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T,d, PX nflcW k_Xe TggiXVaTkXT niakkXe iXjgfejX kf k_X ajjlXj-hlXjkafej Tk ofli XTicaXjkVfemXeaXeVX jlUjXhlXek kf ofli UlW\Xk _XTiae\, J cXTjX YfinTiW T Vfgo fY ofli iXjgfejXj kf k_X :fleVac dXdUXij TeWk_X:ako :cXib%j IYYaVX, J cXTjX VfekTVklj aYofl _TmXTeo hlXjkafej iX\TiWae\ fli UlW\Xk TeTcojaj, M_Teb ofl Yfi ofli VffgXiTkafe aek_aj dTkkXi, 8kkTV_dXekj VV6 :fleVacdXdUXij :fleVac ;amajafej 8lWakfi AXeXiTc%jIYYaVX AcXe Ffe\( ;?A: :_aXY @aeTeVaTc IYYaVXi Eiajj 8eWiXnj( J if\iTd GTeT\Xi DTVbGTikae(:_aXY @aeTeVaTc IYYaVXi :_Xioc Df_ejfe( @aeTeVX;aiXVkfi 9iXek BTikpXcc(CekXiad9lW\Xk ;aiXVkfi @cfoWLkTecXo(;Xglko 9lW\Xk ;aiXVkfi KXeXX L_fik( GTeT\Xi CC)9lW\Xk 8WTd BfccaXi(GTofi%j IYYaVX .BI4.4N/1'/3 AfRZTeaCO\.\TdJBIGCDEB'DCB'CC: $&/3-RcP Detroit Economic Growth Corporationl Economic Development Corporationl Downtown Development Authority FY 2013-2014 Budget Analysis by the Fiscal Analysis Division Detroit Economic Growth Corporation (DEGC) The DEGC is a private nonprofit development organization of public, business, labor and community leaders established to assist business in expanding or locating in Detroit. The DEGC provides staff and other administrative services to the Downtown Development Authority (DDA), Local Development Financing Authority (LDFA), the Economic Development Corporation (EDC), and the Detroit Brownfield Redevelopment Authority (DBRA). These development entities do not contain any staff. The DEGC receives funding primarily from the City of Detroit through its Planning and Development Department (POD), the DDA, the EDC and corporate contributions. The DDA, LDFA, EDC and DBRA contributions to the DEGC's budget serve as reimbursement to the DEGC for staff services, office space, and operating expenses. In the proposed 2013-14 budget for POD, POD requested a contribution of $850,000 to the DEGC, but the Mayor recommends a contribution of $700,000, a 17.6% reduction from POD's request (see Attachment I). The chart below shows the City's contributions to the DEGC since 2007-08: City of Detroit's Contribution to the Detroit Economic Growth Corporation from Its Planning and Development Department Recom- mended FY FY FY FY FY FY FY 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Contri- bution Amount $1,000,000 $1,000,000 $1,000,000 $1,000,000 $850,000 $850,000 $700,000 The DEGC feels the City's contribution helps the organization provide citywide proactive business attraction and retention efforts, work on vital economic development projects, and continue to work with the POD during pre-development stages on City projects. The chart below shows the proposed 2013-2014 budget for the DEGC as compared to the current year's budget. 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Council approves the City contribution and project fees stemming from contracts your Honorable Body approve between the EDC and the City of Detroit for a particular project/fund, such as the Casino Business Fund. The EDC supplement remains the same as the current year. (D) Represents DDA's reimbursement to DEGC for staff cost and indirect expenses (rent, utilities, supplies, etc.). DDA's contract level is the same as the current fiscal year. (E) The LDFA budget is based upon tax increment revenues, service fees, City reimbursement, and interest/other income drawn down from the Michigan Economic Development Corporation (MEDC) in prior years. The LDFA contribution remains the same as the current year. See Attachment III for LDFA's current year's budget that was approved by Council. (F) The Environmental Affairs Department has entered into a contract with the DBRA to reimburse the DEGC for DEGC administrative services. See Attachment IV for DBRA's operating budget for the current fiscal year, adopted by the DBRA board. (G) Private sector