Scottville Main Street’s future may be limited due to tax collection error.

May 11, 2015

Scottville-MS-H-1CBy Rob Alway. Editor-in-Chief.

SCOTTVILLE — The Scottville Main Street portion of the city’s Downtown Development Authority may cease to exist after June due to an error in distribution of its funds. The DDA is a specially assessed part of the city’s central business district.

Typically, Scottville property owners pay taxes that are distributed into millages for the city, the Mason County Rural Fire Authority, Ludington Mass Transit Authority, West Shore Community College, Mason County Central Public Schools and West Shore Educational Service District. With the exception of the two secondary schools (MCC and the ESD), a portion of the taxes collected within the DDA can be distributed into the DDA rather than to the other entities, above a capped amount, which is $2.4 million. That distribution is contracted by the city to the Mason County Equalization Department.

The property owners also pay an additional 2 mills in taxes.

The DDA is responsible for the economic sustainability and development of downtown. It pays for infrastructure improvements, such as paving parking lots and beautification, and it also holds special events such as Scottville Harvest Festival and Summerfest.

Recently, the Mason County Treasurer’s Office noticed that over the past three years, the Scottville Main Street/DDA has been receiving about $18,000 a year more than it should’ve received, meaning an overpayment of over $52,000.

City Manager Amy Williams said that she was surprised to find out about the discrepancy. She said a different base amount of value had been programmed into the equalization department’s computer program, which showed the property within the Main Street/DDA had a higher taxable value than it actually did.

“Honestly, I didn’t question this because we have seen a lot of investment in our downtown the last three years,” Williams said. “Smith & Eddy Insurance built a new building and several businesses improved their interiors and exteriors of their buildings. It seemed like our taxable value should have been increasing.”

But, in fact, the downtown’s taxable values have decreased, making the error even worse.

In an email between Tom Routhier of the Mason County Equalization Department and Williams, Routhier explained that DDA has seen a decrease of taxable value of 16.66 percent over the last three years while the city as a whole has seen a decrease of $12.81 percent.

Taxable values of the DDA were:

– 2011: $3,612,908

– 2012: $3,290,940 (-8.9% compared to 2011)

– 2013: $3,319,270 (.86% increase compared to 2012)

– 2014: $3,011,059 (-9.29% compared to 2013).

The city’s total taxable values were:

– 2011: $23,175,060

– 2012: $21,272,165 (-8.21% compared to 2011)

– 2013: $20,559,183 (-3.35% compared to 2012)

– 2014: $20,207,240 (-1.71% compared to 2013)

“The difference can be explained by the disproportionate representation of personal property in the DDA compared to the city as a whole,” Routhier stated in his email.

The 2 mills collected generate about $6,800.

While taxable values may have gone down over the last three years, the Main Street program has actually seen a large amount of investment since it was created eight years ago. Since that time, there has been over $2.8 million worth of private investment into the city’s downtown, which included six facade projects, seven rental rehabilitation projects and several interior renovation programs including new businesses such as Cole’s Antique Villa and the Bottle & Can, plus improvements to Scottville Senior Center, Holden’s Home Emporium (two downtown location improvements) and Carr Communications/Star Theater building.

Williams said that she and Main Street Chair Carla Mayer met with County Administrator Fabian Knizacky, Treasurer Shirley Smith and Routhier from Equalization recently to discuss the issue.

Williams said the county will pay back the money to West Shore Community College, Ludington Mass Transit Authority and the Mason County Rural Fire Authority, which was about $20,129. The DDA will then have to make interest-free payments to the county over the next three years. The majority of the money owed, $31,296, is actually owed back to the city itself. Williams said will recommend to the city’s finance committee to allow the DDA five years to pay back that money.

While the DDA and its governing board will continue to exist, the future of the Main Street program is in question. The program is overseen by the state and requires the employment of a fulltime manager.

“When we created the Main Street program, it was agreed that the majority of the taxes collected would fund the manager position,” Williams said. “The remainder of the downtown programs would be funded from money raised at events.”

The Main Street manager has a salary of $32,000 but the position is budgeted for $47,700 with benefits. The new DDA budget would not be much more than $25,000 a year, Williams said.

The Main Street board will hold its regular monthly meeting on Thursday, May 14, 8 a.m. at city hall. Agenda items include the tax capture, amending the 2015-2016 budget and “staff.”

“The Main Street board will be meeting Thursday to look at a revised budget and consider our options, including whether the board will continue as a Michigan Main Street Program or a traditional DDA,” said Main Street/DDA Chair Carla Mayer. “Either way we remain dedicated to serving the downtown business community.”

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