We will call back to order the budget finance and artist standing committee for Wednesday, October the 1st, 2025.

Would the clerk please call the roll?

Councilmember Fair Durha third.

Present.

It is noted that Member Young will be absent.

Thank you, Madam Clerk.

Councilmember Gabriela Santiago Romero.

Present.

Mr.

Chair, you have a corn.

Thank you, Madam Clerk.

And we are back in session for the budget finance and audit standing committee.

Next, we'll move to approval of the minutes.

Is there a motion to do so?

Motion.

Here are no objections.

That action shall be taken.

We've already done public comment for today's committee hearing.

Now we will move on to unfinished business line item 5.1 status of the legislative policies division submitting the Citizens Research Council of Michigan's report on evaluating local option admission tax on sports and entertainment venues in Michigan.

Is there a motion to discuss line item 5.1?

Motion.

No objections, that action shall be taken.

Uh and joining us, we have Mr.

Corley from LPD.

As well as CRC is here today.

And good afternoon to you both.

Yeah, the no Mr.

Chair.

And uh City Council Irv Corley from Let's State Policy Division.

I am Eric Lufer, the president of the Citizens Research Council of Michigan.

Thank you.

Whoever would like to proceed, please.

Thank you so much.

Um Councilmember Durall.

Um afternoon, Mr.

Chair and Council members.

Uh again, I'm Irv Corley from the Less City Policy Division or LPD.

I would like to introduce Mr.

Eric Lufer, President of the Citizens Research Council of Michigan, or CRC, who is here to briefly discuss the CRC report on a local option amusement tax in the state of Michigan, including the revenue that could be generated from a local option amusement tax in the city of Detroit.

As a reminder, City Council back in April approved a resolution authorizing LPD to contract with the CRC to complete studies on a local option sales tax study and a local option amusement tax.

Council approved the contract with the CRC to conduct these studies back in June.

Phase one of this contract is the local option amusement tax study, which is before you today.

Phase two of this contract is the local option sales tax study, which will be completed in about two months.

It's important to note that the CRC's local option amusement tax study is on both LPD's and the CRC's websites.

With that, Mr.

Chair, I would like to turn it over to Mr.

Lofer for his presentation.

So a couple of hard copies of his presentation.

Would you like one?

Yes.

Okay.

Thank you.

And uh Mr.

Payne has it on the screen.

Uh so real quick for the people uh viewing at home.

The Citizens Research Council is a 501c3 not-for-profit organization.

Um we do statewide research, but we have one arm of our work focused on the city of Detroit and the work that we do.

We're very independent and nonpartisan.

We're not a an organization that tries to shrink government or grow government.

We're trying to find factual information to help you as city council members, to help the legislature, to help um school boards understand what's going on and make better decisions.

So that was slide three.

So as we started um looking at the the issue, why would we want to do this?

Uh Detroit is among several cities in the nation, but very unique within the state of Michigan that it hosts obviously the four major sports teams, uh, basketball, football, hockey, baseball, um, bringing in the women's NBA has a professional soccer team.

It's it's not the highest level of soccer, but it's still well attended.

Um, technically in Ham Tramic now, but soon to be in Detroit.

Of course, there's the concerts halls, the theaters, uh, you know, Fisher Theater, Fox, St.

Andrews, Masonic.

There's the golf tournament, the car show, the Grand Prix Movement Festival, Moto Crosses, Truck Poles, just so many things going on in the city that you, as the city government are responsible for making sure that the resources are allocated to host those events, um, which creates a cost for the city, but there's also some benefits.

If we can go on to the next slide, uh from a from an economic point of view, uh bringing in those activities, it enhances the city's visibility, right?

Uh tigers right now are playing every sports fan in in America that has the ability, has the TV on learning about Detroit, um, putting up a good visibility.

Uh unfortunately it's in Cleveland now, not in Detroit, but next year or next series, maybe.

Um on the positive side, there's employees, right?

The employees that are working in the stadiums, the close by restaurants and hotels.

There's a lot of economic churn because of these activities.

But you want to make sure patrons, whether they're coming from the neighborhoods of Detroit or suburbs around Detroit or other places in the United States, are coming in, they feel safe, they're the roads are quality.

Um just expenses for the city associated with that.

Right now, those costs are largely borne by city residents, part uh city income tax or the gaming taxes, which is is borne by a wider tax base.

But um the idea with the admissions tax would be could you shift some of that to those people benefiting from the activities, benefiting from the services being provided.

Um so it's a way of equating the tax burden with the taxpayers.

Let's go ahead, two slides.

Uh so as we set out to evaluate the tax, we have several criteria that we walk through.

Uh, first of all, are the is the tax adequate to bring in the revenues sort of is it worth the effort?

Um we'll get we'll get into the details of that a little bit.

Uh as we started to do the work, it's one of the first things what is the goal?

And as we've talked to some of the city council members, as we talked to LPD, as we talked to some other interests, we heard many things uh as being part of that goal.

So we tried to lay out what those goals may be.

Um, and then it's up to you, I guess, as city council, whether you decide to move forward, asking the legislature for an authorizing bill.

Um the equity side, there's two sides to equity horizontal equity.

Are taxpayers treated equally?

Um, in this case, are the businesses uh are they treated equally as are we taxing football games but not baseball games?

Are we taxing um Fisher Theater but not the Fox Theater, things like that?

So vertical equity is the other aspect of that.

Is the tax regressive?

Does it put more of the burden on low income relative to high income?

Is it proportional?

Um is it progressive?

We looked at the issue of neutrality.

Uh the ideal tax is created in a way that it doesn't cause people to change their economic behaviors.

Um we looked at balance, uh balance of the overall tax system.

When we talk about this, I use the analogy of the three-legged stool, with one leg being property taxes, a second leg income, and a third leg sales or consumption taxes.

In Detroit, you have two legs of that stool, the income in the property, uh, but that third leg is really missing.

So it'd be really hard to sit on that three-legged stool as it as it's presently um structured.

We looked at administrative efficiency, and there's several aspects to this, as from a taxpayer point of view, from a patron of the sporting event, the the play, the concert, whatever, it's very simple.

You're buying the ticket, it's added to, there's very administratively simple.

There's the ticket reseller, whether that's the box office or ticket master or uh life nation, whoever it creates an administrative burden for them, but it's important to know that many other cities have this tax.

So they have that structure in place, and um they will just add that for Detroit.

They don't have to reinvent the wheel.

And the third aspect of administrative efficiency is the government, right?

So as a the entity receiving that money, having the apparatus in place within the finance department to receive that money, but also an audit system.

Are you getting the money that you're owed?

And then the last aspect of it is the legislative processes and legalities.

So let's go on to the next slide and start answering some of these questions.

The first one is the adequacy of revenue.

When we were going through, and I'm gonna I'm gonna walk through with greater detail how we came to our assumptions.

Um, but we tried to look at the biggest venues, obviously the the four sports teams, the Comerica Park and Fox Theater and Fisher Theater.

We didn't try to dig down to some many of the smaller venues.

Um they would just have to do a whole lot of events to equal one football game.

Um the bottom line is even at the highest tax rate that we modeled, the revenue is about equal to the utility users' excise tax.

So very helpful, right?

That's money you don't otherwise have, the ability to provide some more services or provide some property tax relief, but it's not going to be a game changer in terms of the adequacy of revenue.

Is it worth it?

Um that's a question for you guys to decide.

The next slide, several aspects of what constitutes a good tax system in terms of the equity, uh, the horizontal equity, it's proportional.

If you're buying the expensive seats, uh court side, or you're sitting up in the upper echelons, the amount of tax you pay is proportional to the ticket of the price, and and there's equity in that way.

In terms of vertical equity, it tends to be a bit regressive, not because of the structure of the tax, but because you're taking an already fairly expensive item and you're adding to the price.

Does that further make it unattainable to low-income people?

Arguably.

Uh we were able to look at a number of other cities that levy these types of taxes and look before and after.

Atlanta just started levying their tax not too long ago.

We found no evidence that people stopped going to events, that the touring companies decided not to go to those cities, that business was in any way disrupted because of that.

So neutrality seems to be achieved through this tax.

Uh I mentioned a little bit about the balance, the three-legged stool.

I think this helps to improve that.

Uh, and then administrative efficiency again, easy for consumers, a small burden for the ticket sellers, and a new responsibility for city government.

The next slide talks about the legislative processes and legalities.

Michigan's law, um, Michigan's constitution says that cities should have the ability to levy taxes beyond the property tax.

But the ink wasn't yet dry on the constitution in the state legislature in 1964 said let's pump the brakes on this, and they enacted public act 243 of 1964 that says only when the state authorizes a local option tax can one be levied.

So should you as city council decide this is desirable, step one is going to the legislature and asking for an authorizing act.

Michigan has structured all of the local local option taxes in a uniform way.

The uniform city income tax, uniform, utility users tax, hotel mow taxes, they're all structured in the a way that the state law defines the rate, the maximum rate.

You may choose to levy less than the maximum.

It defines the tax base, it defines the disposition of the revenues, and and then you as a city choose, are you in or are you out?

So when it comes if the law is enacted, it comes back to city council and you have no discretion.