contributions are expected to remain the same as the current year. (G1) With the approval of the Boards of the various Authorities that DEGC administers, the DEGC has hired an in-house General Counsel. Funding for the position and assistance is received through the reallocation of the existing legal budgets of the various Authorities. This is done at a much lower rate than if the DEGC were still using an external lawfirm as its General Counsel, resulting in a net savings to the Authorities. (H) The DEGC has entered into contractual agreements to provide administrative services (such as accounting and financial reporting services) for Eastern Market and the former Next Detroit Neighborhood Initiative (this organization will be renamed), both Michigan non-profit corporations. (I) The DEGC includes interest income in the Services/Other Fees revenue line item. (J ) The DEGC expects to receive this level of service fees from the Detroit Industrial Revolving Loan Fund (DIRLF). The DEGC has received permission from the federal Economic Development Administration (EDA) to utilize this fund for commercial projects as well. Formerly, the EDA Title 9 monies, which support the loan fund, could be used only for industrial projects. The DIRLF can now provide up to $200,000 in commercial loan funds. In addition, due to interest rates and the timing of cash receipts, the DEGC is no longer able to capture any real interest income in a given year. Please note that the remaining explanations relate to expenditures. (K) The DEGC continues to operate with 38 employees and 2 consultants (last year the DEGC had 3 consultants). In addition, the DEGC has hired an internal General 3 Counsel, and a new Office Manager who is doubling as a Legal Assistant. Fringes cost remains about 29% of payroll, but cost go up due to normal increases in health care and the addition of the general counsel and office manager positions. (L) The DEGC is cutting back on legal services as it realizes some savings bringing an in-house general counsel. Professional services go down due to reduced funding. (M) The travel/meetings/marketing budget remains the same. (N) The rent/utilities/insurance budget remains the same. (0) The DEGC's line of credit is fully exhausted and no interest payment is expected in 2013-14. (P) The equipment budget remains the same. (Q) "Other" includes postage, building maintenance, delivery, supplies, printing, dues, publications & subscriptions, processing fees, special projects, advertising, governmental relations/fund raising and other miscellaneous expenses. This budget remains the same. The DEGC is organized so that its employees can be more functionally oriented rather than departmentally oriented. This way, staff can use their skills to work on a broad spectrum of citywide projects rather than on projects related to a specific area, such as commercial development. The DEGC has clarified, however, whom employees report to, thereby, maintaining accountability. Attached is DEGC's most recent organizational chart (Attachment V). Economic Development Corporation (EDC) In the proposed 2013-14 budget for POD, POD requested a contribution of $255,000 to the EDC, but the Mayor recommends a contribution of $200,000, a 21.6% reduction from POD's request (see Attachment I). The chart below shows the City's contributions to the DEGC since 2007-08: City of Detroit's Contribution to the Economic Development Corporation from Its Planning and Development Department Recommended FY FY FY FY FY FY FY 2007-08 2008-09 2009-10 2010-11 2011-12 I 2012-13 2013-14 Contribution Amount $300,000 $300,000 $300,000 $300,000 $255,000 $255,000 $200,000 Additionally, as indicated earlier, the EDC does traditionally supplement DEGC's budget from EDC's project service fees and reserves (see EDC's Supplement per DEGC's budget in the chart above). 