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Utica dissolves its DDA to cope with COVID-19 budget constraints

By: Kara Szymanski | Shelby - Utica News | Published June 23, 2020

UTICA — The Utica City Council voted unanimously to dissolve the Downtown Development Authority board June 9.

Due to cuts in funds coming from the state, the council felt that the move was necessary in order to keep the city’s budget positive and services available to residents.

Utica Mayor Thom Dionne said he was not happy with the decision to have to dissolve the DDA.

“I’m very disappointed about the DDA being dissolved. The DDA has a lot of great ability to really improve the downtown area. Those areas include downtown, all of Van Dyke, Hall Road west of M-53 and three of our public parks,” he said via text message.

He said that due to the effects of the coronavirus, the city had to make the decision in order to look out for the city and its residents.

Downtown development authorities derive funding from tax increment financing, which diverts a portion of property taxes within the authority boundaries to help finance projects in the authority area. Without the diverted TIF funds, and factoring in revenue declines from the state due to COVID-19, the city would not receive the funds necessary for its budgeted items.

“I understand the need for the City to be able to capture the TIF dollars and help the general fund,” Dionne said. “This move is another example of what COVID-19 has done to the economy. The City is expecting to see a $250,000 shortfall in state revenue sharing. The DDA captures nearly $325,000, plus or minus, per year, of which approximately $260,000 would be added to the general fund. It’s an unfortunate (situation).”

Dionne said the DDA has made some of the most significant advancements in the city, from façade improvements to public events to major projects.

“The City is currently in the process of developing its Capital Improvement Plan. Council will be dedicating some funds to the plan that will assure that we still have many of the same events and programs in place,” he said.

Gus Calandrino, a member of the DDA and City Council, said that without the funding from the state, it will be difficult for the city to maintain a positive budget, so the council decided to eliminate the DDA. Over the years, the DDA was able to do many projects that improved the city, he said.

“The DDA accomplished some really great things in the city. Unfortunately, the cuts in revenue from the state of Michigan due to COVID-19 left the City Council very few options to balance the city’s budget. I’d like to personally thank the members of the DDA who have worked hard and made wonderful improvements in our city,” Calandrino said in an email.

He said with the struggle of a previous deficit and now a cut in funding from the state, the council was facing an even bigger problem due to COVID-19.

“Facing a preliminary budget deficit of over $250,000, city council made the bold decision to dissolve the DDA to avoid employee lay-offs and reduction in services,” Calandrino said.

He said that there are several developments underway or anticipated in the city, including a new car wash on Hall Road, the On Deck Circle sports facility next to Jimmy John’s Field and the upcoming marijuana facilities.

“Because these developments are all in the Downtown Development District, the city’s General Fund would not see any benefit. All increases in property taxes would go directly to the DDA. Dissolving the DDA allows this revenue to be directed to services anywhere in the city, not just in the Downtown District.,” Calandrino said.

Brad O’Donnell, a member of the DDA and City Council, said the sacrifice was something the board discussed a lot and found that it was a sacrifice that could be made at the time.

“The ‘loss’ in revenue from dissolving the DDA is about 21% of the DDA’s total revenue. It is something that the council discussed and mulled extensively. Ultimately, it was decided that those dollars returning to their original purposes (mostly education and transportation) was a sacrifice we could make,” said O’Donnell.

For more information on the change, call the city of Utica at (586) 739-1600.