Should we define the tax base to be broader?

Should we ask for a higher tax rate, anything like that, that will be determined through the state legislative process.

If that happens and the legislature gives it the thumbs up, then uh uh subject to Section 31, Article 9 of the Headley Amendment, it has to go to a vote of the people whether they want to have that tax in place.

Ultimately, that rests with the people.

The next slide, uh, we're gonna look at the tax rate, tax base, and the disposition.

So 34 states have some sort of a tax that captures this type of activity.

In some states, it's part of the tax base for the general sales tax, whether that's the state tax or a local option tax.

Other states have an excise tax.

So the tax is levied to define only these types of consumption activities, and the revenue is dedicated to a specific purpose versus the general sales tax where the money goes into the general fund for any purpose.

Michigan is not one of those 34 states.

Uh obviously we don't have an admissions tax yet, but these ticket um ticket prices are not part of the state sales tax base either.

So right now there's no taxes levied when you choose to go to a lions game or a tiger game or Taylor Swift in town.

You can see from the um list of cities.

We we tried to pick cities that were sort of regional to Michigan, but also Detroit is one of four cities.

There's three other cities that have all four major sports teams within the city, right?

There's a lot of cities that have four major, but just like Detroit used to have the teams up in Pontiac or Robern Hills, um several of those other cities, it's in the suburbs or or something like that.

So only four teams, so we're sort of have a mix of the cities around us, but also that mix of others, and you can see here that the rates range from three percent Atlanta and Cincinnati to as much as ten percent in Denver and Indianapolis.

Chicago is an anomaly, they went all in on this, and they tax Netflix, and um if you're doing online um gaming in the sense of of you know kids playing video games, things like that, you're you're paying for that, there's a tax on that.

We didn't think that's appropriate for what we're looking for, looking at in Detroit.

Um, so really focusing on that range from three to ten percent.

Uh if you take a ticket of a hundred dollar, which is a pretty good ticket for a um, you know, a like a tiger game, but hard to get you in the door for a lions game.

But let's take a hundred dollar ticket, that three percent tax makes it a hundred and three dollar price, that ten percent tax makes it a hundred and ten dollar price.

Um next, we looked at what would that be the tax base, and we didn't try to define this to do the work of the legislative service bureau up in Lansing, but we envision obviously all the major sports teams, um the lesser level we have the G League basketball.

We included university um sports, the college sports several years ago.

You would say those are amateur athletes, and maybe we shouldn't be taxing them.

Other cities have had their taxes in place for purposefully exclude them.

Now with the NIL deals and everything, I think they're pro-athletes, and I I would include them.

Uh, you got the Grand Prix and the golf tournament, and then looking at the different Broadway shows and concert venues and things like that.

The next slide, um, it's important to think about what you might exempt from or exclude from the tax base.

Um we think you should exclude anything going on at the K-12 level.

So right now we're in high school football season.

Uh, if there's admission to get into the game, I don't think that's really in the spirit of what we're trying to accomplish with this.

Um, so many other cities exclude that, we think you would too.

Any activities staged by a 501 seed non not-for-profit organization, so like the Detroit Opera, the Detroit Repertory Theater, um, they have a tax exempt status.

Um, maybe there's some burden for the city, but sort of the purpose of the tax exempt is to give set special status to organizations like that.

Um events staged by government, whether that's the city government, county, school district, um, events conducted by the city, um events that cost less than ten dollars, you could set that at different levels, and the idea here is if the uh if the bar down the street has a a live band and there's charging cover for it, it's probably not what you're going for, right?

And the idea here is if the uh if the bar down the street has a live band and there's charging cover for it.

It's probably not what you're going for, right?

So and and again, in that same vein, setting a threshold.

Um we looked at Columbus, they said any venue of 400 people or less would be exempt.

You can set that, you know.

There's nothing magical about 400, it's a good working number.

So looking at those big um big events, the the gate, um, season gate for the sports teams, looking at the concerts that were held in Comerica and LCA, uh, looking at the receipts for the Fox here, Fisher, Masonic, um, which excludes some of those things that I ticked off.

If we go to the next slide, we estimated that a three percent tax could bring in at least 14 million dollars.

Again, you know, you start pulling in St.

Andrews and some other things, um, the golf tournaments may you're you're inching up on that, and then ranging as much as that 10% tax would bring in upwards of 47 million dollars.

So a fair chunk of change, but in the relative to Detroit's 1.6 billion dollar budget, um, is the effort worth the reward with what's coming in.

If we can go on to the next slide, um a couple of issues that we would recommend going forward.

Um first, there's some merit in this tax, it creates some more fiscal stability.

The the more diverse the tax structure, the less susceptible to economic variations where um income tax revenue might go down during a recession.

Do people change their entertainment uh budgets attending Lions Games or things like that?

Um, and it allows the city to recoup some of the cost of hosting these major events.

It's important that the tax be structured as an excise tax and not a sales tax.

I think that's generally the case, but in Michigan, where we have the constitutional provisions for the sales tax, if this looks like a sales tax, um, if it's going into the general fund, if it's very broadly defined, I think it's subject to legal challenge and and not accomplishing what you want.

Um, where that money would go, many other cities dedicated to public safety, again, tying it to making feel people feel safe as they're coming in, having the resources to do that.

Some cities use it for recreation, so the um the rec centers, right, helping the next generation to be the uh the next athlete out on the professional teams, things like that, sort of feeding that cycle.

Um it's been discussed that maybe the state of Michigan or maybe Detroit could have a fund that would help to bring in national events.

So I don't think you would use all of this revenue for that, but could you peel off 10 percent or something that over a number of years would go into that and help to bring in the next NFL draft or the next NCA tournament games, things like that.

And lastly, property tax relief, and we can go on to the next slide for this one.

So um looking at the 2026 property tax projections from the um not the last consensus revenue, but um the one prior to it back in March, I guess expected that 165 million dollars would come in through property tax revenues.

That means that each mill brings in about eight million dollars, uh 8.3 million dollars.

So looking at those different tax rates that we modeled in the best case scenario for revenue that three percent tax would allow you to provide about 1.7 mils of property tax relief, and then scaling up so a 10% would be about five and a half, five point seven mils of property tax relief.

I'm here to tell you all property tax relief is good for the city, but that's not a game changer, right?

Um we have a 19.8 mils currently scaling it back to 14 mils as in addition to the school taxes, the county taxes, everything else.

You're still gonna be a high property tax city, even if you dedicate all this revenue for that purpose.

For um for a house that's 100,000 house, the SEV of 50,000, it's about 285 dollars of savings.

You know, helpful, right?

Undoubtedly helpful, but it's still gonna be a high tax.

Um you have the slide decks and um Earth can make it available to you electronically, you'll find this on our website as well.

I included a number of the media citations.

Uh we got a lot of calls from newspaper radio, television wanting to know more about this, and I think generally very positive reception by the media and some of the TV stations put the the reporter out on the streets before a baseball or football game, and uh we heard positive comments from that.

So for what it's worth, um some interesting information.

Okay, thank you.

Uh first uh again, thank you for a well-detail report uh as well as LPD uh coming together uh for this report.

So uh just wanted to touch on a couple things.

Um of the common things that I heard you state through this, uh, even though we all know that there is a possibility to generate more revenue, uh, but it is not a game changer uh for the city of Detroit.

Uh and one of the things that I looked at that caught my eye in your report, and something that you know, uh through in in all transparency discussions you and I have had off the record, um, were what does that look like to offset one of Detroit's highest burdens, which is property taxes, um, which lead to obviously foreclosure, uh, which leads to other things, degradation of our neighborhoods.

When I look at this chart, um, and I see uh the mills, and I think you said close to about 300, and maybe to be generous, probably four hundred dollars if you taxed at the maximum amount, uh, it still doesn't provide the amount of equitable property tax relief that would be uh a game changer for Detroiters.

Uh, but yet it kind of in this report seems too if we raise the prices of those tickets, what'll happen?

We'll drop you know, residents, let's say they save three, four hundred dollars, uh, but if they are used to attending events, they're gonna they're gonna make that up paying for the new tickets, right?

Um, and so uh I I think as I as I look at that, you know, obviously there have to be other components that exist.

Uh I would also say something that was interesting that you mentioned uh that I talk about all the time, the difficulty of changing Detroit's tax structure, uh, is that those roles lead through the state legislature.

Um, and as many uh or some who may know, some who don't know, uh we even in regards to the percentage uh are at the whim uh of the legislature.

Uh so if it was a let's say a tax implemented and we say, hey, as Detroit, we want 10%, and the legislature says we're only gonna give you three percent, uh you're stuck with what comes out legislatively from Lansing.

And so I appreciate you noting that.

Uh I think that was important.

One of the things that I did want to ask though, question-wise, uh, as we look, and I think you have it on page, let me see, where you list the cities.

Uh yeah, I think this is page 13, and we talk about setting a competitive tax rate.

And your research as you looked at cities like Atlanta, as you looked at Chicago, as you looked at Cincinnati and on and on.

Um my question is relative to AMIs of that city, uh, what information did we find based off of the AMIs of those particular regions?

