Ishpeming DDA: 2019 revenues, expenditures approved
ISHPEMING — The Ishpeming Downtown Development Authority can expect to operate under a “cookie cutter” budget over the next few years.
The budget, which has been pared down in the last few years as a result of a bond payment structure for work completed on Malton Road, was unanimously approved during the panel’s regular meeting Monday.
The core reason for the restricted budget, Ishpeming Finance Director Jim Lampman said, is that the DDA is responsible for paying a large portion of the $2.975 million bond, which was taken out in 2011.
“The issue with the budget is, the DDA share of the 2011 capital improvement bond that was used to establish the Malton Road area was taken out on an arc,” Lampman said. “And we have been climbing this arc and within the next couple of years we are going to hit the peak and then we will start going down the other side.”
The total payment for that bond in 2016 was about $174,600, according to budget documents presented to the panel Monday, as compared with the roughly $231,500 payment in 2019.
“Looking at the peak of that debt curve, next year we are looking at $231,510, and in 2020 our debt payment is going to be $232,365. So we are going to hit that peak in 2020, and then it will start going down,” Lampman said. “But the big drop is in 2022, so really we are going to have a cookie-cutter budget all the way through 2021, and then in 2022 we will see quite a bit more revenue over expenses.”
Another contributing factor to the current budget crunch is the reduction in DDA tax-increment financing revenue over the last several years, shrinking from nearly $252,000 in 2016 to almost $223,000 in 2018.
Tax-increment financing, or TIF, captures the growth of property tax values from the year-to-year growth in property value within the DDA’s TIF authority district. That district became smaller in 2018 when the Ishpeming City Council took action the previous year to remove the Malton Road area.
One of the DDA’s primary expenses in 2019 is expected to be the Lake Bancroft Pavilion Project, which will be built across from Lake Bancroft Park at the former home of the Cleveland-Cliffs Inc. Mining Company administrative offices.
The DDA committed $50,000 to the project which is set to be paid out this year and will also release the proceeds of a $250,000 grant award from the Cliffs and Eagle Mine Community Fund when the project begins in 2019.
“For 2018 we have $50,000 for engineering costs that we have already incurred for the Lake Bancroft project,” Lampman said.
City Manager Mark Slown said the money had been set aside and budgeted previously.
“So just to be clear on that, it is money that we already have in the bank that we have been holding on to that we are going to spend this year and next year for this project,” Slown said. “It’s not part of what we would normally spend in our budget, because it’s a special project, it’s a one-time deal. And that is why the budget looks so much bigger than in previous years.”