarded a TAP Grant of nearly $250,000 to help fund pedestrian crossing islands that will be constructed in 2015 and will improve walkability & pedestrian safety in the downtown leading to further economic growth.

Main Street Assistance We received $10,000.00 in Technical

Assistance from Main Street for the development of the Downtown Pedestrian & Bicycle Plan

Main Street is helping to fund the current update to the Downtown Master Plan with a commitment of $6,000.00

In addition, Main Street offers support, design assistance and other in-kind services to help our downtown & community.

A word about planters...

The planters for the last streetscape were rejected for poor quality and all of the funds were returned to the DDA.

Plans are underway for new plantings and landscaped beds for next year!

Ultimately, we feel it’s a much improved plan

A little more detail about revenue & budget In 1990 the original base taxable values in

the DDA were $7,041,400 In 2009 we hit our peak when the DDA

property taxable value was $14,639,730 generating a combined tax revenue of$179,542.

With the recent economic slump our 2014 taxable value has dropped to $11,388,270 generating $130,948 of tax revenue.

That’s a drop of $48,594 in revenue or a 27% loss in revenue since 2009.

Current Year Revenue; 2014-15 $75,400 of city general fund & rubbish

fund $28,100 of captured County revenue. $23,548 from the 2-mil levy on DDA

properties. $11,000 of revenue generated by the

DDA through fundraising programs.

$138,048 = total projected revenue55% from city capture45% from county capture, add’t levy

and DDA projects

Expenses vs. Revenues

Once debt payments for the streetstcape are factored into the budget expenses in the DDA are projected to be $198,030 for 2014-2015….

That means a deficit of almost $60,000 Thankfully there are spendable cash

reserves of $150,000 that will help offset this loss for the near future.

Tell us more about the debt The DDA currently owes $105,111.41 on a

loan from the original Streetscape Project. Declining revenue due to the loss in property

values made this debt difficult to repay and the city froze the payments for two years.

The DDA paid one installment payment in 2013-2014 after a two year freeze. The plan is to make one payment on this debt in fiscal year 2014-2015 and the final payment in 2015-2016.

This debt would then be paid in full in 2016!

The Big DebtThe second streetscape project

2.1 million dollar project-.75 million in grant funds1.4 million bond obligation by the DDA

Yearly payments of $100.000.00 through 2030

This debt payment uses up 71% of the current revenue generated by the DDA.

Say Goodbye!I have heard the question, why don’t we just get rid of the DDA? We would no longer have the expenses and everything would be great, right? No!

Nearly 50% of the current revenue would disappear:County TIF capture would be gone 2-mil levy would be gone Additional funds raised by the DDA

would be gone

The debt doesn’t disappear Without the DDA, the General Fund

would be responsible for the payment of all the remaining debt.

Using some boring math again, the General Fund and Rubbish Fund would gain the capture amount of $75,400, but inherit the debt payment of $100,000 per year. That’s a net loss of $24,600 that would continue through the year 2030.

Into the future The continued management & programs

of the DDA help the development and growth of our Downtown allowing the taxable value to increase and the debts to be paid with captured tax revenues.

The County capture will also grow as taxable value increases meaning increased revenue for the city

Continuing the TIF makes great sense for the future of our entire City.

And…. With pending legislation that might possibly

allow opt-outs from TIF capture, we should explore extending our TIF beyond 2020 now.

Risking losing the County capture would do significantly more harm than good.

Extending the DDA and TIF capture will ensure that our Downtown growth will be reinvested in new growth and that our debt will be paid off by the funds that were intended to do so.

And Finally… Support for the DDA sponsored events

promotes our sense of pride in the Clawson Community.

Strength for our entire community begins from the Downtown business core.

Economic growth and reinvestment will spur more people to live in, laugh in, and love in Clawson.

Let’s work together to expand our City from City limit to City limit and we all win.

For more information A spreadsheet showing the history of

the DDA budget & TIF capture is available

Monthly Financial Reports for the DDA are available on the city and DDA websites.