Um we found very low little correlation between how the tax rate is set and the um AMI.

Um as we know the the um the market is bigger than the court, the host city, right?

So when you start looking at that, it's a question of how far do you draw that dotted line around the core city to capture that AMI the revenues um you know looking at some of these other cities we didn't feel like the revenue was reflective of the AMI either.

Is it more reflective of the tax rate being set um and and therefore how much revenue are gonna come in?

And and I and I bring up the AMI because you know when we talk about amusement tax and entertainment tax, and my thoughts uh if this were to be implemented and I uh and I'm not to say that it down the road this may not be a tool that we can use as a city.

I I have always been on the record state, and I'm opposed to it, so I'll start there.

Uh at least right now.

Um I always think about how that affects the average Detroit that lives here that may already have a problem with ticket prices uh and attending a game in the city that they actually reside in, uh, and then raising those tickets higher, uh, probably to a point where they may not even have the ability to access those games even more.

But I I wanted to, you know, see if there was a parallel between the cities in comparisons to AMI, where folks land, um, and their rate of income and what they generate, you know, what does poverty look like in some of these cities as compared uh to here uh and see if there was any correlation.

Yeah, we we didn't really find any, and I would just note um you know, you your point earlier if they're saving 280, 290 dollars, if they attended every home game for a tiger game, they're still better off with the property tax relief.

Right, right.

So it's taking an expensive thing and making it more expensive.

That's un undoubtable, but this 10% tax will provide some report.

This is a better bit of me personally, you know, adding to this.

I don't think it's a game changer for people that have the wherewithal to attend in the first place.

And so my second question uh that I kind of wanted to dive in, and you you kind of mentioned it.

As we look at let's say a Chicago, let's say as as we look at it, Atlanta, uh, you look at you know, other places, Miami, whatever the case may be, when we talk about the potential uh entities that we are willing to tax, those uh entities in those cities generate more revenue because they are considered bigger markets.

Uh so let's say uh you look at a game uh in Los Angeles, uh it's a bigger market, more it's televised more, it generates more revenue, uh sells more tickets or or tickets are higher, but the but the market is bigger, so the pot that we could potentially draw from, let's say if the market was bigger would help us generate more revenue based off of these percentages.

Um your thoughts, just asking your thoughts.

Uh obviously, in an era that we are in, we just got all our sports teams back down here.

Um they're playing very well, thank God.

Uh, and so we are now becoming televised more, the market is approving more, we're gaining more attraction or attention.

Uh as we looked at those as as just in your opinion, as we look at those cities, do you think market-wise Detroit is where they need to be uh possibly right now to you know generate or or create a tax like that?

Because I always worry about tax shock as as well.

Yeah, I mean your point was some of the bigger cities, uh Atlanta and and Chicago, um, but on the list clearly Pittsburgh and Indianapolis and Cleveland is sort of Cleveland proper is smaller than Detroit.

So it's on both sides, and we have 34 states that are levying a tax of some sort on these entities.

Um arguably it's cheaper to buy a ticket to a lot of events in Detroit than clearly New York or Chicago or things like that.

Um but it's not cheap.

Uh it's just you know, sort of relative.

Um and whether they're on television or not doesn't affect the ticket price.

You're only getting people coming through the gate, and therefore it's more about how well the team's doing than lions prices just keep going up and up and they keep selling out regardless.

So I think the market you're still in a city metro city of four million people.

Um a lot of people interested in both the sporting events but also Broadway plays and concerts and things like that.

Um if the entertainer is good or if the product is good, people are gonna pay.

And finally, this is and I'll turn it over to Member Santiago Romero.

You know, one of the things that you mentioned here was talking about the potential of we did NAS in some of these cities under the research, you didn't see drop-off in attendance or drop off and change the venues, or maybe lack of interest for folks to uh host uh in those cities.

Um my question that I have specifically um were was that to like all events that was concerts, et cetera.

We we we didn't see a drop-off in the number of concerts based off of you know, and I think about this for our promoters as well, noting that there's going to be a higher charge for them to host their events at these venues.

Um so we did look, and Atlanta gave us an opportunity because of the recent implementation of the tax.

It's hard to know the null case.

We don't know who didn't go there because the tax was now put in place, but uh we were able to look at attendance at the um Atlanta Falcons games and Atlanta Braves games, and there was no change in attendance because the tax was put in place.

Um and we did give some thought will will a promoter will uh um an entertainer choose not to come because the tax is in place, and I keep coming back to the idea that there's 34 states that are levying this tax.

You can't skip Detroit and go to Cleveland, Columbus, Chicago, Indianapolis.

They have the tax as well.

You you're not gonna escape this tax in any major city, and they're not gonna go to Alpina to do it.

There just isn't enough people to make it worth it.

They're gonna come to a big city, that's where the revenue is, that's where the people are, and every big city in America but Detroit has a tax of this sort.

And finally, my final question.

Well, we could do comparisons to some of the sporting venues and the events, um, as far as seating.

Uh, do we find they they hold more seats than Detroit, or the seats that we have in our arenas and our stadiums, are they comparable to other major cities?

They're they're comparable.

Okay.

Thank you.

Thank uh Chair recognizes member Santiago Romero.

Thank you, Mr.

Chair.

Um, good afternoon, everyone.

Just want to first excuse myself and my tardiness.

I sent out a memo that I would be tardy.

We made announcements of truck routes today, so that's exciting.

Uh so I apologize, but I'm here excited about this conversation.

Uh thank you, Eric, for being here.

I'm a big fan.

I read a lot of your work um and excited that you did this with your team, because I am in support of this.

Um, me and my colleague can talk through the the the ifs and ands and and whys.

Um, but I think this gives us a lot to uh for those of us that are excited about something like this, the information that we need to continue to advocate for this.

I have quick questions.

Um, so is it am I correct?

Even if we call it an access tax access excise tax.

Um English is not my first language.

Um, but if we call it that, we still need to have permission from the states, correct?

Okay.

Um and essentially the steps are getting permission from the states, figuring out the tax, getting permission from the people.

That is our our timeline if we were to it if we were to move this forward.

That's not going to be easy whatsoever.

Um, and I know that that's something that we as a city um hopefully our next administration can use our lobbying power, our organizing power with other cities, other electeds that that you also mentioned in the reports.

Um that's I I think the next step that we're at, correct?

Because I agree with you.

Um we are I think behind on this by by not moving forward on some kind of um sales tax or admissions tax.

Um, quite frankly, I can't even afford to go to a lions game now.

Somebody has the money they're gonna go, might as well tax them to put that money back into public safety infrastructure um programming for for the city.

Um, and for me, understanding that um the tax relief is not as as as big as we need it to be for Detroiters.

It is it is a a a relief.

Um I'm incredibly excited to think that we would get anywhere from 10 to 40 million dollars because that funds departments.

I I've learned that that that can fund programs that can fund our CVI programs.

Um that's really what what interests me, and of course, relieving um some of the tax burden uh to residents.

Um I guess has and and I see that you have other articles from other cities that have been responding positively to this.

Do you have a sense of the possibilities of this?

I think things are looking a little crazy at the federal at the state level right now, unfortunately.

Um but what do you see in the horizon?

Is this possible, especially seeing other states?

Um you're right.

Um I I was speaking with um uh someone that runs a major project here who does a lot of work in Texas, because Texas has a a a funds that supports their entertainment and in major events, um, and they see it as something um that is net neutral when they're able to tax reinvest that money, make the money, um, and and have these major events there.

I I don't want to lose out on these opportunities, and other states are already doing this work.

Have you seen Texas or other states do this well?

Um, and do you think at the state level there might be interest in doing this in Michigan as well?

Yeah, so on that question specifically, the Citizens Research Council does policy, not politics.

Um we haven't talked to any legislators or lobbyists.

I cannot give you any direction on that.

Okay.

But on that question, um, part of the reason why we looked at Grand Rapids and Lansing and East Lancing in the in Arbor is um my general sense from having been doing this work for a long time.

If this is a project for Detroit, it's a tougher sell.

Right.

If it's a project that other big cities in Michigan relative to their size would benefit from trying to navigate State Street on a football Saturday in Ann Arbor, Haggerty Road on a football Saturday in East Lansing.

If there's some relief that comes from that, some ability of those cities, maybe you have some partners in arm to um go to the legislature.

Um the yeah, the other states, I think this is fairly new.

Texas, I I've seen in some of what we were reading about this.

Texas has a fund set aside, bringing in Super Bowls and NCA tournaments and um arguably paying off.

And you can do the math right that this would become cyclical.

You put money into the fund, you bring in this a big event, it draws people from nationwide.

They pay a lot of money because it's a national event.

You levy the tax on that, and now you have more money to bring in the next thing and and do the next event.

Um I don't I'm not aware of like I I don't know of any source where you can look through and say of the 20 biggest cities, 18 are doing it or something like that.

I I just not aware of that type of information.

Okay, thank you.

This all seemed that fund was the first time I've heard of it, and and I think it is newer, but I I see the benefits of it.

Um so just really wanted to to get that clarity of like really what we have to do moving forward.

I agree we need to work together uh with our state legislators and other city legislators so that we're able to push this forward because until then we can't make these things happen.

