The Poletown Papers

2/11/11 UPDATE: Copy of the 1986 TIFA.
In case you haven’t heard, Detroit has stopped paying Hamtramck’s share of revenue from the GM Detroit/Hamtramck plant. This action was triggered by a state audit which showed that Detroit over-collected $22 million from Detroit Public Schools. The auditors based this conclusion on the fact that all project expenses were paid back in 2000. Detroit, therefore, believes they overpaid Hamtramck $7,119,685.22 between fiscal years 2001/2002 and 2007/2008. Detroit stopped paying Hamtramck’s current “Fair Share” of the Poletown revenue to recoup their over-payments, and the City of Hamtramck responded by filing a lawsuit
If Hamtramck’s case rests on whether or not the TIFA has ended, it looks like we’re in trouble.
From the agreement establishing a joint venture between the EDC of Detroit and EDC of Hamtramck:

ARTICLE V
TERM AND DISSOLUTION
5.01 Term. This Agreement shall become effective as soon as it has been properly authorized, executed and delivered by the EDCs. This agreement shall terminate as soon as the purposes of the Joint Venture have been accomplished and the affairs of the Joint Venture have been wound up in accordance with the terms hereof.
5.02 Events of Dissolution. The Joint Venture shall be dissolved:
(a) upon mutual consent of the EDCs;
(b) upon the occurrence of a default by either EDC with respect to its obligation hereunder;
(c) upon completion of the purposes of the Joint Venture.
5.03 Dissolution and Winding Up. Upon the dissolution of the Joint Venture, the Manager shall proceed with reasonable promptness to wind up the affairs of the Joint Venture. After paying or providing for liabilities owing to creditors, excluding the EDCs, the Manager shall set up such reserves as are deemed reasonably necessary for any contingent or unforeseen liabilities or obligations of the Joint Venture. Said reserves may be paid over by the Manager to a bank or an attorney-at-law, to be held in escrow for the purposes of paying any such contingent or unforeseen liabilities or obligation. After paying such liabilities and providing for such reserves, the Manager shall cause the remaining net assets of the Joint Venture to be distributed to the City of Detroit and applied by said City as provided in the Interlocal Agreement.

From the Tax Increment Financing Plan:

DURATION OF THE DEVELOPMENT PROGRAM
Under the Interlocal Agreement, the duration of any tax increment financing plan adopted by either Detroit or Hamtramck is limited to the actual date by which all Qualifying Projects Costs have been reimbursed to Detroit and Hamtramck. The latest estimate of Qualifying Project Costs for the CIPP is $203,000,000. Taking into account sources of funds other than tax increment which will be used to reimburse Detroit and Hamtramck for their Qualifying Project Costs (income tax collection, proceeds from land sale, grants, etc.), it is estimated that the duration of this tax increment financing plan will be 50 years.

From the Interlocal Agreement between the cities of Detroit and Hamtramck:

3.07 Non-impairment of Agreement; Duration of Tax Increment Financing Plan.
Each City hereby covenants and agrees that, except as mandated by state or federal law, (a) it will take no action that will in any way result in impairment or diminution of the amount of Project Area Revenues available for allocation under Section 3.05(b)(i)(1) above and (b) it will not approve a tax increment financing plan which is inconsistent with the provisions of this Agreement. The duration of any tax increment financing plan which is adopted by either City with respect to that portion of the Project Area lying within the corporate boundaries of such City shall be limited to the actual date at which all amounts allocated under Section 3.05(b)(i)(1) have been paid and all Qualifying Project Costs reimbursed to the City incurring the same.

>>Read all 117 pages of the Poletown documents
Section 3 of the Interlocal agreement can be read in its entirety after the cut.
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