Billionaire’s Detroit
sports arena to take $34.5 million in school tax money
By J. Cooper
2 August 2017
2 August 2017
Last week, a federal judge paved the way for
millions of dollars in tax money earmarked for the Detroit public schools to be
used instead to subsidize the projects of the city’s billionaire developers.
While this legal robbery was taking place, the
Detroit Federation of Teachers (DFT) pushed through another concessionary
contract on educators based on the claims that the restructured school district
lacked the money to restore years of union-backed wage and benefit concessions.
On July 24, a federal judge in Detroit ruled
that a lawsuit filed to enable Detroit voters to approve the use of $34.5
million in state education funds for the new Downtown Development Authority
(DDA) sports arena “lacked standing.” The proposed move of the Detroit Pistons
basketball team to the arena, set to open next month, had been delayed by the
lawsuit. These funds are in addition to over $250 million already “captured” to
pay for the building of the arena, which will also house the Detroit Red Wings
hockey team, owned by the Ilitch family, whose net worth is over $6.1 billion.
Teachers narrowly
ratified the three-year contract, which was revealed to a small membership
meeting just before the July 4 holiday weekend. The result of
the mail ballot was 515 to 474. The contract with the newly formed Detroit
Public Schools Community District (DPSCD) provides a three percent increase the
first year, a 4.13 percent increase the second, and a “wage reopener” in the third
year. Teachers will not be repaid the $10,000 “loan” extorted from them in 2009
and their pay will remain thousands, if not tens of thousands of dollars, below
the national average.
In preventing voters from approving the transfer
of funds in a ballot referendum in November, US District Judge Mark Goldsmith
maintained that the plaintiffs, Robert Davis and City Clerk candidate D. Etta
Wilcoxon, “allege no injury, apart from that suffered by all school electors in
Detroit… But having made a demand [to put the issue on the ballot in November]
does not show any special injury.” In other words, because the two individual
plaintiffs could not demonstrate that they, personally, had been injured by the
decision to divert the $34.5 million, the issue lacks legal standing to appear
on the ballot.
The judge’s decision in favor of the DDA,
Olympia Entertainment and Palace Sports follows similar legal rulings over the
last several years, which, in the name of “economic development,” have handed
over the meager public resources allocated for schools to private business
interests. Under the current agreement to fund the new downtown arena, property
tax money will cover about 58 percent of the bill. The DDA is expected to
collect $726 million in school property tax revenues through 2051.
Among the counts the judge allowed to move
forward against the DPSCD included one challenging Davis’s right to speak for
more than two minutes at a school board meeting. Goldsmith will also permit
Davis and Wilcoxon to seek court costs and attorney fees, and to be awarded
nominal damages.
The plaintiffs’ motives in the case are far from
pure. Davis is a career litigator, and spent two years in federal prison after
admitting to embezzling $200,000 from the Highland Park, Michigan school district
while he served on its board. Wilcoxon, in seeking public office, is looking to
make a name for herself.
The deal to finance
Ilitch’s Little Caesars Arena was worked out during the 2013-14 bankruptcy
restructuring of the city. In December 2014, the same week the city emerged
from bankruptcy and the Ilitches announced the building of their $450 million
arena, Michigan Attorney General Bill Schuette issued an opinion reiterating
that state taxes for schools can legally be used to fund the arena’s construction.
The cynically worded opinion argued that school taxes are captured by the
DDA before being deposited into the School Aid Fund;
therefore, “those captured school taxes were never dedicated to the School Aid
Fund.”
This sleight of hand and the current lawsuit by
Davis and Wilcoxon have their origins in the backdoor negotiations surrounding
the city of Detroit bankruptcy between 2012 and 2014. In November 2012, Detroit
voters approved a millage continuing the taxation “on non-homestead property
(mainly industrial, commercial and rental property).” Detroit voters were urged
at the time by the Detroit Public Schools to approve the measure, assuring them
that the tax would be used for “classroom instruction, technology,
intercollegiate athletics, music and arts programming.” It is these revenues
that are being redirected to the DDA and the gentrification of downtown
Detroit.
On December 5, 2012, the state legislature
passed a bill specifically allowing these state funds to be diverted to the DDA
and the Ilitches’ project, as it was considered “a catalyst development
project.” On December 13, the state legislature ran an end run around Michigan
voters and approved Public Act 436, enabling Governor Rick Snyder to appoint
emergency managers, when voters had rejected the emergency manager law barely
six weeks earlier. Emergency Manager Kevyn Orr, appointed by the Republican
governor, rammed through the city’s bankruptcy with the support of the Obama
administration. This resulted in the tearing up of city workers’ contracts and
pensions, the closure of over 100 public schools and the ongoing assault on
teachers.
The new three-year
DPSCD-DFT contract coincides with the announced layoff of 70 instructional
specialists and administrators by recently appointed Superintendent Nikolai
Vitti; the termination of a 20-year-old literacy program aimed at ensuring that
all Detroit pupils are at grade level in reading by third grade; and the ending of traditional
pension contributions for new hires and the introduction of
merit pay for new teachers. Under the deal the district will also slash the
salaries of educators transferred from the dissolved Educational Achievement
Authority, categorizing them as new hires.
Detroit has been the model for the national
policy to eviscerate public education pursued by both big-business parties and
the handing of billions to charter schools and voucher programs.
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