By Jim Newell
Review Editor
LAKE ORION — A citizen-led petition drive to repeal the ordinance that funds the Lake Orion Downtown Development Authority has made it to the Nov. 7 ballot.
However, DDA Executive Director Molly LaLone says that even if voters pass the proposal it will likely not make a difference in how the DDA is funded.
Lake Orion resident Tom Patterson circulated the petitions on behalf of the Committee for Equitable Distribution, a citizen-led group that formed to repeal village Ordinance 36.05 and get the proposal before voters. Ordinance 36.05 is the ordinance that establishes the DDA’s TIF district, allowing the DDA to capture the increase in taxes on properties in the district, and to capture a portion of millages levied within the district.
Patterson said he contacted the Oakland County Elections Division and was notified that the proposal was placed on the unofficial proposal list for the November election. The proposal is now listed on the Elections Division’s website.
The proposal, “Adoption of Ordinance No. 36.06, which repeals Ordinance No. 36.05 of the Village of Lake Orion” reads, in full:
Ordinance No. 36.05 approved a fourth amendment to the Tax Increment Financing Plan for the Lake Orion Downtown Development Authority, originally approved in 1985, continuing its tax capture from the Village of Lake Orion and other effected (sic) taxing authorities until December 2039.
Shall the Village of Lake Orion adopt Ordinance No. 36.06, which repeals Ordinance No. 36.05, and cease the capture of taxes from the Village of Lake Orion and other affected taxing authorities?
“The motivation (for the petition) is that although the village council states that we have a lot of money in the village my feeling is that we do not and that the lion’s share of money is being pulled out by the Downtown Development Authority with no oversight by the village residents,” Patterson said. “I don’t think that’s the right way to do things, and I think there’s a lot of people who agree with me.”
At issue for the committee is that the DDA “captures” tax dollars from residents, millages that voters approved and the DDA’s purchase of the Lake Orion Lumber Yard. That purchase is still under negotiation but the DDA did take out a $5 million bond – approved by the Lake Orion Village Council – to purchase and redevelop the Lumber Yard site for parking and event space.
Patterson and Lake Orion resident Harry Stephen, who tried unsuccessfully last year to get a similar proposal before voters, say they are happy that voters will have a say on the issue.
“The mission, which is to get it to the residents, has been accomplished,” Stephen said.
LaLone said that while “there are some legal implications that have not been addressed,” she does not believe that the ballot proposal, even if successful, will lead to the dissolution of the DDA or remove the DDA’s TIF tax capture.
“There’s a problem with that petition in that the bonds were in place before that petition was certified and validated by the township clerk. The bonds were in place before that even happened and, therefore, even if that ballot proposal wins there’s still a problem because bonded indebtedness – and the TIF revenue has been pledged toward the indebtedness – there’s a lien on that TIF revenue,” LaLone said.
“By state law (the DDA) cannot be dissolved while there’s bonded indebtedness. The state will not allow the DDA to be dissolved while there is bonded indebtedness. So no, (the money) will not go to the village, it will remain as part of the DDA and that TIF funding will still be collected,” LaLone said. “There are uncertainties but my understanding is that that doesn’t happen. You are not allowed to dissolve a DDA while it has bonded indebtedness.”
The Lake Orion Village Council scheduled a closed-session special meeting for Tuesday to discuss attorney-client communication and the DDA Board of Directors scheduled a special closed-session meeting for Wednesday to hear a legal opinion from its attorney.
Both Patterson and Stephen said the taxes the DDA captures have to be spent in the downtown and, therefore, do not benefit all the residents throughout the village, even though nearly half of the DDA tax capture district is residential.
“I think there’s a lot of deception on this thing that people don’t realize where the money is going or how their taxes are being spent,” Patterson said. “There is no oversight by an organization except the DDA themselves, and they can vote to do what they want to.
“They (the DDA) say that a lot of it goes back to the village, which may be true, but do we really need the overtime the police are spending to actually do DDA events? Now don’t get me wrong, I like the downtown of Lake Orion. I think they’re doing a great job of doing things. Over my 22 years here, they’ve really cleaned up the downtown,” Patterson said. “But I think that one of the things that drives me crazy is the purchase of the Lumber Yard. I don’t feel it’s a part of what the DDA should be doing, buying property to increase the presence downtown.”
Patterson suggested that the business owners who benefit from increased traffic downtown should invest in those improvements, not the residents who pay taxes that they expect to go to the village or millages.
“Twenty some years ago when the roads were paved they were paved by the village. Now they’re talking about using special assessment districts to pay for sidewalks, roads and several other things,” Patterson said.
Patterson and Stephen said they, and other residents, also feel that if they vote for a millage, such as the fire millage, they expect those taxes to go to the fire department. The DDA, however, captures approximately $94,000 of the fire millage each year and that money must, by law, be spent within the DDA district.
The DDA’s tax capture works by collecting the increase in taxes on a property from the base year of 1985 when the DDA was formed and the tax capture was put in place. The DDA also captures a portion of the millages within the district, such as the NOTA transportation millage and the fire, police, Orion Township Parks & Rec. and Oakland County millages.
Patterson said many residents he spoke with while circulating the petitions were supportive of the effort.
“I was really amazed how many people were really on board with this, saying they’re not seeing anything out of the DDA. The DDA goes on and spends money the way they want to and there’s no conversation, there is no structure to it. They just spend money where they want to and the village residents who are paying their tax dollars into this are not seeing it nor do they have a say where things go,” Patterson said.
Stephen’s position is that while the DDA has done good things for the village over the years, the DDA now just captures too many tax dollars that it investment in the downtown core area, a small portion of the village, and does not benefit all the residents, even though they pay taxes that the DDA gets.
“I really think the DDA has done a really nice job. And I’m not against the DDA. I just have a problem with the amount of money they’re collecting and where it’s being used,” Stephen said. “Right now (the DDA) is collecting 37 years of growth within the (DDA) district. That’s a significant amount of money. Extend that to the year 2039 – that’s almost a half a century or a lifetime for some people – of increased taxes going to the benefit of, I call it a special interest group, which is downtown.”
The Committee for Equitable Tax Distribution will discuss its campaign goals and likely campaign on the ballot proposal in the Fall to inform residents of the committee’s position and the issues facing the village and DDA, Patterson said.
“I’ll take it either way. Whatever way it works out, I’m glad it’s out there and it will be visible for all people to see where our tax dollars are really going,” Patterson said.
The DDA board and village council did come up with a 75/25 revenue sharing agreement where 75 percent of the taxes on new development – such as the Moceri developments along M-24 – would go to the village to use for improvements and projects.
That money, however, can only be spent within the DDA district. Proponents of the agreement argue that if that money is being spent in the DDA district, it frees up other village funds to be spent in the village areas outside of the DDA district.