4 The chart below shows the proposed 2013-2014 budget for the EDC as compared to the current year's budget. EDC POD's EDC Proposed Proposed Comment FY 2012- FY 2013- FY 2013- 13 14 14 Reference Revenue Budget Budget Allocation Difference Letter City Contract $255,000 $255,000 $255,000 $0 Expenses Contractual Services-DEGC $250,000 $250,000 $0 (A) Legal/Audit Services-EDC 5,000 5,000 0 Total $255,000 $255,000 $0 (A) Represents EDC's reimbursement to DEGC for DEGC staff time and indirect costs allocated to EDC related activity. The DEGC hopes to maintain the same level of City contribution in order for the EDC to provide an adequate amount economic development project services. However, again at Attachment II, the current year's operating budget for the EDC describes in more detail other revenues captured by the EDC and what expenditures they pay for. Downtown Development Authority (DDA) The DDA, a public corporation for the City of Detroit, was established for the purpose of promoting and developing economic growth in the City of Detroit's downtown business district. The DDA has been authorized to fund its General Fund (operating) budget by an ad valorem tax of one mill on real and tangible personal property not exempt by law in the downtown development district, and by a levy on the increased assessed value of a tax increment district, and the issuance of negotiable revenue and tax increment bonds to finance the development activities of the DDA. Note: the DDA could receive two mills on real and personal property for operating purposes based on the 2010 Census count results. Unlike the DEGC and EDC, the DDA does not receive a General Fund contribution. Therefore, the DDA feels they do not need to come before Council during any DEGC and EDC budget hearing. The DDA has expressed that they would be willing to address any DDA concerns that Council may have when their operating budget is 5 presented to them in J une. Attachment VI represents the current year's operating budget for the DDA City Council approved in J uly 2012. Council will recall as well that pursuant to State Public Act No. 197, Council approves the Tax Increment Finance Plan, which delineates the anticipated development projects in the downtown area. Whenever the TIF Plan is amended, the DDA board must first approve the amendments, and then the amendments come before Council for approval. This process additionally gives Council an opportunity to review the DDA's policies, plans, and procedures as they relate to development activity in the downtown area. Attachment VII represents an excellent chart from the most recent Capital Agenda showing the relationship of the DEGC and related development entities (DDA, EDC, etc.) commonly known as the "alphabet soup". The Capital Agenda also contains brief descriptions on these development entities with past and pending projects. Issues and Questions DEGC Please describe the impact of the Mayor's proposed 17.6% cut to the City's contribution to the DEGC, going from $850,000 to $700,000, on DEGC services. Please describe the DEGC's understanding of Planning and Economic Development and City Planning Commission functions consolidating with the DEGC and this will improve service delivery. Please provide the most recent accomplishments by the DEGC, including both downtown and neighborhood development projects. What major new economic projects the DEGC anticipates working on in 2013-14 for both downtown and neighborhood development? Does the DEGC anticipate the DDA board approving any modifications to the Tax Increment Financing Plan and Development Plan for Development Area No.1 soon for Council's approval? Please describe the impact of the Mayor's proposed 21.6% cut to the City's contribution to the DEGC, going from $255,000 to $200,000, on EDC