Village retention of DDA funds may not be legal

It’s been a bone of contention between the Oxford Downtown Development Authority and Oxford Village Council for about five years, but now, it appears the situation might finally get resolved.
It all depends on what the attorneys say and how officials on both sides react
The sore subject is the $145,000 the village currently charges the DDA for police and DPW services utilized within the downtown district. For years, the DDA has questioned whether or not the village can legally do this.
In an effort to find the answer, the DDA board obtained an opinion from its attorney.
For now, it appears the short answer is the village may not be acting in a legally appropriate manner with regard to its annual retention of $60,000 for police and $85,000 for DPW services from the DDA budget.
‘I am not sure they are going about it in the right way,? wrote DDA attorney John D. Staran, who’s based in Bloomfield Hills.
The DDA board discussed Staran’s four-page opinion letter behind closed doors during a Jan. 17 meeting.
When it returned to open session, the board voted 9-0 to direct its attorney to ‘continue his investigation of the use of DDA funds by the village and prepare a report.? Officials directed their attorney to interpret and clarify terms such as ‘maintenance? in his report.
In the interest of fostering better communication and avoiding any misunderstandings or hostilities, the DDA also voted unanimously to release the attorney opinion as a public document, so the village council may read and discuss it.
‘This is not another attempt to ‘place walls? between the DDA and the village,? wrote DDA Chairman Kevin Stephison in a cover letter he penned to go with the attorney opinion.
Stephison explained this is merely a case of the DDA seeking ‘clarification of some concerns that have been around since 2006/2007: the first one being the DPW/Police transfer.?
‘As you are aware the DDA Act is vague in its language, and Oxford is not the only community where some of these issues have been brought forward,? the chairman wrote. ‘The DDA’s goal is (to use) open dialogue as the method to put to rest some of the ongoing issues that have taken center stage.?
At the Jan. 25 village meeting, Councilman Tony Albensi indicated he appreciated the DDA’s efforts regarding this matter, however, he wants the village’s attorney, Robert Bunting, to review Staran’s letter and render his own opinion.
‘Our attorney’s going to look out for the best interest of the village. This attorney’s looking out for the best interest of the DDA,? Albensi said.
In his opinion letter, Staran explained that ‘if the village council desires to keep a portion of the DDA’s revenues to offset the cost of police and DPW services provided to the downtown district, the proper way to do that is through the tax increment financing (TIF) plan, or an amendment thereof.?
The TIF plan is the mechanism through which the DDA obtains its operating revenues by capturing a portion of all the village, township and county property taxes levied within its district’s boundaries. The DDA adopted its most recent TIF plan in 2004.
In Staran’s opinion, if the adopted TIF plan provides for the village to capture some DDA revenues for these basic services, then ‘the village possibly may be able to do so.?
However, if the TIF plan doesn’t specifically provide for this, Staran believes ‘it is questionable whether the village council may lawfully decide to keep a portion of those revenues via the process of approving or modifying the DDA’s annual budget.?
According to Oxford’s 2004 TIF plan, maintenance in the DDA district is addressed.
The plan states, ‘Eligible activities can include but are not limited to replacement of infrastructure improvements such as streets, sewers, water lines, storm sewers, sidewalks, screen walls, landscape improvements, street lights, parking lot lighting, downtown area signage, and similar improvements, and general cleaning and upkeep of the downtown. Maintenance required as a result of downtown district promotional activities is also intended to be included here. The authority will formulate specific maintenance activities which will directly benefit the (DDA) district during their annual budgetary process.?
In his opinion, Staran noted there is a distinction between ‘basic and special? police and DPW services.
‘To the extent that DDA activities require special or a higher level of police and/or DPW services, then it may be appropriate for the village to charge for those special services,? he wrote. ‘That arrangement, however, should be set forth in an agreement between the village and the DDA concerning those special services.?
State law does allow the governing body of a taxing jurisdiction to opt-out of a TIF plan and exempt its taxes from capture by adopting a resolution within 60 days of a public hearing regarding the designation of DDA district boundaries.
However, the village council never did this when the TIF plan was adopted seven years ago.
‘Absent a timely adoption of such a resolution, it is questionable whether the village or other (taxing) unit may lawfully decide to retain a portion of the DDA’s revenue stream to pay for public services such as police and DPW services,? Staran wrote.
In his conclusion, Staran noted that ‘it is beyond question that the village council is responsible for providing these services and it is otherwise cash-strapped and struggling to do so in this time of tight budgets and declining revenues.?
‘The village council needs to identify a source to fund these basic public services, and the DDA is viewed as an available source,? he wrote.