For 47 years the Detroit DDA has been actively engaged in economic development activities in the CBD. Funding for the economic development activities primarily has come from the DDA’s capture of property tax revenues levied by the city, county, intermediate school district, and other taxing jurisdictions.

Clearly downtown Detroit is in better shape now than it was at the time that the DDA was created, but it is fair to ask at what cost. The city and the other local governments have foregone hundreds of millions of dollars of tax revenue because of the tax capture. The city has benefited from increased income tax revenues related to business activity downtown, but the other local governments can only indirectly trace benefits related to the income of downtown workers.

The primary critique of the Detroit DDA, and other TIF districts in Michigan, is that they have failed to fulfill their purpose because they continue to capture property tax revenue without end, thus fueling more economic development but not enhancing the capacity of taxing governments to expand or improve government services.

Justification of the continued operation of the Detroit DDA is not difficult – for all of its successes, the economics of locating in downtown Detroit do not work for many businesses. However, the operations of the Detroit DDA should not be put on autopilot for the indefinite future.

Recommendations in this report are geared toward rewarding the local governments that have endured decades of stagnant property tax revenue growth to fund economic development. The Detroit DDA should not issue new debt until the current debt is repaid. It should end the capture of property taxes once the current debt is repaid. When that happens, Detroit city leaders should evaluate the needs of the downtown versus the needs of the balance of the city, and if continued investment in the downtown is warranted start with a clean slate and new plan for tax capture.