Davis v. Detroit Public Schools Community District, 080918 FED6, 17-1909

Docket Nº:17-1909
Opinion Judge:CLAY, CIRCUIT JUDGE.
Party Name:Robert Davis; D. Etta Wilcoxon, Plaintiffs-Appellants, v. Detroit Public Schools Community District, et al., Defendants-Appellees, Detroit Downtown Development Authority, et al., Intervening Defendants-Appellees.
Attorney:Andrew A. Paterson, Ann Arbor, Michigan, for Appellants. Kevin J. Campbell, THE ALLEN LAW GROUP, P.C., Detroit, Michigan, for Detroit Public Schools Appellees. David H. Fink, FINK + ASSOCIATES LAW, Bloomfield Hills, Michigan, for Detroit Downtown Development Appellees. Andrew A. Paterson, Ann Arb...
Judge Panel:Before: BOGGS, CLAY, and LARSEN, Circuit Judges. CLAY, J., delivered the judgment and opinion of the court, in which BOGGS and LARSEN, JJ., joined, except as to the issue discussed in Part II.B. BOGGS, J. (pg. 12), delivered the opinion of the court on that issue, in which LARSEN, J., joined. BOG...
Case Date:August 09, 2018
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Robert Davis; D. Etta Wilcoxon, Plaintiffs-Appellants,

v.

Detroit Public Schools Community District, et al., Defendants-Appellees,

Detroit Downtown Development Authority, et al., Intervening Defendants-Appellees.

No. 17-1909

United States Court of Appeals, Sixth Circuit

August 9, 2018

Argued: March 15, 2018

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:17-cv-12100-Mark A. Goldsmith, District Judge.

ARGUED:

Andrew A. Paterson, Ann Arbor, Michigan, for Appellants.

Kevin J. Campbell, THE ALLEN LAW GROUP, P.C., Detroit, Michigan, for Detroit Public Schools Appellees.

David H. Fink, FINK + ASSOCIATES LAW, Bloomfield Hills, Michigan, for Detroit Downtown Development Appellees.

ON BRIEF:

Andrew A. Paterson, Ann Arbor, Michigan, for Appellants.

Kevin J. Campbell, Floyd E. Allen, Lawrence T. García, Amy M. Robertson, THE ALLEN LAW GROUP, P.C., Detroit, Michigan, for Detroit Public Schools Appellees.

David H. Fink, Darryl Bressack, FINK + ASSOCIATES LAW, Bloomfield Hills, Michigan, Jeffrey M. Sangster, Dennis K. Egan, Anthony M. Sciara, Tyler P. Phillips, KOTZ SANGSTER WYSOCKI P.C., Detroit, Michigan, for Detroit Downtown Development Appellees.

Before: BOGGS, CLAY, and LARSEN, Circuit Judges.

CLAY, J., delivered the judgment and opinion of the court, in which BOGGS and LARSEN, JJ., joined, except as to the issue discussed in Part II.B. BOGGS, J. (pg. 12), delivered the opinion of the court on that issue, in which LARSEN, J., joined.

OPINION

CLAY, CIRCUIT JUDGE.

Plaintiffs Robert Davis and D. Etta Wilcoxon seek a declaratory judgment and mandamus relief against Defendant Detroit Public Schools Community District Board of Education, arguing that the school board has the authority and obligation, under Mich. Comp. Laws §§ 380.11a(10), 380.1216, 168.312, and 168.641(4), to place on the next Detroit election ballot a question asking city voters to approve or disapprove of certain tax expenditures by Intervenor-Defendants Detroit Downtown Development Authority ("DDA") and the Detroit Brownfield Redevelopment Authority ("DBRA"). The district court dismissed Plaintiffs' claims and entered judgment under Rule 54(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, we AFFIRM the judgment.

To the extent that Part II.B of this opinion is inconsistent with the concurring opinion, the concurring opinion constitutes the opinion of the Court.

STATUTORY BACKGROUND

The DDA and DBRA are tax increment finance entities created by the City of Detroit to facilitate economic development and to spur economic growth projects within the City. They operate according to the rules set forth in Mich. Comp. Laws § 125 et seq., using property tax revenue to finance construction projects in the City of Detroit. As relevant here, in 2016, the DDA and DBRA agreed to fund $56.5 million of construction projects related to the relocation of the Detroit Pistons professional basketball team from Auburn Hills, Michigan, to Little Caesars Arena in downtown Detroit. The construction projects included improvements to Little Caesars Arena, construction of a new basketball practice facility, and creation of a Pistons corporate headquarters. Plaintiffs oppose the projects and seek a city-wide referendum asking voters to approve or disapprove of these tax expenditures. Because Plaintiffs' claims require an understanding of the law governing development authorities, we begin with an overview of the relevant Michigan law.

