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DDA To Kick Back School Taxes
At their last, DDA meeting embers unanimously agreed to rebate those dollars back to the Grand Rapids Public Schools and the Kent Intermediate School District.
The millages in question are the KISD millage that voters approved in March and the upcoming GRPS millage election, if city voters ratify it on the June ballot.
“We will not collect any of the new millage should it pass,” said Jay Fowler, executive director of the DDA.
DDA Financial Analyst Jana Wallace did a study that showed the board has sufficient funds coming from the school increment tax revenue to cover its debt obligations. Her analysis showed that for FY04, which begins on July 1, the DDA will capture nearly $80,000 more from the tax than it needs to meet its three outstanding bonds payments for the year.
Over a 20-year period, Wallace’s analysis revealed that the DDA would collect slightly more than $12 million more from the tax than its debt totals.
Wallace added that her analysis was based on current tax collections, which are expected to grow by 2 percent per annum, but that she couldn’t account for future, unexpected changes to that revenue source.
Under state law, the DDA is obligated to capture its share of the property tax that is dedicated to schools. But the board has the right to give back to the schools some, or all, of what it collects. In addition, the DDA can only use the school-tax revenue to pay off debt.
The DDA is currently meeting bond obligations for land purchases it made in 1989, the public museum parking ramp it built on Front Street in 1993, and the Van Andel Arena that opened in 1996.
The DDA owes bondholders $4.92 million in FY04 and $5.01 million in FY05, the final year of payments for the properties the board bought 15 years ago. The DDA will pay for the ramp through FY14 and for the arena through FY24.
In all, the DDA must meet $116.5 million in obligations over 20 years.
DDA Counsel Dick Wendt, a partner at Dickinson Wright, told board members they need a waiver from the Ambac Assurance Corp. to allow them to rebate the excess school tax back to GRPS and KISD.
Ambac, based in New York, holds the municipal bond insurance policies for the DDA’s three packages, and those policies require the DDA to use excess revenue to redeem bonds early.
Mayor George Heartwell said that the DDA needed to formally inform the schools of the board’s intention to return its share of the school-tax dollars. Fowler and Wendt will write a letter, making the board’s intended action dependent on getting the waiver from Ambac.
For FY05, the DDA expects to capture $5.09 million from the school tax and has bond obligations of $5.01 million.