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"Tax captures" are a function of "Tax Increment Financing," or TIF. It is one of the ways in which our tax dollars are redirected to private business elites without our knowledge, or any public oversight.
The state law PA 197 of 1975 authorized the use of TIF "to correct and prevent the deterioration of downtown areas in the State of Michigan" during that time. PA 197 also created the legal framework for "Downtown Development Authorities" (or DDAs) to exist in cities across Michigan, and to use tax captures. Mike Duggan loves to say that Mayor Coleman Young pushed for this legislation. The original idea of tax captures was to skim a tiny bit of money from local taxes to boost struggling downtowns in the 1970s; no one (including Mayor Young) ever intended for them to be used to the detriment of millage-funded institutions like schools or libraries, but in Detroit that is what has happened since Duggan became mayor. PA 197 was superseded by PA 57 of 2018, which was lobbied for by Mayor Mike Duggan, and greatly expanded the powers of tax capture.
In Detroit, our DDA exists under the broader umbrella of the "Detroit Economic Growth Corporation," or DEGC. The DEGC is a quasi-governmental entity overseeing other various development "authorities" that have the ability to take tax captures from our local millages. These authorities' members are appointed by the mayor, they are not subject to public oversight, and all of them are insiders from the local business elite. In other words, they are the proverbial "smokey back room." Additionally, the mayor is also the chairman (ex-officio) of the DEGC, and DDA.
The various tax capturing authorities under the DEGC include:
These four tax capturing authorities of the DEGC can take money that you voted to go to a millage, and redirect it to something else, without ever holding another public vote on it. Worse yet, they can take it from something that benefits the public (like schools, parks, libraries), and move it to something that benefits only private investors—such as a stadium project, if it is billed as something that will "bring economic investment" or "create jobs." As if that weren't enough, the DDA also gets more money the more property values rise, which means tax captures snowball with gentrification.
Using Freedom of Information Act (FOIA) requests, we retrieved reports from the DEGC on how much money their tax captures have taken from each millage on your tax bill, for the years 2014-2022. The four TIF authorities listed above stole a combined $442,542,283.78 from Detroit taxpayers in that nine-year span. This is totally separate from the other tax incentives that have been reported in the news! By the time the 2023 tax capture figures are added in, that total will exceed half a billion dollars.
Not only is this incredible amount newsworthy, but the fact that it is done in secrecy is an essential element of this discussion. Before we filed these FOIA requests, this information was not available to the public anywhere—no budget documents, audit reports, websites, or mayoral presentation ever mentioned it, and there is nothing on your tax bill that explains it. The DEGC has often maintained that they are not subject to FOIA because they are a private entity, but we reminded them that since they handle public money, Article IX, Sec. 23 of the Michigan Constitution requires that "All financial records, accountings, audit reports and other reports of public moneys shall be public records and open to inspection." We still have not been able to retrieve an itemized breakdown of where this $442M was actually spent after it was tax captured, nor has there ever been any audit of the DEGC.
You can view our breakdown of how much money was tax captured from each millage on your tax bill HERE.
On September 5th, 2023, we unveiled this FOIA information before City Council and members of the local press. We gave printouts of this data to each Councilmember and reporter, and for 20 minutes explained in detail to them each feature of the data sheet, and what effects it had on taxpayers and our millage-funded institutions by listing what that stolen money could have paid for had it not been tax captured. Our aim was to show the shocking—and at its core, racist—ways tax captures affect Detroiters. Our demand was that City Council use its power to end this deeply unjust practice, by dissolving the tax capturing authorities of the DEGC, something which they have been empowered to do by state law.
If the DDA's mission was to help revitalize downtown we asked, and downtown has in fact been undeniably revitalized, do they still need to exist? Do we still need tax captures? There is a provision in Section 125.4230 of PA 57 that says "An authority that has completed the purposes for which it was organized SHALL be dissolved by ordinance of the governing body." That's City Council by the way, and the word "shall" implies that it is mandatory. We told City Council point-blank of this provision, and asked them to do what it required, but Council President Mary Sheffield merely deflected, stating that in order to end tax captures we needed to change state law—even though we had just recited the state law, which clearly names City Council as being the responsible party.
Section 125.4230 goes on to say, "The property and assets of the authority remaining after the satisfaction of the obligations of the authority belong to the municipality." In other words if City Council dissolved the DDA or DBRA, the bond debt of that authority would then become the City's debt. So the DDA keeps issuing new bonds, to dissuade Council from ever thinking about dissolving them. A spokesperson from the DDA recently told Axios that the authority's dissolution is "legally impractical" because it would need to satisfy all of its outstanding bond debt obligations, which extend to 2048." City Council could do something to stop the DDA from constantly issuing new bonds, especially since their mission of revitalizing downtown has been fulfilled, but they do not. The only news outlet to write anything about our Sept. 5th presentation was BridgeDetroit.
Despite this predictably lackluster response to our presentation, it was but a necessary first step in our mission to bring awareness to the general public of how we are being looted by tax captures, and to demonstrate the intransigence of City Council to do anything to stop the injustices that pay for corporate welfare even when the ball is absolutely in their court. It may also be worth noting here that the City Council President (Mary Sheffield) is also an ex-officio Director of the DEGC. Not only that, but Council is also empowered to approve (or deny) the DEGC's budget every year.
The Detroit People's Platform has a great explainer giving more detail on the DDA and what it is, HERE. The DDA was sued in 2017 for excluding the public from their meetings, a violation of the Open Meetings Act. They have also been scrutinized more recently for cancelling most of their meetings.
Detroiters For Tax Justice
P.O. Box 34040, Detroit, MI 48234
Copyright © 2024 Detroiters For Tax Justice - All Rights Reserved.
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