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Council OKs Pistons tax fund for neighborhood upgrades

Christine Ferretti
The Detroit News

Detroit — The City Council on Tuesday approved a resolution that will allow for the capture of millions of dollars in income taxes from Pistons players, employees and visiting NBA players to fund neighborhood improvements across Detroit.

The Neighborhood Improvement Fund was introduced last month by Councilwoman Mary Sheffield. The District 5 council member proposed the fund a week after the City Council signed off on $34.5 million in taxpayer-funded bonds to make modifications to Little Caesars Arena, enabling the Pistons to play there starting this fall.

Council members voted 7-1 in favor of the measure. President Brenda Jones was the lone no vote.

Sheffield has said the fund would focus on blight removal, home repairs for seniors, educational opportunities for young people and affordable housing development in neighborhoods outside of downtown and Midtown.

“This sets the framework. It expresses what the fund should be used for and it ultimately gives council the ability to propose projects,” Sheffield said after Tuesday’s meeting, adding the council won’t be limited from adding controls and procedures on how the fund should operate.

Sheffield said she drafted the proposal in response to residents who complained they were being left out of the city’s progress.

“It’s not going to solve all of the problems and it’s not going to please everyone, but I do believe it’s a step in the right direction to make sure these catalyst projects have some type of tangible benefits for residents.”

City officials have estimated $1.3 million will be generated in income tax revenue each year from the salaries of players and employees. But it won’t be limited just to the Pistons, Sheffield said.

Officials hope to bolster the fund with additional sources, both public and private. Those, she said, will be decided as the council deliberates future projects.

“We as a council are going to look at other development projects and sources that could go into the fund too,” Sheffield added.

The resolution says “it is imperative that the neighborhoods, and all other areas of the City, benefit from the Detroit Pistons’ return downtown …”

“In turn, the City will receive income tax revenue, from the multimillion dollar salaries of the NBA players as well as other Pistons employees and Palace Sports & Entertainment employees,” the document says.

The council will submit its proposals to the administration for review and approval.

But Jones on Tuesday declined to support the plan, saying she’s worried some dollars could be diverted to other uses without council’s approval. Currently, contracts under $25,000 don’t have to go before council.

She wanted stronger language to ensure money being spent from the fund would come before council for approval.

“What I’m saying is nothing new,” Jones explained prior to the vote. “Every time we’ve talked about it, I’ve stressed that.”

“What happens if the council does not appropriate projects for all of the dollars that are in the fund?” Jones asked.

Roughly 10 percent of Detroit is not covered by the federal Hardest Hit Fund that has helped with the city’s blight removal efforts, Sheffield said.

The income tax dollars would be available for use in the Neighborhood Improvement Fund in the next fiscal year. The council will deliberate during its next budget cycle on how to appropriate the dollars. It could be divided by council district or dedicated to efforts citywide.

Additionally, the improvement fund can be used toward city pension or bond obligations when general fund revenues are insufficient, “should there be any unforeseen shortfall,” according to the resolution. But that would be a last resort.

The fund will be in place until the bonds are paid off in 2048, she said.