Downtown property tax revenues are falling, taking a bite out of the St. Ignace Downtown Development Authority's pocketbook for next year. With this in mind, and with fewer one-time improvement expenses anticipated next year, the DDA decided it can tighten spending for the upcoming year to fundamental maintenance levels.

After approving changes to both the 2009 and 2010 budgets aimed at helping the city's marina renew its bonds at a lower interest rate, the DDA approved an operating budget for 2010 at its meeting Friday, November 13.

Property taxes in the downtown district are expected to raise $211,260 of the $226,660 budgeted for 2010. Interest earnings are expected to add $400 to the DDA's revenue, and the remaining $15,000 gap will be drawn out of the DDA's cash balance for improvements and maintenance, which is expected to contain $31,730 at the end of 2010.

The main source of revenue for the DDA, downtown property taxes, has fallen from $230,270 in 2008 to an estimated $211,260 for the 2010 budget, a reduction of 9% in two years.

"This is the first time we have ever had a hit like that," said DDA Director Deb Evashevski. Falling property values in the area, like those across the state, are mostly to blame for this decrease, said DDA chairman Gene Elmer, who is also the city assessor, city treasurer, and marina director.

The taxable value of downtown properties is determined by Mr. Elmer. Property owners are taxed on the property value from 1981, when the downtown district was established, to pay for general city, county, and school operating taxes, while taxes they pay on property improvements or value increases over the 1981 level go directly to the DDA.

Changes from the DDA's 2008 budget include $15,000 less budgeted for contracted services, $2,500 less for printing and publishing, and $13,000 more to help fund major purchases like more downtown benches and the replacement of U.S. Flags on the light poles along State Street, to replace those damaged in high winds this year.

The decrease in contracted services, Mrs. Evashevski said, reflects a lot of one-time costs in 2009, like the purchase of signs, banners, and landscaping work. This will be reduced to only normal maintenance to lights, flowers, and landscaping in the downtown area.

"We had a lot of one-time shots in 2009 that we won't have this year," she said.

A 3% increase is budgeted for the DDA director's salary, an increase from $32,370 in 2009 to $33,340 in 2010, although Mrs. Evashevski is given the same raise or pay cut given to other department heads. She works 30 hours a week.

The City of St. Ignace is awaiting the end of employee contract negotiations scheduled in December before it approves any final salaries and wages for the upcoming year. According to the city's charter, a budget for 2010 must be in place by December 31, 2009 . In the last contract, employees received 3% raises annually.

Budget Revised

DDA members approved a transfer of $10,000 to the city's marina in 2009 instead of 2010, but further insight into the marina's end-of-the-year finances have proved that transfer unnecessary.

During the meeting, members approved the elimination of $10,000 budgeted in 2010 for transfer to help the city's marina pay off its current debt of $795,000. Instead, the DDA decided to give the money to the marina before the end of the year, at the marina director's request.

Mr. Elmer asked that the DDA transfer $10,000 to the marina before the end of 2009, which he said will assure that the marina ends the year in the black, a requirement the marina must meet before it can be considered for refinancing its bonds .

The current interest rate, which is set at about 6%, could be as low as 4% if the debt is refinanced now, Mr. Elmer said.

"I feel that I'll be in the black at the end of the year, but I'm not certain," Mr. Elmer said November 13 . "We are exploring the possibility of re-bonding at a lower interest rate. You can't start the re-bonding process if you are in the red."

Mayor Paul Grondin initially questioned drawing from the DDA's cash balance for the marina, and reminded board members that the city's financial situation may actually be worse in 2011. He asked Mrs. Evashevski how much cash balance the DDA has historically held.

In the past, this balance has hovered around $50,000, Mrs. Evashevski said, although the $31,730 at the end of 2010 would be nearly 15% of the total budget.

In October 2008, the DDA agreed to contribute $30,000 to help pay the marina's debt over the next three years. After a total of $20,000 is transferred to the marina in 2009, the DDA plans to transfer no money in 2010, and transfer the remaining $10,000 to the marina in 2011. This remaining $10,000 transfer would need to be approved by the DDA in 2011.

2009 Transfer Unnecessary

After looking more closely at end-of-the-year bills, Mr. Elmer told The St. Ignace News Monday, November 30, he will likely have about $10,000 extra at the end of the year, assuming the transfer of $10,000 from the DDA budget is not made before the end of the year.

The first $10,000 transfer was made at the beginning of 2009, which means without that assistance the marina would have ended 2009 very close to breaking even. The marina was recently required to file a deficit elimination plan with the State of Michigan, in which the marina plans to eliminate its yearly deficit by 2013.

If the marina does end the year in the black, the DDA will not need to transfer the $10,000 in 2009, and will instead pay the amount out to the marina in next year's budget. After the final payment of $10,000 in 2011, the full $30,000 the DDA promised the marina in 2008 will have been paid, and board members will decide if the DDA will provide any further support to the marina.

Mrs. Evashevski said the marina is crucial to downtown St. Ignace, and acknowledged that the financial stability of the marina is a primary concern to the DDA.

"Obviously, the marina is very important to our downtown district," she said. "We have other commitments, ourselves, but it's definitely something the DDA is interested in, making sure it is operational and continues drawing boaters to our community."

The largest determinants of the marina's financial success in the 2010 season, Mr. Elmer said, will be the cost of fuel and the weather, both of which can strongly affect the number of boaters who visit St. Ignace.

The St. Ignace DDA meets at 8 a.m. on the second Friday of each month, and its meetings are open to the public. The next scheduled meeting is at 8 a.m. Friday, December 11. All meetings are in City Council chambers in St. Ignace City Hall.