services. Please provide the most recent schedule of the Casino Business Development Fund dollars, showing budget versus actual revenues and expenditures, with balances. If available, please provide an explanation of individual program expenditures to date. What major industrial projects you have on the horizon? BRDA 6 Please provide the most recent spreadsheet of brownfield redevelopment projects with anticipated investment and job creation levels. What is causing the lower number of brownfield redevelopment projects in the last year coming before Council? LDFA Is the Local Development Finance Authority generating sufficient tax increment revenues to meet debt service requirements? Is the Downtown Development Authority generating sufficient tax increment revenues to meet debt service requirements? Other Please provide a copy of the J une 30, 2012 audited financial statements for the DEGC and affiliates, EDC, LDFA, DBRA, and the DDA. IC: 1\2013-14\IC\DEGC-EDC-DDA 13 14.doc Attachments 7 .p~,-h~t .... r .r CITY OF DETROIT Planning and Development Department Financial Detail by Appropriation and Organization 2012-13 2013-14 2013-14 Redbook Dept Final Mayor's Community Development Request Budget Rec Community Development FTE AMOUNT FTE AMOUNT FTE AMOUNT APPROPRIA TlON ORGANIZA TION 00014 - Community Development 360130 - Community Development 0 $219,357 0 $271,782 0 $181,966 APPROPRIATION TOTAL 0 $219,357 0 $271,782 0 $181,966 00595 - Economic Development Corporation 360134 - Economic Development Corporation 0 $255,000 0 $255,000 0 $200,000 APPROPRIATION TOTAL 0 $255,000 0 $255,000 0 $200,000 00597 - Economic Growth Corporation 360135 - Economic Growth Corporation 0 $850,000 0 $850,000 0 $700,000 APPROPRIATION TOTAL 0 $850,000 0 $850,000 0 $700,000 05797 - Eight Mile Boulevard BG 360600 - Eight Mile Boulevard BG 0 $22,700 0 $22,700 0 $22,700 APPROPRIATION TOTAL 0 $22,700 0 $22,700 0 $22,700 11134 - Office of Neighborhood Development - PO 363125 - Office of Neighborhood Development 1 $125,764 0 $0 0 $0 APPROPRIATION TOTAL 1 $125,764 0 $0 0 $0 11302 - ONCR Project 363138 - ONCR Project 0 $40,000 0 $0 0 $0 APPROPRIATION TOTAL 0 $40,000 0 $0 0 $0 12368 - DTC Loan Repayment 364046 - DTC Loan Repayment 0 $147,000 0 $147,000 0 $147,000 APPROPRIATION TOTAL 0 $147,000 0 $147,000 0 $147,000 13529 - Section 108 Loans 364082 - Garfield Sec 108 Loan 0 $260,603 0 $251,805 0 $251,805 364083 - Stuberstone Sec 108 Loan 0 $35,658 0 $34,485 0 $34,485 364084 - Ferry Street Inn Sce 108 Loan 0 $266,426 0 $332,888 0 $332,888 364085 - New Amsterdam Sec 108 Loan 0 $842,321 0 $843,545 0 $843,545 364086 - Mexicantown Mercado Sec 108 Loan 0 $0 0 $574,130 0 $574,130 364087 - Garfield II Sce 108 Loan 0 $487,710 0 $485,755 0 $485,755 364088 - Vernor Lawndale See 108 Loan 0 $97,489 0 $545,874 0 $545,874 364089 - Book Cadillac Sec 108 Loan 0 $921,323 0 $1,623,003 0 $1,623,003 36-9 ~J. n\ (IV) + : 7/ ECONOMIC DEVELOPMENT CORPORATION OF THE CITY OF DETROIT OPERATING BUDGET JULY 1, 2012 TO JUNE 30, 2013 Proposed Budget June 3D, 2013 REVENUE City of Detroit TSF From Waterfront Reclamation TSF From Other Projects TSF From Casino Development Fund TSF FromWayne State UDAG TSF From Trizec Annuity Other Revenue & Service Fees 255,000 200,000 140,000 350,000 50,000 350,000 25,000 TOTAL REVENUE 1,370,000 EXPENSES Detroit Economic Growth Corp Detroit Economic Growth Corp Special Proj Other Projects Administrative Fees Legal Services Audit Miscellaneous 650,000 500,000 140,000 33,000 27,000 20,000 TOTAL EXPENSES 1,370,000 Operating Surplus/(Shortfall) o Debt Service (Increase)/Decrease in Reserve o o NET SURPLUS/(SHORTFALL) o II ~Lh rYl.fVl r 'fir LOCAL DEVELOPMENT FINANCE AUTHORITY OPERATING BUDGET JULY 1,2012 TO JUNE 30,2013 Proposed Budget June 30, 2013 REVENUE TAX INCREMENT REVENUES RELEASED CURRENT YEAR CITY REIMBURSEMENT