Downtown Development Authority: The Basics. Michigan Downtown Association Marquette MDA Conference July 10, 2009. Donald W. Keim Thomas D. Colis Miller Canfield Paddock and Stone, PLC web : www.millercanfield.com. What is a DDA?. Downtown Development Authority.
Michigan Downtown Association
Marquette MDA Conference
July 10, 2009
Thomas D. Colis
Miller Canfield Paddock and Stone, PLC
Downtown Development Authority
Separate legal entity.
Board members appointed by governing municipality.
Included in municipality’s budget.
DDAs are used to finance “public improvements” including streets, sidewalks, streetscapes, water and sewer improvements and improvements to buildings for handicap accessibility.
DDA may levy up to 2 mill property tax.
DDA may capture tax increment revenues from all property within the development area to finance public facilities within the development area.
Tool for local economic development authorizing capture of property taxes levied by certain taxing units to be used for development purposes.
TIF depends on growth in value.
“But for” development theory.
Initial Assessed Value (a/k/a Base Value) of property is set in the first year of Plan.
Each subsequent year: Current Assessed Value.
Current Assessed Value – Initial Assessed Value = Captured Value.
Tax Increment Revenues (TIR) = Captured Value X Millage Rates.
DDA District must satisfy the 3 Ds:
Downtown of the municipality (term not defined in Act, up to governing body of municipality).
District zoned and used principally for business.
Deteriorating property values must be demonstrable in some way.
Section 3 of DDA Act sets forth the procedures for establishing a DDA.
“Significant”number, more than “one or two.”
“An area in the OAG 6558:downtown of a municipality zoned and used principally for business.” Sec. 1(d).
Downtown district: “An area in a business district that is specifically designated by ordinance of the governing body of the municipality pursuant to this act.” Sec. 1(j)
Attorney General: Act 197’s focus “for the accomplishment of its stated purposes is upon a business district zoned and used as such.” OAG, 1983-84, No. 6212 (March 29, 1984). Thus, both the zoning and the actual use of properties within any proposed district must be principally for business activities.
Public Hearing Required. OAG 6558:
The Clerk’s nightmare.
Publish notice of hearing twice – both at least 20 days before hearing.
Post and mail notice of hearing. Certified mail to other taxing units.
Opt-Out for other taxing units: Resolution must be adopted and filed with Clerk of municipality creating DDA within 60 days of public hearing on establishment of DDA.
Must be published.
Must be filed with the
Secretary of State.DDA Created by Ordinance
Same requirements as for establishment of DDA.
Section 3 of DDA Act allows municipality to amend DDA district boundaries using the same steps used to establish DDA (Opt-out right applies to expansion of boundaries).
Controls capture and use of TIR.
Procedural requirements: Similar to creating DDA but not identical.
Plan applies to “Development Area” – may or may not be same as DDA district boundaries.
If 100+ residents: DA Citizens Council.
Mandatory contents of TIF Plan in Section 14 of DDA Act.
No “opt-out” - Village of Holly v Holly Twp., 267 Mich. App. 461 (2005).
No 60-day delay.
Development Plan and TIF Plan can be adopted together.
Public hearing required.
DDA adopts resolution approving Plan.
Governing body of municipality adopts resolution calling public hearing on Plan.
Publish notice of hearing twice – the first publication must be at least 20 days before hearing.
Post and mail notice of hearing.
Certified mail to other taxing units.
Plan adopted by ordinance.
DDA may pay for projects from TIR on a pay-as-you-go basis;
DDA may issue bonds payable solely from TIR; or
Municipality may issue bonds payable primarily from TIR of the DDA and pledging the municipality’s full faith and credit as additional security for the bonds.
Since 1994, definition of “tax increment revenues” excludes revenues captured from the levy by the State, K-12 school districts and intermediate school districts.
However, DDAs that had obligations incurred prior to 1995 may capture TIR from the State, K-12 school districts and ISDs up to amount needed to pay “eligible obligations,” “eligible advances” and “other protected obligations” (pre-1995 obligations).
Bonds issued to refund eligible obligations and other protected obligations may also capture school taxes.
Plans may be amended to change duration, boundaries of Development Area (not District), projects and improvements and financing of projects and improvements.
Projects undertaken by DDA must be authorized by law and in the DDA Plan.Amending the Development Plan
States “Public facility”, defined as a street, plaza, pedestrian mall, and any improvements to a street, plaza, or pedestrian mall including street furniture and beautification, park, parking facility, recreational facility, right-of-way, structure, waterway, bridge, lake, pond, canal, utility line or pipe, building, and access routes to any of the foregoing, designed and dedicated to use by the public generally, or used by a public agency.
The reality? to plan. First reading of ordinance.
Act now provides for marketing of district – what is allowed?
Currently Senior Counsel at Miller, Canfield, Paddock and Stone, P.L.C., Don has worked with Michigan communities since 1978. During this period he has helped create, expand, contract, and in a few cases dissolve, over 100 tax increment authorities. Don has worked on dozens of development/tax increment plans and has been bond counsel for over 75 tax increment bond issues. He has also found time over the past 30 years to work with tax increment authorities in over a hundred communities.
Tom is a principal with Miller Canfield practicing in the area of municipal finance, including tax increment finance, economic development, Brownfield redevelopment, special assessments, and intergovernmental transactions. Tom has been with the firm for over 15 years. He has worked with dozens of communities providing assistance and guidance in connection with their tax increment authorities and has been bond counsel on numerous tax increment bond issues.
313-496-7677Presenters: Donald Keim and Thomas Colis