But I'm excited, thank you for the work.

It's been really helpful to read, exciting to read, um, and I will continue to try to push this forward.

Thank you.

Thank you, Mr.

Chair.

Thank you, Member Santiago Romero.

Uh I do have one question, um, and and I'm glad she brought up Texas, because I had one question that I forgot to ask.

Uh, in your research, as we looked at a lot of these other cities as well, a lot of those states have different tax structures.

So for instance, Texas doesn't have a state income tax uh that they uh you know impose on their residents.

And uh Chicago has a local sales tax option, which I think is about 11%.

Uh so if you live in Chicago, you used to be a tax anyway.

But um do you have like a list uh of some of these cities that you have uh in their tax structures that vary?

Um, you know, what do we see that is one thing that is consistent throughout these cities who have implemented these taxes?

Because what I see on this list, the two most recent cities that have incorporated an income tax, obviously, is Columbus and Atlanta.

Those are the two most recent cities uh in the past decade.

Uh others are over 40 years old or 50 years old, as we see.

What do we see that is consistent or comparable?

Yeah, so Texas, you know, we we don't have Dallas or Houston or some of those cities on this list.

Texas is one of the few states, as you say, that don't have an income tax, and there's a number of states that don't have a sales tax.

Every state has a property tax of some form.

Um the commonality, I think, with these list of 10 states, there are 38 states that authorize local option sales taxes.

Um the idea of paying a consumption tax is something their residents are pretty used to.

So to go to them and say that we want to include this in the base of the sales tax, or we want an excise tax that looks like a sales tax and and acts like a sales tax, but is treated a little bit different, is not such an anomaly that they're they're thinking about it in a different way.

Um but for these states generally, Ohio, Colorado, India, and uh um they they have that three-legged stool to bring in their income from consumption income and um property taxes.

And finally, my last question, uh, because you mentioned the interesting point about the big four uh cities that have all four.

Um, you know, obviously Chicago, uh, and I think Atlanta has a big four.

It's Chicago, Denver, Philadelphia, and Detroit.

Okay, Chicago, Denver, Philadelphia, and Detroit.

Oh, that's right.

Atlanta does not uh have a hockey team.

No.

Uh so uh as we talk about some of these cities, um, again, give it to me again, Denver, Philadelphia, Philadelphia, Chicago and Detroit.

Chicago and Detroit.

Uh as we look at like some of the other ones like Columbus, um, and we look at them, they do uh what I'm looking at is a five percent tax, but they're generating 22 million dollars in revenue based off of I'm assuming hockey uh and I think they have uh hockey, they got minor league baseball, they've got a professional soccer team, the whatever they call it, MLS, MLS team.

Um and it's a rich entertainment venue, you know, a lot of Broadway plays and concerts and things like that going through the city.

And and do we see a lot of diversity?

I I know one of the things in the recommendations on here as well, um, obviously stand away from nonprofits and their events, city events.

Uh I thought it was interesting about uh and I know that's kind of a hot take probably with the universities, but um do we see in some of those other cities they generate a significant amount of revenue?

They they do the same thing for their universities as well.

Uh the cities we looked at um are generally exempted the university sports or the university types thing, but this NIL deal is so new that um they had their tax system in place and then the NIL occurred.

Um Detroit would have the luxury of knowing the playing field as you think about it.

Yeah.

And I and I, as always, you and I always have this this discussion.

I appreciate the policy.

I think the politics attacks in Wayne State would get any legislator killed here.

So but uh I you know, certainly uh, you know, again, in my opinion, in the future, uh, if we grow uh and it broaden our market, I do think there's an opportunity.

Uh and in my opinion, I always just say I don't think we're there yet uh as as we're growing.

Um but again, generating revenue is generating revenue.

Uh the question becomes how much uh and where you put it.

So uh that concludes my questions.

Uh Mr.

Corley, did you want to chime in?

Thank you, Mr.

Chair.

So uh these comments are coming from Mr.

Corps.

You know, I we need revenue.

We need diversified revenue.

And right now, um, we're gonna be more reliant.

The city of Detroit's gonna be more reliant on its own revenue sources with you know, federal dollars going to ARPA, you know, and some of the state dollars, you know, they may be coming in at a lesser amount.

That means that we're gonna be relying more on our own money, our own revenue.

So the more I know 47 million doesn't sound like a big amount in the overall scheme of things.

That's 3% of the 1.6 billion dollar budget, but it's 47 million dollars.

You know, that's 500 police officers or firefighters.

That's 670 um non-uniform employees.

That's departments as Council Member Santiago Romero indicated, you know, that could generate from that.

Um, you know, I I personally think this may this may be an opportune timing to go to Lansing, you know, do the line be in.

Um, because that's Mr.

Umford indicates there's other cities that could benefit from this.

So you know, you don't know, unless you try.

And I I just personally think that we should try.

You know, we we need diversified revenue.

Um, and it's so hard, and Mr.

Lufer C and CRC has written on so so many, you know, reports on this.

It's so hard to generate new revenue in the city of Detroit and state of Michigan for that matter.

You know, with the constitutional, you know, limitations, you know, it's just so hard.

You have 34 other states that allow for this.

Why not Michigan?

We need to, you know, we need to become more, you know, involved, you know, involved like the other states.

So I, you know, I just I just hope that either this current administration or next administration would try hard, do the lobbying and see what happens.

Thank you.

Yeah, and I there are oftentimes, Mr.

Corey, I wish I could travel back to 1994 as well.

Uh uh being the legislature has some of those talks.

Um, but but to your point, I I think you're right.

That's one thing you and I always agree on.

We do need to find different revenue sources to to help fill some of the gaps that we have.

But what I gather from this report and just the recommendations taken back, is stated not putting that money into the general fund, but putting it into specific areas.

So we would not be able to, let's just say, if we followed the CRC's recommendation, be able to utilize that for police uniforms.

We wouldn't be able to utilize that for any cost that come out of the general fund.

Uh, but more so, I would think from the recommendations, and that's not to say that we can't.

I mean, again, that comes from Lansing, depending on how they prescribe it to be.

I think you know, if I if I was the guy leading it, uh, you know, I would mostly likely want to push it towards property tax relief, which is one of the biggest burdens that our city faces.

Um, and channeling it into that.

But that also frees up our other opportunity to for our general fund, right?

Uh, if folks uh are able to stay in their homes.

We uh don't have to spend as much on right to council.

We don't have to spend as much on some of the other programs that we have if folks have the ability to pay their property taxes, right?

Uh so I get it.

We send out less hope applications uh if folks have the ability to pay property taxes and stay in their homes.

So it's a it's a significant trade, it's a significant trade off.

Uh but the question becomes is it going to be enough to be able to serve the amount of Detroiters and make the impact on the amount of Detroiters and homeowners here that we would want it to.

So I, you know, I'm sure all three of us can go all day talking about this, but I gotta move on in our agenda.

But I I want to thank you so much uh because this is a highly anticipated report.

Um and I wanted to afford the time to have that discussion.

Member Young, uh, who has submitted uh uh his excused absence today.

I know he's going to be uh a little bit disappointed he missed this, but um uh we'll get any other questions that we have to you, but thank you so much for your diligence, your time uh putting together this report.

Uh as always, I'm a big fan as well.

Uh and appreciate the discussions in the past and and appreciate you as well, Mr.

Corley and LPD.

Um with that, is there a motion to receive and file line item 5.1?

So moved.

Hearing no objections, that action shall be taken.

Thank you very much.

Next we'll move to line item 5.2 status of council member Mary Waters submitting a memorandum relative to analysis of the fiscal impact of the big beautiful bill of Detroit and upcoming fiscal years.

Motion to discuss line item 5.2.

Motion.

Thank you, Member Santiago Romero to LPD.

Uh, do we need a little bit more time on this considering uh what's happening at DC right now?

Mr.

Chair, um, if you can bring this back in a couple weeks, we do I do have in front of me um from assessors an updated uh pamphlet or um memo that would go out to the uh potential um purchasers of homes in City Detroit, you know, explaining Mr.

Corley, really quick.

This is the memo regarding the big beautiful bill.

Um but we're you're a little bit ahead of, we're getting ready to go on the 5.3.

Gotcha.

But do we need more time on the uh uh fiscal impact analysis of the big big beautiful bill I hate to call it that, but it gives a monthly okay.

Is there a motion to bring back line item 5.2 in one month?

Motion no objections, that action shall be taken.

Next we'll move the line item 5.3.

And if Member Santego Romero, we can take line items 5.3 and 5.4 together.

Motion.

Thank you.

Uh line item 5.3 status of the legislative policy division submitting flyer property tax rates suggest when property is transferred from council member Mary Waters.

Uh, and 5.4 is a memorandum relative to establishing the pamphlet on Detroit property tax rates for real estate's sales.

Mr.

Corley, to you, and we have Mr.

Horn here with us as well.

If you would like to join us at the table, we will discuss line items 5.3 and then 5.4.

Yeah, Mr.

Chair.

Uh I was really excited to see an updated um form that could go to the potential, you know, um property um homeowner purchases.

And uh as Mr.

Elvin would go through, Mr.

