UPDATED: Wayne County Communities Sue to Keep Tax Money Earmarked for Zoo, DIA

Editor's note: This story has been corrected to reflect that the city of Berkley has a Tax Increment Financing Area and is interested in the case's outcome.

Nine Wayne County communities that capture a portion of the revenue from voter-approved millages intended to help fund the Detroit Institute of Arts and the Detroit Zoo are asking a judge to decide whether the practice is legal.

A lawsuit was filed Feb. 1 in Wayne County Circuit Court against Wayne County Treasurer Raymond Wojtowicz and two taxing authorities established to oversee the DIA and zoo millages. It was filed on behalf of Wyandotte, Belleville, Dearborn, Dearborn Heights, Northville, Plymouth Township, Romulus, Taylor and Van Buren Township.

The matter began when Wojtowicz told the communities they were not permitted to continue the practice.

"I remain convinced the voice of the voters should be heard and these taxes should benefit the zoo and the art institute,” he said in a written statement.

Wyandotte City Administrator Todd Drysdale said he’s just as convinced his interpretation of state law is correct.

“The law requires us to capture the money and send it to the local tax increment financing authority that it belongs to,” he said. “We’re following the law. That’s what we’re supposed to do.”

Communities in Michigan are permitted to establish specific development districts within their city limits. In Wyandotte’s case, there is a DDA, a TIFA (tax increment financing authority) and a Brownfield redevelopment area.

According to state law, increases in tax revenue within those districts can be captured by those districts to use locally, Drysdale said.

But, Huntington Woods City Manager Alex Allie said the law is silent as to whether that means appreciation of current taxable assets or revenue from new millages in the district, which is where the confusion arises.

Simply put, since the 2012 DIA millage and 2008 zoo millage weren’t in place when Wyandotte's development districts were formed, any money collected for those millages – or any millage in the future – can be kept locally, Drysdale argues.

The debate is a "non-issue" in Huntington Woods because the city does not have a Tax Increment Financing Authority, Allie said.

He added that communities in Oakland and Macomb counties have paid their portion of millages without challenging the law. Huntington Woods, for example, contributes $45,000 annually toward the Detroit Zoo, according to Allie.

"You're only talking about a very small percentage of revenue," he said.

Berkley, however, will be watching the case to see how the law plays out, according to City Manager Jane Bais-DiSessa and Finance Director David Sabuda.

The city's Downtown Development Authority, which encompasses Coolidge Highway and 12 Mile Road, was formed in 1993 and collects $220,000 in revenue annually; the DDA established an overlapping Tax Increment Financing Area in 1996, the administrators said.

That year was established as a base for tax revenue; when the tax base grew in 1997 and subsequent years, the growth in revenue went to the authority, Bais-DiSessa explained. Revenue captured in the TIFA is used for redevelopment, infrastructure, promotional activities and DDA debt payments, Bais-DiSessa and Sabuda said.

"My biggest fear is that we will not be able to capture any new rates and that people will begin saying you can't capture existing rates," Sabuda said.

Berkley currently collects approximately $7,200 annually toward the Detroit Zoo millage.

"It is small dollar-wise, but the concern is the bigger picture," Bais-DiSessa said.

In Wyandotte, Drysdale said, the city collects about $50,000 a year from residents for the zoo millage. Of that, about $18,000 is kept locally and the rest is sent to the zoo.

“The danger isn’t the $18,000 that the city is capturing now,” he said. “The danger is allowing someone to unilaterally say you can’t capture any taxes. Soon you won’t have any tax increment financing.

"The zoo millage is roughly around $18,000 that would go to our DDA and our TIFA and when you add in the new Detroit Institute of Art millage, that would double that amount. So, we're really talking close to $50,000 we would lose annually to use in our tax increment districts if this interpretation of the law is allowed to go unchallenged.”

Patricia Mills Janeway, communications director at the Detroit Zoo, said officials there have consulted with their legal counsel as well.

"While we won’t comment on legal action, our position remains that voters approved a tax for a specific purpose – to support the Detroit Zoo," she said. "The communities that diverted zoo funds need to return the money, stop capturing funds intended for the zoo and honor the voting process."

Drysdale said he isn’t sure why only a handful of Wayne County communities have opted to hold onto a portion of the tax, but he has his suspicions.

“Practically speaking, (the Oakland and Macomb County communities) probably don’t have a lot of large tax increment districts so the money collected is nominal,” he said. “Plus, some of those elected officials also are members of the zoo authority. It’s hard to serve two masters.”

Rob Wirtz, who splits his time between California and Royal Oak, said Wyandotte voters likely never knew that some of the zoo and DIA taxes would never reach those institutions.

“Like the rest of us in the other Detroit communities, they voted for this money to go to the zoo and museum,” he wrote on the Wyandotte Patch Facebook page. “Either let the money go to what was promised to the voters or give it back to the voters if the city is not going to do that. …

“If the city wins the suit, does this mean that Wyandotte residents will avoid using the zoo or museum since the city is not paying it's fair share, while most other cities are paying? Doesn't seem fair that they would get the same benefits as other cities who are paying.”

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