In Michigan, a municipality may create a "downtown development authority" to "halt property value deterioration and increase property tax valuation where possible in its business district, to eliminate the causes of that deterioration, and to promote economic growth[.]" Mich. Comp. Laws § 125.1653(1). A municipality may also create a "brownfield redevelopment authority," which serves similar functions. See Mich. Comp. Laws § Ch. 125. Both types of authorities are funded through tax increment financing ("TIF"). The Michigan Supreme Court has explained how tax increment financing works: [A] tax increment financing (TIF) plan allows a local government to finance public improvements in a designated area by capturing the property taxes levied on any increase in property values within the area. Under a TIF plan, a base year is established for the project area. In subsequent years, any increase in assessments above the base year level is referred to as the captured value. All, or a portion, of the property taxes levied on the captured value (SEV) is diverted to the area's development plan.

Tax increment financing is premised on the theory that, without the redevelopment project, property values would not increase, or that increases in land values and assessments in the project area are caused by the redevelopment authority's own construction of economic activity in the district.

In re Request for Advisory Opinion on Constitutionality of 1986 PA 281, 422 N.W.2d 186, 189 (Mich. 1988) (emphasis in original) (quotation marks, citations, and footnotes omitted).

In the years since the TIF legislation was passed, numerous Michigan municipalities have established development authorities. As relevant here, the City of Detroit created the DDA in 1978 and the DBRA in 1996.

FACTUAL AND PROCEDURAL HISTORY

This particular dispute has its roots in a Detroit ballot proposal. Specifically, in 2012, Detroit residents voted to allow the school district of the City of Detroit to increase the amount of property taxes it could collect. The proposal specified that the revenue would be used "to provide funds for operating expenses of [the] School District." (R. 12, complaint, ¶ 111.)

Plaintiff Wilcoxon is a Detroit resident who voted on the proposal. Plaintiff Robert Davis is a resident of Highland Park, Michigan. Because he is not a Detroit resident, he could not vote on the proposal. Nonetheless, as a self-styled "community activist," he asserts that he maintains a keen interest in the City's affairs.[1]

In June 2013, the DDA announced its intent to begin capturing some of the tax revenue authorized by the ballot proposal to fund the construction of Little Caesars Arena in downtown Detroit. The DDA hoped to build a state of the art home for the Detroit Red Wings professional hockey team and predicted that the arena would also host a variety of other sports and entertainment events. In December 2016, the DDA revised its development plan, making changes that would allow the Detroit Pistons professional basketball team to relocate to Little Caesars Arena. The revised plan provided for additional improvements to the arena, construction of a new basketball practice facility, and creation of a Pistons corporate office and headquarters. In June 2017, the DBRA agreed to foot some of the bill. All told, the DDA and DBRA estimated that they would spend a combined $56.5 million on the project. Much of this money would go towards reimbursing construction costs that private developers had already advanced. Indeed, at this point, the development project is largely complete.

Plaintiffs, however, oppose the Little Caesars Arena project. On June 20, 2017, Plaintiffs emailed the school board, the board's president, Dr. Iris Taylor, and another school official, asking the board to place on the November 2017 general election ballot a question asking voters to approve or disapprove of the DDA's and DBRA's use of tax revenue for the Pistons relocation. Plaintiffs noted that the 2012 ballot proposal authorizing the taxes specified that the revenue would be used for school operating purposes; it did not mention anything about the Pistons. Accordingly, Plaintiffs argued that the DDA and DBRA were attempting to divert tax revenue without voters' consent, in violation of Mich. Comp. Laws § 380.1216. That statute provides that "money raised by tax shall not be used for a purpose other than that for which it was raised without the consent of a majority of the school electors of the district voting on the question at a regular or special school election." Mich. Comp. Laws § 380.1216.

Three days after receiving Plaintiffs' email, the board held a special meeting to consider Plaintiffs' request. At the meeting, the board's attorney said she believed the board lacked authority to place the tax question on the ballot. During the public comment portion of the meeting, Robert Davis challenged the attorney's opinion. He cited, among other statutes, Mich. Comp. Laws § 380.11a(10), which provides that "[t]he board of a general powers school district may submit to the school electors of the school district a question that is within the scope of the powers of the school electors[.]"

Despite Plaintiffs' efforts, the board did not put the question on the November 2017 ballot. Plaintiffs responded by filing a lawsuit in the district court against the board, Dr. Taylor, the school district, and related entities. Plaintiffs also sued the company managing the Little Caesars Arena project (Olympia Entertainment Events Center, LLC), the company that owns the Detroit Pistons (Palace Sports and Entertainment, LLC), and the National Basketball Association. The DDA and DBRA intervened as defendants. In broad strokes, Plaintiffs raised a variety of claims based on the First Amendment, the Fourteenth Amendment, the Voting Rights Act, and various state statutes. However, only two of their claims are pertinent to this appeal. Specifically, in count VIII, Plaintiffs sought a declaratory judgment stating that the school board has authority under state law to place their tax question on the ballot. In count IX, Plaintiffs sought a writ of mandamus ordering the board to place their tax question on the ballot.

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