Horn would go through is a nice um top five things that you should know about buying a home.

So I'll let him uh go from there.

Thank you.

Thank you, Mr.

Corley.

Mr.

Horn, please state your name for the record, sir.

Alvin Horn, Deputy CFO and Assessor for the City of Detroit.

Good afternoon, sir.

Good afternoon, ma'am.

Afternoon.

Afternoon.

So this is in response to both Councilmember Waters and Councilmember Santiago Romero's request that we do more to inform property uh potential property owners what they would face the both the pros and the cons as far as the tax consequences of uh of buying a home in Detroit.

So the letter, uh the notice of uncapping is a letter will go to within 30 days of of being notified for sale, it will go to every property owner who's bought a home in the city of Detroit.

It will let them know what to expect going forward, uh, what their options are as far as appealing the taxes, uh, that they should look for to if they're in an NEZ area, they can apply for the abatement for the principal residence exemption.

The other letter that Mr.

Corley is referring to, and this is a joint effort between LPD and assessors.

This is gonna go to every property in the city of Detroit at least once a year.

We're still trying to figure out if it's gonna be a separate mailing or if we'll include with the assessment analysis, but it will go to every single property owner in the city, and hopefully it will hit those people who are renting properties or living with someone and who is who are thinking of buying a home, they'll see this.

Uh, we also have a third uh thing we would like to show you.

And this was done at your request, ma'am.

We've been working with do it to create an online tool.

Uh Cynthia Burton should be online.

She'll she'll do the driving for us.

It will allow you if you're thinking of buying a house and you've got the address, you can go on on the city's website, punch in the address, and it will tell you what the estimate taxes will be next year.

So you have some idea of what you're getting into.

Good afternoon, everyone.

Uh the my uh screen sharing capabilities are disabled.

Thank you.

Uh Mr.

Payne, if you can grab Ms.

Burton uh screen sharing capabilities, and also if you can state your name for the record, ma'am.

Thank you, Cynthia Burton, deputy assessor for the city of Detroit.

Okay.

If you could raise your hand really quickly via the Zoom feature.

Oh, looks like we got it.

I have it now.

Thank you very much.

All right, thank you.

All right, so on the city of Detroit's uh home page with just a few clicks, you will receive an estimate of what your tax bill will look like as a uh prospective home buyer.

The property tax estimator tool takes next year Senator uh state equalized value and multiplies it by the current city milletry.

So right in the middle of the home page, right where it says more services, you just simply type in an address.

And right here in the center, it provides an estimated property tax amount of four thousand seven hundred sixty-seven dollars and sixty cents for this property located at 8149, Indiana.

So move on to do a second example.

And here you will see that at 2478, Glendale.

Uh, if the this first if this property were on the market and it was sold next year's estimated property taxes would be $3,435 and 96 cents.

And then lastly, I'll provide a third example.

And here you'll see for 4008 Chancellor.

Uh next year's estimated property taxes would be $3,082 and 50 cents.

So I will take for our office will take any questions that you may have.

And to the chair, if I may add, um, in addition to the estimate, there's a page that will take a property owner and will take a property owner to a page that will explain the different types of abatements that may be available.

If it's in the NEZ area, what that reduction would be, what a PRE would do for you as far as your taxes.

So this is a work in progress, but we want to get something together for the new year, and then as we experience, get feedback from people, we can modify it going forward.

Thank you.

Um I just want to say the flyer looks amazing.

Umestly, probably one of the best flyers I've seen from our city in a while.

Uh I like both sides, the first side of the flyer.

Uh, obviously, very simple.

Um, easy to read, very user-friendly, and then the back goes into deeper explanation of uh five things to know.

So I just wanted to give a shout out to you, your team, and member waters and everybody uh LPD who's poured into this flyer.

Uh, I think it is a really good thing for our residents.

Uh you guys have done an amazing job.

And that's that I will pass your compliments on to Stephanie Davis and OCFO and Trina Millborn and Assessors, they took the lead in putting this together.

I did not think I did not think you did it yourself, Mr.

Horn.

You are a very talented young man, but I I don't see your fingerprints on this work.

No, but but it but in all but all seriousness, uh you your team as well as everyone involved uh have done an amazing job.

And I think this will help the transparency is very important uh in this process.

Um, but I I think you know, also education uh about how the process works is is equally important.

And I think you guys have done a great job with this flyer.

So thank you again.

Has off to you, sir.

Chair recognizes member Santiago Romero.

Thank you, Mr.

Chair.

Wholeheartedly agree.

Uh great job, and thank you so much.

Um get emails of of new people moving into the city who are just very surprised.

So just allowing them to plan, I think is incredibly important, being transparent and having them be ready and prepared while we do our job to try to lessen the tax burden.

Um even talking about uh um an entertainment tax.

Um if we're supporting you with an uneasy, if we're doing some kind of tax relief, then maybe more people will move into the city and help us um with with more income as well.

So I'm just grateful.

Um, we will I see that it's live now, so I just checked it online.

Um, so if it's okay with you, we're gonna begin to share this to the public so that they know that a lot of friends were trying to find housing in the city right now who are really terrified of taxes and what's to come.

Um, but I'm trying to have them prepare be ready plan um and and realize that we do have resources um and we are trying to to address the tax burden here in the city.

Um, so then just for clarity, these are two different letters.

Correct.

This one, the five things to know, which is great, um, once a year, and this one is this when you purchase a home.

Correct.

Okay, understood.

Um, well, amazing.

Thank you.

I really appreciate this.

I have no questions, just a lot of gratitude.

Thank you.

Thank you.

Thank you, sir.

All right.

Thank you.

Seeing nothing for oh, anybody anybody else?

Miss Corley, we're all good.

Okay.

Uh seeing nothing further, uh, is there a motion to receive and file line items five point three and five point four?

Motion.

There ain't no objections, that action shall be taken.

Next, we will move to uh new business uh under the Office of Contracting and Procurement Line Item 6.1, submitting a resolution of authorization for contract number 6007 188, 100% city funding to provide reconfiguration and implementation services for the Oracle Project Portfolio Management Model Contractor Vigilant Technologies LLC Total Contract Amount 449,396.

And this is for the Office of the Chief Financial Officer.

Motion to discuss line item 6.1.

Thank you, Member Santiago Romero joining us.

We should have Ms.

Yelder Terry Daniels and Nadim Zaya Zaidi.

Zaidi.

I hope I pronounced that right.

I see Ms.

Daniels, though.

Good afternoon, if you can state your name for the record.

Good afternoon, Terry Daniels, Director of Office of Development and Grants.

Good afternoon, Nadine J Director of ERP.

Okay.

And I don't know if we have anyone else joining us, but if you can just give us a brief overview of this contract and what it what it does and why we're pushing it through.

I can go ahead.

Good afternoon, Mr.

Chair.

This contract is for an expansion for an additional module in the our Oracle ERP system.

This particular module will allow us to uh manage capital projects and also our grant projects.

A lot of this work is being done manually now through Smartsheets and spreadsheets and other um external databases, and this will allow us to bring um all of that data together and manage those projects and be fiscally responsible with them.

Simple enough for me.

Um chair recognizes member Santiago Romero.

Thank you, Mr.

Chair.

Good afternoon through the chair.

This is for a one-year period, it says, is this going to be the case?

Is this just the implementation?

And then we'll have it.

We can use it.

Can you explain that timeline and how we'll use this?

The implementation will be up across across one year, but we will be using this module as long as we have the Oracle application license because we're just paying to implement this new module.

That is correct.

Okay.

Um Mr.

Chair, I um Oracle's been on the news a lot recently.

Um, and quite frankly, have questions that um I have concerns um with data in the connection to the company itself and the owner, and to not make this political, I will ask these questions offline.

Um, I know that when we first started, when I first started my term here in City Council, Oracle was not easy to use.

Um, and I believe we even had conversations about um utilizing a different kind of software or service uh for the city.

Um, so this is where my head is.

And um, who can I talk to about this?

I'm assuming Director Stahl.

Um, but who else in the city works closely with Oracle for me to get a better understanding of uh where we are um in the commitment to this company um and and the and the needs that we have as a city?

I believe that would be me.

Uh you can talk to me about Oracle application and you can have a composition on that.

Okay, so then um my staff will make a note and we'll reach out to you soon.

Thank you, Mr.

Chair.

Thank you, Member Santiago Romero.

Is there a motion to send line item 6.1 to formal with a recommendation to approve?

So moved.

Hearing no objections, so that action shall be taken.

Thank you, folks.

Next under the Office of the Chief Financial Officer will move to line item 6.2, submitting a report relative to the financial report for the one month ended July 31st, 2025.

Motion to discuss line item 6.2.

Motion.

Thank you, Member Santiago Romero.

We have joining us, Mr.

Donnie Johnson.

Good afternoon, sir.

Please state your name for the record and then proceed.

Good afternoon, Mr.

Chair.

Um, Member Santiago Romero.

I am Donnie Johnson and I am the acting deputy chief financial officer and budget director for the city.

Um, I'm going to share my screen.

If Mark can thank you, Mark.

Um then I'm going to.

There we go.

Um, okay.

