Monday, January 07, 2008

Comparisons to Birmingham aren't fair -- to Birmingham

Note: This article has been cross-posted to, a website supporting the efforts of my wife, Tiffani Gagne and local publisher Stephanie Loveless to defeat the $0.35/square-foot tax on Ferndale businesses. Please visit for more information.

In reporting on the campaign against Ferndale PSD tax, Mirror reporter Megan Pennefather spoke to DDA Executive Director, Cristina Sheppard-Decius:
Sheppard-Decius said everyone is entitled to their own opinions, but that she's disappointed neither Gagne nor Loveless met with her to discuss the issue before starting the campaign.

"The information they may be putting out there is inaccurate," she said. "And I hope businesses will do their due diligence" and research the issue. "My hope is that people will make a decision based on information, not on hearsay."
It's not Tif and Steffie's fault the $350,000 isn't correct. That number came from the DDA's presentation to council in June, 2007. But the DDA's budget also includes millages and sponsorships that bring their revenue up to $503,700. I agree with Cristina that not disclosing 30% of the DDA's income to city council is "inaccurate," but that was the DDA's error--not Tif and Steffie's.

What Cristina doesn't appreciate is the information Tiffani Gagne and Steffanie Loveless are sharing comes from information published earlier by the DDA, presentations the DDA gave to city council, but subsequently removed from their website.

So what information might Tiffani and Stephanie be sharing that's inaccurate? Maybe it was when the DDA compared their current $350,000 budget to Birmginham's, Rochester's, and Royal Oak's $600,000, $1.25 million, and $2 million budgets respectively.

The DDA compared Ferndale's $350,000 to Birmingham's $600,000. But the more-accurate numbers are $503,700 and $1 million, because according to Birmingham PSD's executive director John Heiney, Birmingham receives $800,000 from their PSD tax and another $200,000 in sponsorships.

That may seem worse but Birmingham's revenue is spread across 600 businesses to Ferndale's current 200. In other words, Ferndale's raises $2518 for each of its businesses ($503,700/200) compared to Birmingham's paltry $1667 ($1 million/600).

And that's without Ferndale's onerous PSD tax!

The real irony comes when we include the new PSD tax. According to the latest information from Ferndale, the PSD tax proposal will double its size to 400 business and raise an additional $284,689.

That's a good thing, isn't it?

Let's look at the numbers again. Ferndale's new total revenue will be $684,269 (see table below) but will now be responsible for 400 businesses. On a per-business basis Ferndale's revenue actually drops to $1710--33% less than before the PSD tax!

Ferndale DDA Ferndale DDA w/ PSD Birmingham
# businesses 200 400 600
TIF $347,700 $347,700 $0
PSD $0 $284,869 $800,000
Millages $75,503 $0 $0
Sponsorships $80,500 $51,700 $200,000
Total Revenue $503,703 $684,269 $1,000,000
Revenue/Business $2,519 $1,711 $1,667

On the revenue side of the argument, some bean counters may actually say that collecting less money from more business is a good thing. On its face even I would say that's an example of broadening a tax base. But there are at least two problems with that perspective.

First, "broadening its tax base" is meant to describe what happens when new businesses open, existing businesses grow, and property values increase. The tax base grows because the downtown economy has grown--not its boundaries. By drawing new lines around 200 additional businesses the DDA has artificially broadened its tax base.

Second, at the DDA's own admission it is not proposing an equal distribution of the funds, but is planning to spend more of its money downtown than anywhere else. Alley improvements are for Nine Nile--not behind Wetmore's or Minser's Collision. Sidewalk snow removal and power washing are for downtown sidewalks, not those outside Elliot Saw Works or Detroit Comics.

That's not a broadening of the tax base, it's a redistribution of money--taking from non-downtown businesses to spend on the downtown. But even downtown stores like House of Chants, American Pop!, Dollar Castle and Via Nove oppose the new tax. In addition to being against higher taxes for themselves they realize many of their neighboring businesses are struggling under Michigan's single-state recession and that higher taxes may push their neighbors over the edge. Being surrounded by empty storefronts isn't good for downtowns or residents.

No comments:

Post a Comment