Local communities file suit for zoo tax

Feb. 13, 2013  PLYMOUTH EAGLE.

Clarification of the situation is imperative, many city officials said, because of the recently approved .2 mills for the Detroit Institute of Arts…

Residents throughout the area who thought they were supporting the Detroit Zoo with a tax they approved in 2008 were surprised to learn last week that more than $200,000 of that tax revenue was captured and used in their local communities.

Now, nine Wayne County communities are suing the county treasurer and two tax authorities to ensure that their right to withhold the dedicated zoo millage, and the Detroit Institute of Arts millage approved in November, is legal.

The capture of the one-tenth of one mill translates to about a dime for every $1,000 of taxable value of a home, but it obviously adds up. Local communities have been diverting the funds through Tax Increment Finance districts, a state mechanism that allows local municipalities to establish districts or areas within their borders where a portion of any increase in property taxes can be captured and used by the municipality. Many of these TIFA districts are managed by Downtown Development Authorities.

In Belleville, for example, the DDA captured $3,214.94 of new zoo tax revenue in TIFA district in 2008. In 2010, the city captured another $2,847.26. Belleville has joined the lawsuit.

Canton Township diverted $13,377.73 of the new zoo tax in 2008, but has not reported any capture since that year.

Northville, which has also joined the lawsuit, has diverted money every year since 2008 when a reported $2,824.39 was taken. In 2009, Northville diverted $3,232.13 and in 2010, $2,933.43. The last filing, for 2011 showed that Northville had used a TIFA district to capture $3,005.11 of the zoo millage funding.

In Plymouth, $4,559.64 was diverted in 2008, $4,434.34 in 2009 and $4,201.68 in 2010. There was no amount reported by the city for 2011.Plymouth Township, however, diverted funds for all four years. In the first year, 2008, the township diverted $3,822.42, which in the second year, 2009, only $968.47 of zoo funding was taken by the township. In 2010, the township took $985 and in 2011, another $2,145.45 of funds voters approved for the zoo went to the township for local improvements. That community has also joined the suit.

In Romulus, which is also a plaintiff in the suit, $22,692.52 was diverted in 2008, $21,845.26 was reported as taken from zoo funding in 2009, $16,755.58 was diverted in 2010 and in 2011, the city captured $14,728.85.

Van Buren Township also authorized the capture of the zoo tax, diverting a total of $16,054.42 in 2008, $15,191.74 in 2009, $10,156.00 in 2010 and another $10,324.39 in 2011. That community is also a party to the lawsuit seeking to allow the capture of the revenue to continue.

The City of Wayne diverted a total of $21,062.00 in the first year voters approved the zoo tax and then did not capture any funds in 2009 or 2010, In 2011, however the city reported capturing another $5,162 of the funding approved for the zoo.

In Westland, the city took $4,562.68 in 2008, $14,477.00 in 2009 and $8,855.50 in 2010. Westland did not report any capture in 2011.

The legality of the capture of the tax funding has been a hotly contested issue. Deputy Wayne County Treasurer David Szymanski, a former probate court judge, said that there has “been a significant different of legal opinion as to the appropriate treatment of these funds.”

He said the county treasurer’s office discovered the capture of the funds in 2009 and sought a legal opinion from the State Attorney General. Former Attorney General Mike Cox issued an opinion that the capture was illegal. His opinion was seconded by cur- rent Attorney General Bill Schuette who also said the capture was illegal.

Subsequently, the Wayne County Treasurer sent letters to all 43 collecting municipalities telling them to stop these captures at the risk of facing legal consequences.

Despite that legal opinion, Plymouth Township continued to capture the funds and insists that state law allows for the capture. Officials in both Canton Township and the city of Plymouth discontinued diverting the tax funding following the letter from the county treasurer insisting the practice be stopped.

The group of nine communities filed the lawsuit last Friday in Wayne County Circuit Court. The communities claim that the capture of the tax is legal under state provisions. One of the leaders of the group is Romulus, where Mayor Alan Lambert said that many of the communities depend on this funding for local improvements.

Lambert noted that his city is now collecting about $3 million less per year in property taxes than before the economic downturn and that local communities need the provisions of the TIFA districts to continue to provide improvements in their communities.

His sentiments were echoed by Tim Keyes, the Romulus economic development director. Keys said that after the letter from the Wayne County treasurer, Romulus sought a legal opinion from the city attorneys who told them they had no choice but to collect the funds.

Westland Mayor William Wild said that his city stopped capturing the zoo millage funds after receiving the letter from the county treasurer.

Westland is not among those communities who joined the lawsuit.

The approved millage accounts for about 40 percent of the zoo budget and Director Ron Kagan said the zoo could do better with the funding approved by the voters. According to the reports from the Wayne County Treasurer’s office, the total diverted from the zoo during the past four years by all the communities has been about $756,000.

Clarification of the situation is imperative, many city officials said, because of the recently approved .2 mills for the Detroit Institute of Arts that could also be diverted under the same TIFA plan. That millage will generate about double the amount approved by voters for the zoo.