So today we are here to discuss the uh monthly financial report for the one month ending uh July 31st, 2025.

So this is the first month of the fiscal year.

Uh some highlights that we want to note are um the Office of the Chief Financial Officer received the GFOA, the Government Finance Officers Association Certificate of Achievement for Excellence and Financial Reporting for the seventh year straight based on the submission of our FY24 ACFR, our annual comprehensive financial report, or as many people colloquially call it, the audit.

So we're very proud of that.

And the FY 2026 budget was awarded the GFOA Distinguished Budget Award for the third straight year.

And we also received a special certificate of recognition for our budget preparation and adherence to strict adherence to program standards.

So I'm personally very proud of that and the hard work my staff put in to prepare a budget that is worthy of an award.

And then on September 11th of this year, um, a couple few weeks ago, the public lighting authority did close on their bond refinancing through the Michigan Finance Authority.

The transaction uh did provide a present value savings of $7.446 million or about 5.13% of the refunded bonds.

And this equates to an average annual debt service savings for the PLA of around 1.19 million dollars between uh fiscal year 2027, so the next fiscal year and uh through 2045, fiscal year 2045.

So very good news.

It was a very successful um bond refunding transaction.

So on to the budget versus actuals report.

Um in the period of July and well, year to date, which is also the period of July, um, we did see a shortfall in our income tax.

This is sort of as we've been discussing.

This is a continuation of that.

It was a shortfall in our corporate income tax um collections in that time period.

Um in expenses, uh, the item that I would call to your attention is the employee benefits category of expenses.

You can see that on the um both period, well, um year to date, it is a 3.7 million dollar overspend in benefits, but we're under budget on expense on salaries.

And this is because we've just recently received guidance from Plant Moran, the our um third part, our external auditors, that we actually need to reclass almost a substantial chunk, almost the majority of that 3.7 million over to a fiscal year 25, back to fiscal year 25.

So they they were actually payments that are um payments that are dictated by contract for the fire department, and we had booked them in 26 and plant's guidance is that we should move them back to 25 where they were earned officially by the um employees in question.

So that will come down and that will be scrubbed out of the report as we move forward.

We only just received this guidance after we had already prepared and submitted the reports.

Um so on the whole, that does leave us with um a period deficit of 5.5 million dollars.

Um, I would say in terms of expenses, you do see a number of um overspends in these categories.

This is really going to be timing, you know, as we've talked about in previous early in the fiscal year financial reports.

Timing is really how we what we attribute um this overspend to.

And um sorry, one okay.

Um, and uh we expect that these will smooth out over the next few months.

Um it's just a timing of expenditures.

The next slide is our budget uh projection slide at this time because we're only this report is only one month into the fiscal year.

We're not really projecting any major deviations from the budget.

Um, I suspect that our monthly financial reports we may start to show projections a little bit earlier than we normally do because of the um uh activity that we're seeing related to our um income tax revenues.

So we may start to show some adjustments there.

On that point, this report does show revenues that are the February revenue conference numbers.

It is next month's report, the August 2025 report that will be updated to show the new September 2025 revenue estimating conference numbers.

So right now, this is bumped up against the February numbers.

Next month, when we look at this report, we'll be looking at the the newly adopted revenue numbers as part of this report.

Um, continuing appropriations, uh a number of these items are going to be uh, as we've noted before, moving out of fund 1000 into um other general fund series uh general fund class uh funds in order to be more compliant with PA2 and the rules around balance forwards and the expiration of a general fund at the end of a appropriation period.

Um but for now, uh everything balanced forward that we were expecting to balance forward or that we received authorization from this honorable body uh to do.

Um no major changes here.

I think a number of these items we do expect to spend out in this current fiscal year.

So I don't expect that they will carry forward into the subsequent fiscal year, fiscal year 27.

And uh finally for my portion, this brings us to the employee count monitoring report.

Um, as you can see, we did have some success in the police department.

We had some um successful recruitment there in the fire department.

You'll see a large increase.

That is the new fire class.

So the fire trainees are considered you know, they're on the payroll essentially.

Um, and so we see it a large and successful class currently moving through the academy for the fire department.

Um and public works has also had some success in recruiting a number of their um road maintenance crew um positions.

Overall, however, you can see sort of right in the middle of the slide where we have a row called position variance over under budget.

You can see that despite our successes in some recruitment areas, we do continue to be substantially under budget in some departments in terms of the filled position.

So we have a large number of vacant positions um throughout the city.

Um, and that is um, you know, uh something that we continue to work on with recruitment activities, um, but that has also been you know beneficial for us as we are working to you know maintain a balanced budget and monitor our revenue situation.

Uh, that is something that we can also be confident that we know that we have enough resources available to us um as we move through the fiscal year.

Um the next slide.

Um, I believe that our um acting treasurer Valeria Goalie is also on the call.

And uh if she could be promoted, um she I know she's going to cover the remaining slides of the financial.

You can promote her good afternoon.

Um I'm Valeria Goli.

I am the acting deputy CFO and treasurer for the city of Detroit.

So I'll pick up with slide eight.

This is our slide on income tax collections.

This is only one month of data, so frankly, we're not putting much stock into the difference.

Um, for example, individual is quite different, but we really want to see what happens next month.

We just believe that's a timing issue.

Um, and again, with corporate income tax with just one month of data, it's it's hard to make any kind of generalizations.

Um on the next slide.

Oh, my apologies, Valerie.

Thank you.

Oh, that's okay.

Um, is that the next one?

Oh, I'm sorry, it skipped to the slide.

My apologies, everyone.

No problem.

No problem.

I'm still I'm learning technology.

Okay, this is um our slide on cash position.

You'll notice we added a column that will show you the variance um of our cash position from the prior year in July 2024 to this month, um, 2025.

Um there are some big differences, the same kinds of things that I tell you about ARPA spending, um, capital projects.

There was quite a bit of spend down in bond proceeds.

Um and those are really the only remarkable changes.

Uh we still are our um cash balance is about 1.8 billion, which is very strong.

The next page so shows our operating cash activity.

You can see um for actuals ending July 2025.

We have 838 million um in cash uh in our cash pool.

And um again, we don't have any concerns there.

And then finally, this is the AP slide.

Um it's typical of what you see.

Um I will note though, in the upper right hand corner, you can see July.

There's a large amount in that bar graph of not on hold.

And that's just because of the process that AP uses where um they cancel all invoices at the end of the fiscal year, in this case June 30th.

And then um those uh if there are invoices attached to POs, those get reinstated.

And that concludes the financial report for the month of July.

We're ready for any questions.

Thank you.

Any questions?

Okay, thank you very much.

Seeing none, is there a motion to receive and file?

Oh, I'm sorry, Mr.

Corley, pardon me.

To you, Mr.

Corley.

Thank you, Mr.

Chair.

So FD has some questions on this month report.

Again, um, kudos to the OCFO on the awards that they spoke about on page um three.

And we can go there, page three.

Uh yeah, sorry.

So on the last budget, um, we were interested in more details about the public lighting authority um sale.

Um and best practices is that if you can achieve a three to five percent uh present value savings due to a refunding or refinancing, that's good.

And obviously five five percent uh it's is very good.

So that's worth noting.

Um also this bond cell got a uh minus rating, credit rating from both standards and poorers and fitch.

And so it shows that the pledge of the 12.5 million dollars from the utility uses tax that we go that goes to the public mining authority uh based on um uh state legislation both as well for the public lining authority.

Um, and also we found that this sale enabled PO PLA public authority to put to the side another 10 million dollars for um projects.

And so we were interested, so council during the this past budget process express its interest in you know, could there be more um uh could there be a restoration of mid block lighting throughout the city?

Uh could there be um maybe more uh Lighting throughout the city?

And uh fortunately, the public lining authority indicated that they will be looking at that, you know, because of the additional funds that they receive through this refinancing.

And if they uh codify that in the in their lighting plan, they will that would make that available, you know, to city council uh to see that.

So I thought that was very good.

Um just around the report.

Basically, uh our questions that we had were covered by uh Mr.

Johnson and uh Ms.

Ed Goldley.

So I do not have any more comments.

Thank you so much.

Thank you, Mr.

Corley.

All right.

Uh is there a motion to receive and file line item 6.2.

Motion hearing no objections, that action shall be taken.

Next under the office of the chief financial officer, line item 6.3, submitting a resolution of authorization establishing the fiscal year 2025-2026 corporate income tax reserve fund.

Motion to discuss line item 6.3.

Motion.

Thank you, Member Santiago Romero.

Mr.

Johnson, you are back up.

Yes, yes, I am.

Um, so this resolution uh will establish a um a re uh what's called a revenue reserve uh that will backstop the expected losses in our corporate income taxes for the current fiscal year.

So right now we are expecting our corporate income tax revenue to fall short by about 42 million dollars in the current fiscal year based on current collection trends and our experience in fiscal year 25.

So we are proposing that we take 42 million dollars of the um expected um current calculated FY25 fund balance and set it aside as an assigned fund balance that would be appropriated onto the books as a revenue, the prior year resource revenue, and that will be there to ensure that if those corporate income taxes uh do turn out the way we expect, the way we are projecting, um, we will not incur a general fund deficit overall.

