City announces plan to eliminate budget deficit

Seeks contributions from DDA, general fund

Sunday Times Newspapers

ALLEN PARK — Officials announced a plan to battle its $7 million budget deficit over the next four years.

The five-year plan for the deficit, caused partly by the $1.2 million per year the city is losing on its studio center on Southfield, was approved at a City Council meeting Tuesday.

The plan includes a contribution of $3 million for each of the next five fiscal years, from now through 2015, from the city’s general fund and the Downtown Development Authority to cover the estimated losses on the property each year, as well as to eliminate the city’s deficit.

Finance Director Timothy McCurley said the money, which will not be paid back to the authority, must be voted on by its Board of Directors. The plan is in its “very preliminary” stages, he said, and no dollar amount has yet been earmarked by the DDA for that use.

“We’re hoping the DDA and the city work together to come up with this,” McCurley said.

If the authority does not agree to donate the money, the entire contribution must be taken from the general fund. McCurley said the remainder of the $3 million for each fiscal year will go toward repaying the deficit.

“If we didn’t have the deficit, we’d only have to come up with $1.2 million,” he said. “Because we have the deficit, we have to come up with both.”

The 104-acre property, which the city purchased in 2008, has led to controversy since its major occupants, Unity Studios and the Lifton Institute for Media Skills, vacated the complex in the fall after a year.

Many media outlets reported that the complex, for which the city paid nearly $25 million, was overvalued by figures ranging from $4 to $20 million. The results of a recent appraisal showed the property currently is valued at $21 million, but McCurley said the difference is due to declining property values.

The property currently generates $1.6 million in rent per fiscal year, not including maintenance charges paid by the renters totaling $900,000 per fiscal year. Projected revenues for the complex for 2010-11 are $2.7 million, but expenditures for it are projected at $3.7 million, McCurley said.

As part of the plan, officials are working to bring new renters to the property. A real estate task force began meeting two weeks ago to market it to potential renters, and some talks are in progress in hopes of meeting the additional $300,000 in projected rented space outlined in the plan.

“If someone wanted to buy five acres, that money could be used for this,” McCurley said. “There’s a lot of potential, and we’ve had a lot of conversations with this.”