Wayne County sues Wyandotte over tax for court settlement
Detroit — Wayne County has filed a class-action lawsuit against the city of Wyandotte over tax money that was supposed to be collected as part of a judgment levy earlier this year.
The county alleges the city and its Downtown Development Authority and Tax Increment Finance Authority collected taxes intended for the judgment levy for their own use. The levy stems from a ruling in June that requires the county to replenish funds it pulled from a retirement fund.
Downtown Development Authorities, or DDAs, and Tax Increment Finance Authorities, TIFAs, are systems cities, villages and townships use to fund improvement projects in specific districts. They use a mechanism that freezes the property taxes of the businesses in that zone at a specific level and tax increases above that level can be used to pay for the projects.
“The (city of Wyandotte, its DDA and TIFA) have stated that they ... intend to capture revenue raised from a special purpose millage levied by Wayne County,” the county said in its lawsuit filed Thursday in Wayne County Circuit Court.
“(They) have misconstrued applicable law to conclude that they are required to capture revenue from the judgment levy,” the lawsuit said. “If (the city of Wyandotte, its DDA and TIFA) divert a portion of the judgment levy to their own use, the county will be unable to satisfy the judgment levy because the revenue collected will be insufficient.”
The county filed a class-action lawsuit to ensure, if successful, other municipalities’ DDAs or TIFAs could not capture and use revenues from the judgment levy, officials said.
It’s not clear how much money Wyandotte’s tax increment finance systems collected. The county’s lawsuit only said “the amount in controversy exceeds $25,000,exclusive of interest and costs.”
Wayne County is asking the court for a speedy hearing on the matter.
Wyandotte City Administrator Todd Drysdale and Mayor Joseph Peterson could not be reached for comment.
Earlier Thursday, county attorneys gave Wayne County commissioners a briefing on the lawsuit. The commission met as a committee of the whole to discuss several matters, but went into closed session to discuss the suit and potential legal action on other issues.
No formal action on any of the items was taken during the meeting, officials said. Commissioners are scheduled to meet next on Thursday as a full board.
In June, the county levied a one-time tax on property owners to pay a $49 million judgment in favor of a county retiree fund. The lawsuit does not specify the amount allegedly withheld by Wyandotte.
The judgment stemmed from a lawsuit retirees filed against the county for pulling $32 million from its “Inflation Equity Fund.” For three decades, the fund provided retirees what’s known as the “13th check.” The $49 million made up for the amount taken from the fund, plus lost earnings.
Commissioners passed a resolution to use the delinquent revolving tax fund to pay for the judgment, but County Executive Warren Evans vetoed it and the commission decided against overriding it.
The result was the average Wayne County homeowner had to pay an extra $35 on their summer tax bill.
Commissioners also discussed the county Treasurer’s proposal to transfer $82 million from the delinquent tax revolving fund to the county’s general fund.
Earlier this month, Wayne County Treasurer Ray Wojtowicz told the commission there is an $82.5 million surplus in the county’s delinquent tax revolving fund and he planned to transfer it to the county’s general fund.