We will have a revenue resource, a resource that is ensuring that any shortcomings in corporate income tax is covered by this other source.

If it's not needed or if only a fraction is needed, whatever remains of the 42 that isn't um let's call it um utilized for the backstop will revert back to unassigned fund balance at the end of fiscal year 26.

And then we would have a conversation again for fiscal year 27 if we think that it's necessary to you know uh do another reserve or or take some other uh preparatory action based on current revenue trends.

Thank you.

And what I will say is uh at the press conference when we announced this, Mr.

Johnson, I think it's a really good idea uh moving forward, considering the unpredictability of what's happening now federally, we see uh on TV uh relative to the way the budget is going federally.

Uh we see what is happening as we speak right now uh in the state legislature.

Uh uh and I think it is a very good idea as we talked, even our last conversation when we the the need to generate revenue as we talk about remaining fiscally stable and doing what's fiscally prudent to ensure that we don't have deficits here in the city of Detroit and that we don't face um you know uh we don't face a situation uh where that loss of revenue from corporate and uh corporate income tax uh will affect us overall.

I think we've got to do and put uh the necessary things in place to make sure that we're safe.

Um and what I like about this resolution is even though it goes back to the um uh unassigned fund balance, uh there's still opportunity for the next administration, whoever that may be to help utilize that for council priorities uh in the upcoming budget after that.

Uh and so the money does not go away, but it just finds a way to provide protection for us uh in these uncertain times, particularly within this next fiscal year.

Um so that is my commentary on that.

Uh are there any questions?

Okay, no questions from Member Santiago Romero.

Ms.

Corley.

Thank you, Mr.

Chair.

So um the OCFO did indicate that they would consider doing this every year, you know, just depending on what's going on in the economy, uh, what's going on, you know, of course, the impact of what's uh happening at this at the federal level, state level, the tariffs and all of that.

Um conceptually, we're in agreement, you know, with this concept of setting aside dollars, in this case 42 million dollars for corporate income tax reserve fund.

Um I was more concerned about the mechanics of it.

And so we had a slew of questions about that.

I'm satisfied with those.

Um Mr.

Johnson alluded to the fact that the 42 million would be assigned, and so the um the fiscal 2025 Act for will be coming out in December, and so it should be represented in the journal fund portion of the AC for that the 42 million would be a part of the unassigned, um, which I'm fine with that.

Um and as Mr.

Uh Johnson indicated throughout fiscal 26, you know, 2026, the current fiscal year, if the 42 million is not used or partially used, it would fall down to the unassigned fund balance as at as of June 30, 2026.

Um and just to remind the council, um we know that in four years, if we continue to have balanced budgets, we come up from under the Finance Review Commission, which would be you know newsworthy worldwide.

So I so the idea of ensuring that we have dollars to address upcoming shortfalls, but potential shortfalls is a good one.

It also says, though, that we're gonna have to really be careful on our signatures, obviously.

You know, as I said earlier, um the city of Detroit is gonna be relying more on its own revenue sources.

So if if we're taking 42 million dollars from the overall surplus as of 2025, whatever that difference is beyond that, um, because uh Ms.

Steidmeyer has alluded to the fact that we could end up with a higher general fund surplus as as of June 30, 2025.

You know, right now they're projecting 60 million that could go higher.

Um, so any any amount, uh I think you alluded to that too, Mr.

Chair.

Any amount above the 42 million could be used for possibly council issues or to address potential expenditure shortfalls.

And we know that in the last couple of years, the administration has come to city council with mid year um budget amendments to address expenditure shortfalls.

So um in talking with Mr.

Steinmeier and Mr.

Johnson, they've always you know met with the departments on a monthly basis.

That's gonna continue to ensure that they're monitoring you know the level expenditures uh to hopefully mitigate as much as possible any potential expenditure shortfalls.

But if spinning shortfalls were to occur, we do have some question to address that.

It's just the question is not as large because we're putting aside 42 million dollars for a word being you know for a word because so um that I understood the mechanics and also the OCFO indicated that Plan Moran, because I asked them, you know, is Plan fine with this with this with the mechanics, and they are you know external auditors are fine with what we are looking to do if council approves this.

So with all of that, um I'm comfortable in and supporting uh this process.

Okay, thank you, Mr.

Corley.

And and again, uh, you know, this council has been very responsible, uh, whether it's investing in our retiree protection fund or budget stabilization fund or ready rainy day fund.

Uh and this is another step.

Uh you mentioned the FRC.

Uh and we have shown uh over these past years that we are going to be fiscally responsible uh here as a city, uh making tough decisions but taking the necessary steps.

Uh one of the things that we don't wanna do again is find ourselves scrambling in a way, searching for money on how to to fill gaps.

Uh and is uh best to plan ahead uh and ensure uh that we are are doing that and and uh I think this is another resolution that helps us or another fund that helps us uh remain where we are and be fiscally stable.

And if those revenues to your point do exceed uh because we are going to be looking and it's probably expecting a 90 million dollar surplus, uh there's still room for you know the next council to utilize that in the budget.

Uh it is my hope that that the majority of the council here is gonna return anyway.

So they have been part of ensuring and making or making sure that uh our city's fiscally stable, and I know they're gonna continue that trend.

So and we've all had tough decisions before, so they're they're gonna be used to it too.

Um, but you know, again, um as we look federally, we is it's it's just scary.

You know, we look at the eliminations of grants, we look at the you know, elimination of housing grants and funding, uh, and then ARPA funding is gone.

Uh so we are getting back to a sense of normalcy.

That is not normal what's happening in DC, but I'm just saying as far as us having ARPA funding and some of the revenues that we had to do things, but I think this is a step in the right direction.

So thank you, Mr.

Corley.

Thank you, Mr.

Johnson.

Uh, with that, is there a motion to send line item of 6.3 to formal with the recommendation to approve?

Motion.

Hearing no objections, that action shall be taken.

Thank you, Mr.

Johnson.

Thank you.

Next under the office of the city clerkslash city planning commission line item 6.4 submitting a resolution of authorization for neighborhood enterprise zone certificate applications for the construction of 11 new single family houses at 1457, 1478, 1482, 17, 16, 1723, 1724, and 1731, and 1737 Fisher and 1564, 1591, and 1595 Belvedere in the East Village Amended Neighborhood Enterprise Zone Area.

This has been recommended for approval by the CPC, if I'm not mistaken.

Uh, is there a motion to discuss line item 6.1?

Motion.

No objections, that action shall be taken.

Mr.

Gulak, good afternoon, sir.

Good afternoon, Mr.

Chair.

Chris Gulach, uh CPC staff.

Uh yes, Mr.

Chair, we did submit a report and resolution for your consideration.

I have a brief slideshow if you'd like me to present that.

And we're also joined by the petitioner, I think Rob Gregory and Matt Temkin of Greatwater.

Really, really quickly, Mr.

Gulag, to you very quickly.

Normally it states the recommendation from the CPC on here.

Am I incorrect, though I would assume I am that the CPC has recommended uh this application or this NEZ.

Yes, Mr.

Chair, we're recommending approval.

Okay.

Thank you, sir.

Uh, and if the petitioner could announce themselves uh as well, state their name for the record.

Hello, Councilmember, Councilmember Durha and Santiago Romero is Rob Gregory of Greywater Homes.

Are you done?

Thank you, sir.

Good afternoon to you.

Uh please proceed.

Uh thank you, Mr.

Chair.

Uh yes, this is for uh an EZ certificates for 11 new houses.

Next slide, please.

This is in the East Village area, which is south of Kirchhoff, north of East Jefferson, just east of Indian village.

And the council has already approved um several certificates for new infill on this block.

And they're the Great Water is proposing to build additional units.

Next slide, please.

Zooming in closer.

It's on two streets.

It's on Fisher and Belvedere, which is about four or five blocks east of Fisher.

Next slide, please.

This just shows the Fisher Street.

A lot of vacant land.

There are existing houses.

And this shows some of the new houses that Great Water has already constructed.

Next slide, please.

So this is an East Village amended NEZ.

Council created that way back in 2005.

The petitioners in LLC, which is really Great Water Homes.

Uh next slide, please.

And there's 11 houses.

New single family infill.

The ranges are from 1,000 square feet to 18 1850 square feet.

There's a choice, buyers would have a choice of which uh unit to build.

Uh the unit costs are 275,000 to 425 425,000.

But the estimated sale prices are 350,000 to 550,000, depending on which model you select.

Next slide, please.

And this is on the Great Water website.

You can see the four different models that one could choose from.

And they're currently constructing these in the city right now.

And so there's also a single family, there's a single story, there's a one and a half stories, and there's also uh two-story units.

Next slide, please.

So regarding parking, uh the Great Water is proposing to build the detached garages at the back off the alley.

Uh regarding the accessibility, they indicate they they can customize a house that's being purchased uh to add ADA accessibility.

Uh next slide, please.

So in conclusion, it is in an N E Zone that council approved.

Uh staff is recommended approval.

We submitted a resolution for your consideration that would be then forwarded to the state for review.

And uh thank you, Mr.

Chair.

Thank you.

