The City of Charlotte Downtown Development Authority was hit with a hard truth April 23 concerning its fiscal viability. Declining property values partnered with the elimination of the personal property tax and properties within the DDA district that have been purchased by non-tax-paying entities, have left the DDA with projected revenues of slightly less than $6,000 for the 2015-16 fiscal year.
“Without significant changes to the way our DDA is structured and funded, it will only be able to pay its debt,” said Bryan Myrkle, Community Development Director for the City of Charlotte. “Nearly everything else would have to be eliminated, or funded by other entities.”
The debt Myrkle referred to is that of close to $65,000 remaining from the $105,000 the DDA borrowed from the city in 2010 to purchase the former Corral property. The DDA still has annual operating expenses tied to an annual contribution to Courthouse Square, watering the downtown trees and flowerpots, emptying downtown waste receptacles, as well as sponsoring the Concerts on the Square and Saturday morning Farmers Market.
One option the DDA has to increase its revenue is to levy 2 mills on all property located within the district. Myrkle said the additional 2 mills would generate between $12,000 and $14,000 annually.
“This is commonly levied by DDA’s around Michigan, but has never been in Charlotte,” Myrkle said.
DDA Chair Jeanette Sommer said the DDA board has been reluctant to consider the 2-mill levy in the past, but may not have any other options at this point.
“We are all experiencing a reduction in our property taxes because of our recent assessments,” said Sommer, who is also a downtown property owner. “The 2 mills will help make up for that, which is still less than what we’ve paid in the recent past. If we’re going to try to keep our downtown looking good, we have to have financing to do it. I didn’t think it would ever come to this. I just can’t see disbanding the DDA.”
DDA revenues have steadily declined over the past five years as property values have continued to fall in the district and other properties have been purchased by tax-exempt entities. DDA revenues topped $70,000 in 2010-11, fell to $41,000 in 2013-14 and down to $18,000 this past fiscal year.
In addition to a 2-mill levy, the DDA is considering asking the city to absorb some, or all, of the DPW expenses charged to the DDA; ask downtown businesses and other stakeholders to “adopt” flower pots, and use its fund balance to pay off the remaining Corral purchase debt, Myrkle said.
“If all these changes are made, our total revenue then (including sidewalk snow removal assessment) would be approximately $34,500,” Myrkle said. “Set, annual expenses would include the snow removal at $12,400, the trash removal at $2,500 and whatever DPW expenses not absorbed by the city at large, leaving anywhere from $15,000 to $20,000 annually for DDA programming and maintenance.”
The DDA must adopt a budget to present to Charlotte City Council before its May budget hearing. The DDA’s budget is then approved by the council as part of the overall city budget.
“These are not easy options, but they are very simple and straightforward. It has come down to whether the community wants to have a functioning DDA, or not,” Myrkle said. “Do we want an entity in place responsible for amenities downtown like waste receptacles, benches, bike racks, trees, flower pots, brick pavers, banners and the like? These things have to be maintained and sometimes repaired or replaced, but they all come at an expense. The mechanism that has paid these costs for the past 20 years can no longer do it, and we have to decide how to pay them moving forward. It’s a community decision.”