Foundation for Excellence moves forward: 'What a great day to be in Kalamazoo'

“Optimism is a form of resistance,” Mia Birdsong.

Quoting family activist Mia Birdsong, who has spent 30 years in pursuit of social justice, Kalamazoo City Commissioner David Anderson said he was “going to take a stand for optimism” as he cast a vote in favor of moving ahead with the Kalamazoo Foundation of Excellence.

The Kalamazoo City Commission voted 6-1, Oct. 24 to approve an agreement between the city and area philanthropists Bill Parfet and William Johnston that will lead to the formation of a new foundation designed to bring fiscal stability to the city budget and allow it to invest in projects that will improve the lives of citizens, especially its young people.

Vice Mayor Don Cooney, Commissioners Anderson, Erin Knott, Shannon Sykes, Jack Urban, and Mayor Bobby Hopewell voted to enter into a memorandum of understanding with the donors. Commissioner Matt Milcarek voted against it. 

Milcarek said he is fully committed to the work that is yet to be done to see that formation of the foundation is done “absolutely right,” but he cast a vote against it because wanted to offer a voice at the table for those who are skeptical of the foundation as the solution to the city’s budget woes.

Parfet and Johnston have committed to donating $70.3 million to support the creation of the Foundation, with a goal of having it fully endowed within three years.  They will co-chair a capital campaign that would endow the foundation so that it can last in perpetuity. The funds will be used to stabilize the city’s budget, lower the city’s property tax rate, and provide $10 million a year in the first three years of the endeavor for projects the city could not even dream of when it was continuously battling to balance its budget.

Kalamazoo has been far from alone in the state in experiencing fiscal uncertainty. Michigan is the only state in the nation that cut revenues to local municipalities from 2002-2012. State support for cities, villages, townships, and counties was slashed by 56 percent, $7.5 billion, over that period. Meanwhile, state revenues increased 29 percent, reports the Michigan Municipal League. “Modest increases since then have not kept up with municipal responsibilities to provide police, fire, recreational and other services,” the League says.

In 2016, the city of Kalamazoo avoided a $2.9 million budget shortfall through a series of one-time fixes that plugged the hole in the $134 million budget. Similar structural budget shortfalls were projected into the near future, causing the city to seek other options.

A Blue Ribbon Revenue Panel formed to recommend solutions came up with 23 different ways to raise money for the city, focused on 10 of them, and ultimately recommended the city adopt five. The panel acknowledged revenues raised by adopting its recommendations would not be enough to correct the budget shortfalls.

The city also has committed to maintaining core services though it has had to repeatedly cut the number of city employees in order to balance the budget. The city eliminated 133 positions between 2010 and 2014.

Kalamazoo’s fiscal position also is made more difficult by the large amount of property which is owned by non-profit organizations which don’t pay property tax. By some estimates, 52 percent of the property that might otherwise provide tax base is exempt from paying property taxes. 

Consequently, the City Manager Jim Ritsema and Mayor Bobby Hopewell approached Johnston and Parfet to find out if they would be willing to work with the city to resolve the ongoing budget struggles. “We sat down with them and an ask was made,” said Mayor Bobby Hopewell. “We asked.”

The idea was presented to the commission in July and commissioners agreed to pursue it.

At the Oct. 24 meeting, Ritsema laid out a timeline for establishing the Kalamazoo Foundation of Excellence. As part of the memorandum of understanding between the city and the donors, the donors require “that substantial research and thoughtful deliberation be engaged in to create an organizational document that will stand the test of time and include the appropriate governance structure” be established.
The city by Aug. 31, 2017 will prepare a mechanism to legally accept donations that will go toward the endowment.  It will develop a budget for fiscal years 2017, 2018, and 2019 which generates revues by levying 12 mills on property in the city, rather than 19 currently levied.

In each of those three fiscal years, $10 million will be spent on projects the community has identified as ones that will improve the area through the Imagine Kalamazoo 2025 process. 

About 150 people turned out to learn about the memorandum of understanding between the city and the donors, the majority of whom supported it. 

Former County Administrator Peter Battani, current County Treasurer Mary Balkema, and former City Commissioner Robert Cinabro all spoke in favor of accepting the memorandum of understanding.

Balkema pointed out the reduced property tax rate would be a “game changer” for those who struggle to pay their taxes. “This will provide tax relief for the most vulnerable among us.” She went to thank the donors. “They could have spent their money anywhere and they chose to spend it in Kalamazoo. This is an unbelievable gift.”

Mattie Jordan Wood also spoke in support of the agreement for its potential to cut property taxes. She cited 62 foreclosures on owner-occupied dwellings in the Northside neighborhood between 2008 and 2015. “This just might be the little bit that will help,” Jordan said.

Small business owners also spoke out in favor of the agreement. 

Not everyone praised the proposal, however.  A resident of the Edison neighborhood questioned whether the monies promised by the donors were really a gift and suggested that trust between those in his neighborhood and the city was broken. When his comparison of the donors’ gift to the privatization of public enterprises that took place in Bolivia in the 1990’s was met with derision he responded: “You can laugh. But people in my neighborhood don’t get to laugh. Remember those kids didn’t get to make it to The Promise.”

A Cobb Avenue resident told the commission, “What I have been hearing is really good stuff. If this helps somebody and helps kids, then I’m all for it.”

In response to questions raised about the private-public nature of the foundation, city commissioners pointed to successful private-public ventures across the city, including the downtown KVCC campus building in which the meeting was being held. Construction of the campus launched the revitalization of the downtown area at the north end of the Kalamazoo Mall and beyond.

Most city Commissioners expressed their gratitude for the gift the donors have promised to make happen. Milcarek, however, said he would have liked to see more detail on the agreement and he also would like to know more about how it will be possible to sustain the endowment. 

Mayor Hopewell pointed out that at many points in the city’s history those who were building it  could have hesitated to proceed because it was just too big. But they didn’t. He also noted that Austin, Texas, Pittsburg and Cleveland all have similar foundations. “They might be bigger cities, but we’re big enough to have it happen here.”

Having made their comments, the commissioners went on to approve the agreement. "What a great day to be in Kalamazoo," Mayor Hopewell concluded.

Kathy Jennings is the managing editor of Southwest Michigan’s Second Wave. She is a freelance writer and editor.

Those who want to have a say in what projects are funded are invited to the next Imagine Kalamazoo 2025 workshop at St. Joseph Catholic Church, 936 Lake St. at 5:30 p.m. on Oct. 27. The workshop is part of developing a new master plan for the city. Dinner will be served and children's activities will be available. Spanish interpretation will also be provided. 
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