Any comments from the petitioner.

No additional comments.

Okay.

Any questions?

Chair recognizes member Santiago Romero.

Thank you, Mr.

Chair.

Briefly, um, I believe it states that um two.

Are these homes gonna be uh customized designs correct?

Or will they all look the same, be built the same?

Oh, this is Rob Gregory from Great Water Homes.

Um we have four different flans.

That's really for the actual structure of the home.

Um range from a thousand square feet up to eighteen hundred square feet above ground.

We had two finished basements as well.

Um we do have different elevations, so how the home appears from the outside, uh Colonial Cottage, Craftsman, uh modern, and we have a variety of different colors of the siding boards as well.

So it's definitely our intention to make them look like they were supposed to be in this neighborhood.

This neighbor used to be full of houses back in the day.

Um, and we don't want it to be all looking the same.

Okay.

Um thank you.

Uh I had a question regarding affordability, but then it was you did mention, I believe, um, that we are trying to also design this in a way um that'll make it more affordable, depending on the design, correct?

Yeah, I mean, we're trying to make these as cost effective as possible as it is to build these houses.

Um there are various plans at different price points that folks can choose.

Okay, thank you, Mr.

Chair.

Thank you.

And I know you mentioned uh the detached garage garages, I'm sorry, in the alleyway.

Uh can we talk about uh will there be enough room to move through that alley?

Do we have any concerns relative to utility providers and or EMS if necessary?

Nope.

Nope, no concerns.

Um they're all the existing alleyways.

Um yeah, no concerns.

Same as the previous 12 houses we built so far.

Okay.

And just for the record, one more time.

Uh ADA.

Uh yes.

Yes.

Um, so these are asked for sale homes.

Like we'd be happy to customize ADA access the ground floor for any buyer upon their request.

Okay.

All right.

Seeing no further questions, is there a motion to send line item 6.4 to formal with a recommendation to approve.

I'll move.

Hearing no objections, that action shall be taken.

Thank you very much, gentlemen.

Thanks, Council Members.

Next under the Detroit Health Department line item 6.5, submitting a resolution of authorization for a proposed 10% fee schedule increase for the Detroit Health Department motion to discuss line item 6.5.

Motion.

Hearing no objections, that action shall be taken.

We should have Leah Smith joining us.

And Member Santiago Romero, we could take a line item 6.6 as well.

Motion.

Thank you.

And we have Ms.

Leah Smith joining us.

Good afternoon to you.

Please state your name for the record and proceed.

Good afternoon through the chair.

My name is Leah Smith.

I'm the director of administrative operations for the Detroit Health Department.

And if you could tell us a little about a little bit about line item 6.5, the proposed 10% fee schedule increase, as well as line item 6.6 just for the public's transparency of the proposed resolution to approve fees for issuance of a disinterment uh permits.

Yes.

Thank you.

Through the chair.

Our first line item is a proposed 10% fee schedule increase for the Detroit Health Department, specifically our food sanitation and environmental health and safety divisions.

This adjust this proposed adjustment is necessary to ensure the continued quality, sustainability, and responsiveness of our team, as well as to align with the best industry practices.

The justification for the fee schedule is that it has remained unchanged since 2015 and the increases are long overdue.

The proposed 10% increase reflects a combination of factors, including rising operational costs associated with staffing, training, equipment, regulatory compliance, and required state fees that we pay, and then alignment with peer jurisdictions.

Our proposed fees remain aligned with those charged in comparable Michigan cities and counties, specifically Wayne County, Washington County, and Oakland County.

This adjustment helps us to maintain equity while aligning with regional standards.

And then maintaining service quality.

This additional revenue will directly support improvements in service delivery, reduce inspection backlogs, and help ensure timely responses to public health concerns.

Moving forward, the department is committed to ensuring that our that the division's fee schedule is reviewed and updated annually by three to five percent, which aligns with industry standards as part of the budget development process.

Our next line item is regarding a proposed resolution to approve fees for issues of disinterment permits.

In accordance with the applicable provisions of the 2012 Detroit City Charter, 2019 Detroit City Code, and the Michigan Public Health Code.

We are asking for approval to start accepting fees and issuing disinterment permits.

Currently, the Wayne County Health Department issues disinterment permits for all cemeteries in Wayne County, including those in Detroit.

With the approval of this resolution, the health department will assume this function for the disinterment of bodies in Detroit cemeteries.

In order to enable us to implement the fee as soon as possible, we also ask for a waiver of reconsideration.

And the 10% fee is in alignment with what Wayne County has currently charges.

Thank you.

Thank you.

And that is 6.5 and 6.6.

Any questions?

Oh uh Mr.

Chair.

Chair recognizes Member Santiago Romero.

Thank you, Mr.

Chair.

Just wondering the I I know you mentioned that this is to keep track of the need.

Um, but how do we decide the increase?

Um, just what was the the process in deciding that for it um through the chair for the proposed fee increase of the 10%?

What we looked at was a combination of what our regional jurisdictions are charging, so specifically Washina County, Wayne County, and Oakland County.

We also considered how we have we have not done a fee increase for 10 years, and so if we were to have done a three percent increase over those 10 years, it would actually be a 30 percent increase.

However, we also recognize that we have a duty to the businesses in Detroit to make sure that our increases are fair and reasonable so they can continue to make fit to have business.

So we decided to do the flat fee uh increase of 10 percent to better align with the regional departments and also better align with the industry standards across the state.

Okay, thank you.

Thank you, Mr.

Chair.

Thank you, Member Santiago Romero.

Mr.

Chair, Mr.

Corley.

Thank you, sir.

So um we appreciate the explanation about the 10% uh increase.

Um we did notice that there were 19 new fees, and um we asked about the rationale for the new fees, and there's they were saying that those new fees would align with um state guidance, and also um would help the department that's providing activity or services for these particular areas of the new fees.

Um they wouldn't they were not captured in the current fee schedule, so they're now capturing them on the proposed um increase.

We also noticed that the marijuana dispensationary dispensaries initial fee went from about 2300 down to 500.

And their rationale was that you know that would make it more um competitive, you know, for those that are looking to open up new marijuana dispensation areas, but also there would be a renewal fee of 250 dollars for the marijuana dispensary.

So that's what's going on there.

And then lastly, uh we saw pretty good increases beyond 10% in the tattoo fee related fees, and that's to be aligned with the state.

So given that, um, we're fine.

Thank you.

Thank you.

All right.

Seeing no further questions.

Is there a motion to send line items 6.5 and 6.6 to formal with the recommendation to approve?

Motion.

Hearing no objections, that action shall be taken.

Next, we'll move.

Thank you very much as well, Leah.

Uh Ms.

Smith.

Sorry.

Next, under the General Services Department line item 6.7 submitting a resolution of authorization for the proposed resolution to update and amend the Detroit Parks and Recreation Fee Schedule motion to discuss line item 6.7.

Motion.

Hearing no objections, that action shall be taken.

We would have Crystal Perkins joining us, but she's unavailable today.

So we will go directly to LPD on this.

Mr.

Corley, can you give us a brief overview of this?

Pretty standard, but yes, Mr.

Chair.

So thank you.

So General Services is looking to uh update and amend uh Detroit Parks and Recreation Fee Schedule.

Um, particularly for the Detroit Parks and Recreation Um facilities, including the Northwest Activity Center, Community Center at AB Ford Park.

Uh those are, and then I'm sorry, I'm sorry.

Also some boxing training fees and equipment fee um increases.

And then for the two newly opened facilities, Chandler Field House and Palmer Park Banshell, that's on this proposed um fee schedule.

And so we had a couple questions about that.

Um similarly to the health department, based on industry standards and you know, inflation inflation, looking at um comparable facilities in in Michigan and even out state.

That's how they came up with with these proposed um fees.

And so interestingly, with the boxing, they're looking to really uh ramp up the services provided for um individuals that's that wants to go into boxing, make it more uh nationally um acclaimed in terms of their training, so that's good to know.

So um beyond that we're we're fine with it.

Thank you.

Thank you.

Any questions?

Is there a motion to send line item 6.7 the formal with the recommendation to approve?

Motion.

Hearing no objections, that action shall be taken.

That brings us to the end of our uh the end of our agenda.

Member reports chair recognizes member Santiago Romero.

Thank you, Mr.

Chair.

Just want to invite everyone to join us today at 6 p.m.

at Urban Neighborhood Initiatives for our monthly D6 meeting.

We are going to have a discussion on black and brown solidarity.

We'll have dinner, it'll be a good time.

Uh we hope to see you there.

Thank you, Mr.

Chair.

Thank you, Member Santiago Romero.

And for my member report, I just want to thank the residents of District 7 who came out last night to our community engagement meeting.

We had an amazing turnout last night, had the opportunity to get resources to residents from various city departments and answer some questions uh in real time.

At least as this council for this council member, uh, but again, I want to thank everyone who took the time to come out uh and get the resources uh that are very so much needed.

And thank you to all the city departments as well, as well as DTE uh who participated and the board of review.

Uh that concludes my member report and uh seeing no other business to come before this committee, uh the budget finance and audit committee will stand adjourned at the call of the chair without objection.