INTEREST/OTHER INCOME 150,000 o 25,000 TOTAL OPERATING REVENUE 175,000 TOTAL REVENUE 175,000 EXPENSES DETROIT ECONOMIC GROWTH CORPORATION MAINTENANCE/OTHER 125,000 50,000 TOTAL OPERATING EXPENSES 175,000 TOTAL EXPENSES 175,000 Operating Surplus/(Shortfall) o (lncrease)/Decrease in Reserve o NET SURPLUS/(SHORTFALL) o r:\Idfa\operating\budget2012_ 13.xls A~~"",,,fV\t- F CITY OF DETROIT BROWNFIELD REDEVELOPMENT AUTHORITY OPERATING BUDGET JULY 1, 2012 TO JUNE 30, 2013 Proposed Budget June 30, 2013 REVENUE CITY OF DETROIT BROWNFIELD APPLICATION / ADMIN. FEES INTEREST/OTHER INCOME o 235,000 500 TOTAL REVENUE 235,500 EXPENSES DETROIT ECONOMIC GROWTH CORPORATION PUBLIC NOTICES/ADVERTISING LEGAL AUDIT INSURANCE WORKSHOPS/PROMOTION OTHER EXPENSES 250,000 26,000 30,000 10,000 22,000 1,500 1,000 TOTAL EXPENSES 340,500 Operating Surplus/(Shortfall) (105,000) (Increase)/Decrease in Reserve 105,000 NET SURPLUS/(SHORTFALL) o r:\dbra\operating\budget12_ 13.xls Diane Stafford Executive Assistant George W. J ackson, J r. CEO ----------- ( \ I Ron Flies I ____-J I I Executive Consultant I ,----------~ Rebecca Navin General Counsel OEGC ~ We're all business. Art Papapanos Vice President Board Administration r---I-----, J ennifer Kanalos Brownfield Redevelopment Program Manager Gay Hilger Administrative Associate Tiffini D. Smith Director Corporate Communications Brian Holdwick Executive Vice President Business Development & Financial Services Olga Stella Vice President Business Development Waymon Guillebeaux Executwe Vice President Project Management & Construction Services ( - -G~ry-B::n - ': ----~: Construction I , Consultant I --------' " I Carla Hudson Document Management Malinda J ensen Director Business Development Mark Denson Tracie Tillinger Business Development Business Development Manager Manager Kenyetta Harriston- ~ William Dillon Bridges Business Development BusinessDevelopment Manager Manager Mariangela Pledl H Spencer Olenik Business Development Development Assistant Manager Wendy Hill Development Associate Malik Goodwin Vice President - Project Management I Will Tamminga Director Project Management Scott Veldhuis Tim Miles Senior Project Senior Project Manager Manager Cleveland Dailey, III Orza Robertson Project Manager Project Manager Denise Colona ~ 11 David Tobar Project Manager Project Manager y Sandra Smith ~ Andrea Haas Real Estate Manager Associate Project Manager Glen Long, J r. Vice President Administration Chief Financial Officer Kelly Shovan H J oyce J osaitis Assistant Controller Office Manager Denise Hundley lJ Vickey Thompson Contract & Benefits Finance Associate I I Administrator Elizabeth Reaves H Edward Fisher Accounting Office Assistant Associate ~ Sheila Anthony Receptionist ~ Lamont Davis LAN/WAN Administrator 1 Terrance J ordan Senior LAN Administrator Tec hnology Coordinator /J~hYl1e~r <III DOWNTOWN DEVELOPMENT AUTHORITY BUDGET 2012-2013 2012-13 BUDGET REVENUES: Current taxes - one mil $ 850,000 Earnings on investments 1,000 Transfer from Tax Increment Fund 500,000 State BusinessTax Refund 0 Parking Operations 825,000 Other 20,000 From/(To) prior year balance 334,000 TOTAL REVENUES $ 2,530,000 EXPENSES: Contrac tual Servic es Detroit Economic Growth Corp $ 1,500,000 Annual Audit 29,000 Sub-Total $ 1,529,000 Professional Servic e Fees Legal Services $ 200,000 Insurance 250,000 Advertisi ng/Marketi ng 16,000 Computer Support 10,000 Sub-Total $ 476,000 Parking Lots Management $ 25,000 Spec ial Projec ts & Contingenc ies $ 500,000 TOTAL EXPENSES $ 2,530,000 r:\acct\dda\operatin\bud12_ 13.xls - - - David Bing Mayor - City of Detroit Indicates a Professional ,24123 st Services Agreement exists between the entities PROPOSED CAPITAL AGENDA FY 2013-14 through 2017-18 ) CiS la.uuEI 1.&.== ISA k, .. ""'-"_" ~~ . _ ._ .> aMife&" Woodward Corridor Improvement Authority 316