Did City Commission Vote Early on DDA

January 21, 2008
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GRAND RAPIDS — City commissioners may have unwittingly put the cart before the horse when they amended the boundary of the Downtown Development Authority last month. But Mayor George Heartwell doesn’t think so.

On Dec. 18, immediately after a public hearing on the expansion plan was closed, commissioners added 371 acres to the district.

The DDA Act of 1975, though, requires a governing body to wait at least 60 days from the end of a hearing before it makes any adjustments to the size of a DDA district.

At least that’s the opinion the Business Journal received from the Michigan Department of Treasury.

“According to the statute, if a DDA is expanding its actual boundary, then it would, per statute, have to wait 60 days (to vote). That’s how the statute reads,” said Terry Stanton, a Treasury Department spokesman.

Section 125.1653 of the DDA Act reads as follows: “Not less than 60 days after the public hearing, if the governing body of the municipality intends to proceed with the establishment of the authority, it shall adopt, by majority vote of its members, an ordinance establishing the authority and designating the boundaries of the downtown district within which the authority shall exercise its powers.”

The section goes on to read: “The governing body of the municipality may alter or amend the boundaries of the downtown district to include or exclude lands from the downtown district pursuant to the same requirements for adopting the ordinance creating the authority.”

So any action that adds land to a DDA district or subtracts properties from it must follow the same rules that create a district, and that means the City Commission should have waited a minimum of 60 days after the hearing before it voted to expand the district.  Instead, commissioners approved the expansion just minutes after they closed the hearing on Dec. 18.

The city’s legal department, however, told Heartwell the vote was valid.

“Our legal counsel is convinced that the action we took was entirely appropriate and within the law,” said Heartwell in an e-mail to the Business Journal.

“However, to honor our partnership with other governmental units, the matter will be placed on the City Commission agenda on Feb. 19, 2008, to ratify the action we took. Notwithstanding the question raised on our action, the law clearly allows 60-day notice after the public hearing for taxing units to opt out,” the mayor added.

Stanton said the Treasury Department wouldn’t comment on whether the vote was in violation of state law.

“Nothing about this issue has come to our attention. So I can’t comment or won’t talk about what the city has or hasn’t done,” said Stanton.

No action of any sort will be taken unless someone files a complaint about the vote. If no legitimate complaint is made, then the Commission’s decision will stand as recorded.

“Generally, complaints about issues of this ilk are sent to the State Tax Commission or to the county prosecutor if someone deems, believes, claims or alleges that there has been some sort of violation of the statute,” said Stanton.

Even though Kent County isn’t exactly thrilled that the city expanded the DDA, County Administrator and Controller Daryl Delabbio said Kent would not file a complaint over the vote. Delabbio said it wouldn’t be right for the county to interfere with the business of other governing bodies because he doesn’t want other units meddling in the county’s business.

“We respect their ability to make decisions the same way we would hope they respect our decision-making process,” he said.

“With that being said, I don’t think it would serve anyone’s interest right now for us to file a complaint. We still have a timeframe in which we can act on remaining in the district, which would require no action on our part; or opting out, which would require action on our part. The decision the city made doesn’t affect that timetable,” he added.

The county has 60 days, or until Feb. 17, to decide whether to allow the DDA to capture its property tax and millage revenue in the new areas the DDA designated as tax-capturing blocks. County commissioners will make that decision on Thursday.

The county Finance Committee recommended last week that commissioners refuse to let the DDA capture the tax dollars.

With city commissioners set to vote again on the expansion plan on Feb. 19 — 62 days after the public hearing closed — there is little likelihood that a complaint will be filed or considered.

The Business Journal told then-City Attorney Philip Balkema and DDA Counsel Richard Wendt about the 60-day waiting period on the morning of Dec. 18, at least 10 hours before commissioners were set to vote on the expansion, in order to give the city time to review the statute and possibly remove the amendment resolution from the agenda.

About two hours later, the Business Journal was told the vote would be taken because it would “constitute a public purpose,” and the 60-day waiting period does not apply when a vote achieves that. So commissioners cast their ballots as scheduled.

But the “public purpose” portion of the DDA Act, Section 125.1669, does not waive the 60-day requirement or even refer to it.

The Business Journal told Stanton about the explanation the city offered for why the vote went forward and also shared with him the sections of the act the city cited in support of its going ahead with the vote. Stanton, however, didn’t comment on the city’s position.

Last month’s vote to enlarge the DDA wasn’t the first time city commissioners expanded the district without waiting for 60 days to pass. In 2002, commissioners added two areas totaling 51 acres to the DDA’s boundary. The public hearing was held on March 26 and the Commission approved the expansion 41 days later on May 7. The first vote to expand the district that year was set for April 16, just 21 days after the hearing, but was tabled by commissioners.

Commissioners also amended the DDA ordinance in 2005, but that action didn’t involve changing the size of the district, and a 60-day waiting period wasn’t required for the vote.

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