$70M from new Kalamazoo foundation a ‘game changer’

Mark Hicks
The Detroit News

Kalamazoo leaders are moving forward on a private-public partnership worth more than $70 million that will pump money into the city’s budget, slash property taxes and tackle a projected deficit while boosting community investments, they announced Thursday.

The proposed Foundation for Excellence, funded by area philanthropists and institutions, was unveiled during a City Commission work session Thursday. The city said donors have already pledged $70.3 million over three years to launch the effort; “enough commitments have been secured to begin the process as early as 2017,” according to a release.

The Kalamazoo Gazette reported city leaders secured donations from Kalamazoo philanthropists William Johnston and William Parfet, among others.

“It’s essentially a game changer when we talk about our budget deficit, our ability to do things like fix roads and update the infrastructure,” said City Commissioner Shannon Sykes.

Officials expect the foundation would be fully-funded by 2020, so revenue from investments would be available for long-term. It would allow Kalamazoo to cut property taxes starting in January and spend $10 million annually on “aspirational” projects.

The property tax rates would be reduced by more than a third starting in 2017, from 19.2705 mills to 12, “with a long-term goal of a 50 percent total reduction,” according to a summary posted on the city website.

It would not only help fill the gap from the lower property taxes but is “intended to cover things we have not been able to do for quite some time,” Sykes said.

City commissioners say they are studying the details and will seek input from residents before moving forward.

“There are a lot of nuts and bolts we need to look into,” Commissioner Matt Milcarek said.

The proposal developed after a Blue Ribbon Revenue Panel spent months considering recommendations to combat an expected structural deficit beginning in 2018, Vice Mayor Don Cooney said. A $1 million shortfall was projected, according to city documents.

City leaders say the plan could help solve the problem of lower revenues, which have declined in recent years, Cooney said. The Blue Ribbon Revenue Panel had considered implementing a city income tax, he said; if voters approved it, those funds “would be enough to balance our budget and meet our capital needs but wouldn’t give us any money to do anything else.”

Since the panel recommendations weren’t enough to end the projected deficit, city officials met with philanthropists and others to explore other options, Milcarek said.

What emerged was the Foundation for Excellence, which is modeled after the Kalamazoo Promise, officials said. The anonymously funded plan, announced in the fall of 2005, pays the college tuition of students who graduate from Kalamazoo Public Schools.

“City staff have been working diligently to implement all feasible recommendations from the Blue Ribbon Revenue Panel,” City Manager Jim Ritsema said in a statement. “During our work, this exciting, innovative solution began to take shape. The initial commitments from many local philanthropists made this a real option.”

A portion of the donations during the three years, about $10 million annually, would also be earmarked for the “aspirational investments,” such as youth programs, “neighborhoods, place-making projects, streets and infrastructure, targeted economic development, and other initiatives,” city officials said.

The windfall could boost initiatives to tackle poverty in Kalamazoo, which according to U.S. Census data has climbed in the last decade, Cooney said. “We’ve been trying to work on this, but we haven’t had the resources. Now we’re going to have the resources to do some really big things.”

Mayor Bobby Hopewell called the proposed foundation “a major opportunity for Kalamazoo.”

“This option not only offers a solution to our structural revenue problems, but also provides tax relief for city residents and still creates the opportunity for significantly more investment in our city and its people,” Hopewell said.

No target date to launch the proposal has been set. Feedback is being sought first from residents, commissioners said.

“This is a gift to the citizens of Kalamazoo, therefore it’s going to be up to the citizens to inform us on the best way to spend it,” Sykes said.

The Associated Press contributed.