Proposal L would fund Detroit’s libraries. How much will get diverted downtown?

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The Detroit Public Library gets almost all of its funding from property taxes. It’s asking voters to renew a millage to keep it operating for the next decade. That renewal, called Proposal L, would also help fund an entity with no ties to the library: the Downtown Development Authority (DDA).

The authority “captures” tens of millions of dollars annually in taxes on downtown properties — money that would otherwise go to the library, school system, city’s general fund and other public recipients. A decades-old state law allows these authorities to skim tax revenues to spend in their districts for economic development, but critics say the practice diverts money from its intended purposes.

Library officials and tax justice advocates continue to question the logic behind tax captures. They also strongly support the passage of Proposal L.

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Here are the most important things to know about the ballot measure and tax captures so you can make an informed choice when voting.

What is Proposal L?

The Aug. 6 ballot question named Proposal L asks voters to renew a millage that supports the Detroit Public Library. The existing millage expires in July 2025. Passing it would renew the millage for another 10 years.

The proposal maintains the same millage rate as the one already in place at 3.9943 mills, which equates to about $3.99 for every $1,000 of taxable value. A homeowner with a house worth $100,000 would pay about $200 a year.

How much does the library get from the millage?

The library system’s total budget in the last fiscal year was about $35.2 million, with property taxes contributing a little more than $30 million — or about 85% of its budget.

In other words, the millage is essential for the library to continue operating.

“We’d pretty much be out of business if the millage isn’t renewed,” said Detroit Public Library Chief Financial Officer Antonio Brown. “We’d have to start shutting down branches because we wouldn’t have the funds to operate.”

How much does the DDA get?

The library lost $3.9 million to tax captures in 2023, Brown said. The vast majority of it went to the DDA. (The Detroit Brownfield Redevelopment Authority and Local Development Financing Authority also captured around $500,000 total.)

Brown said the library could “absolutely” use the extra money, but that the loss isn’t putting undue pressure on the system, either.

“The tax capture is not catching us off guard,” he said. “We know how much is anticipated to be captured and go through our budget accordingly.”

Russ Bellant is a former member of the Detroit Library Commission and a tax reform advocate with the organization Detroiters for Tax Justice. He strongly supports Proposal L. At the same time, he says tax capture has greatly harmed the library, forcing it to defer maintenance and delay reopening branches that closed earlier in the pandemic.

“In the last year, the library has replaced around three HVAC systems and three roofs,” Bellant said, adding that there are around 20 branches . “And all the buildings are old.”

He said that full funding could also allow the library to expand collections, increase branch hours and raise staff pay.

Tax captures have cost the library more than $27 million since 2014 — with the DDA and other authorities siphoning off around half a billion dollars within their jurisdictions in that time. Detroiters for Tax Justice got those figures through public record requests. The data is not otherwise published online.

Have tax captures made the DDA too big to fail?

The DDA can capture increases in downtown property taxes and has significant discretion over how it uses that money. It provides loans and grants to projects, sometimes with the stipulation that the developers include affordable housing . It’s given out money to beautify parking lots . Olympia Development of Michigan got $324 million from the DDA to build Little Caesars Arena.

The Detroit Economic Growth Corp. provides administrative support to the DDA. Corporation spokesperson Lanard Ingram said the authority has been essential to downtown’s transformation and will be for its continued growth. He cited several public benefits, including improvements at Campus Martius Park, the restoration of historic structures like the Book Tower and the creation of new opportunities for local businesses.

“The DDA has breathed new life into downtown by creating jobs and boosting the local economy,” Ingram said by email. “It’s exciting to see how these initiatives are coming together to create a more vibrant and economically robust downtown core. Despite progress, challenges still remain and incentives are needed, even downtown, given the additional costs of development in the city.”

A report from the Citizens Research Council of Michigan from earlier this year mostly concurred. Its research found that developers still need the support of subsidies to make most new projects work.

“The anticipated return on investment for some businesses and for certain types of buildings does not yield revenues to provide profitability,” the report said.

The nonprofit estimated that the DDA couldn’t be disbanded until 2053 “at the earliest” because of its $571 million bond obligations.

Alejandro Navarrete, research and policy director with Detroit Action, said there’s an important difference between tax abatements and tax capture. Abatements allow developers to use the expected increase in property taxes to pay for construction costs up front. Those projects might not happen without the abatements.

Tax capture, on the other hand, is a “much more concrete loss,” according to Navarrete.

“All these funds would have gone directly into our general fund and other services were they not diverted for the purpose of building up downtown,” he said.

Downtown authorities, which have been around in Michigan since the 1970s, operate on the theory that a strong downtown will strengthen the rest of the city. Navarrete says this hasn’t proven true in Detroit.

“Downtown has been rebounding, but we haven’t seen those benefits elsewhere,” he said. “No matter how well downtown is doing, the library doesn’t get any benefit.”

The Citizens Research Council report notes that a significant portion of the increases in property values in the last decade have occurred where taxes go directly to authorities or developers, meaning “the city as a whole has not benefited from the rebound (downtown).”

City income taxes have slightly increased, partly due to new jobs downtown, but even these have often disappointed relative to expectations and are poorly tracked by the authorities that approve subsidies.

Downtown’s growth has provided mostly superficial benefits, Navarrete argues.

“All these new skyscrapers look nice, we get national coverage, but they’re not free. We’re paying for them,” he said. “And that money can be better spent elsewhere.”

Outlier Media’s Laura Herberg contributed to this story.