Burtka: City facing challenges

Photo by Andrea Poteet

The audience listens Thursday as Mayor Gary Burtka presents a PowerPoint presentation during his State of the City Address.

Sunday Times Newspapers

ALLEN PARK — In his State of the City Address Thursday, Mayor Gary Burtka addressed the steps the city is taking to overcome its fiscal challenges.

“We’ve got a challenge ahead of us, we know that,” Burtka said. “We are working with some budget sessions … to try to face these challenges.”

One of those challenges is the decline in property values in the area, which will translate to a loss of $100 million in taxable value for the city and will cost it $1.7 million in tax revenue in 2011, Burtka said.

According to a graph the mayor presented, home values in the city have declined steadily since 2004, and are now at an average of $80,000, the same as home values in the area for 1995.

“Hopefully it’s starting to turn around,” Burtka said. “Once it turns around, hopefully more jobs are created, we can stabilize and (home values) can start to go back up. That’s the hope.”

Burtka said the city will not know the true depth of the challenges it will face until Gov. Rick Snyder announces the state’s budget and plan for revenue sharing in March.

During the hour-long speech, which consisted of a PowerPoint presentation summing up the activity of each city departments over the last year, Burtka also expressed concern that the state would eliminate revenue sharing, which earned the city more than $1 million in the fiscal year ending June 30, 2010. The state’s revenue sharing program distributes sales tax collected by the state to local governments as unrestricted revenues. The City Council passed a resolution at its last meeting to ask the state not to hamper revenue sharing.

Another challenge the city faces is its investment income, which has decreased by 88 percent over the last five years due to decreasing interest rates and a lack of funds to invest, Burtka said. The city’s general fund is now at 4.2 percent of expenditures and is projected to decrease, due in part to increasing health care and pension costs that rose by $1 million last year and are due to increase, he said. A healthy general fund is usually 10 to 15 percent of a city’s expenditures, experts say.

Because of the decreasing general fund, Burtka said some sacrifices must be made.

“The services that the residents have become accustomed to will be changing,” Burtka said. He did not expound on what those changes may involve.

Burtka also mentioned positive steps that have happened in the past year, including the filming of two movies in Unity Studios, which left the city in October. The films created more than 300 jobs, Burtka said.

He mentioned Allen Park’s role in “taking the lead” to bring the film industry to metropolitan Detroit and streamline the permit process for the film industry. He said he hopes that brings similar ventures to the area.

Despite the economy, Burtka said there are more positive signs. More than $34 million in improvements were made to homes and businesses in the last year, he said, and more than 28 new certificates of occupancy were granted for businesses, including Stautzenberger Institute, which is in the process of increasing its lease to add more space to its Allen Park Studio Center location. Plato’s Closet and a variety of salon and health businesses were also added to the city in the last year.

More positive changes are on the way, Burtka said. A $50 million upgrade to the Detroit Water and Sewer plant, as well as the finalization of city recreation space at the Fairlane Green shopping center, which was required as part of the original contract, also are on the horizon, Burtka said.

More than five new businesses also are planning to move to the area, including Jimmy John’s Gourmet Sandwiches and The Gap.