Kalamazoo leaders release plan for $70M donation

Downtown Kalamazoo
An Oct. 18, 2016 file photo shows vehicles lining the streets of downtown Kalamazoo.

KALAMAZOO, Mich. (WOOD) — Kalamazoo city leaders are formally outlining their plans for a $70.3 million donation.

City Manager Jim Ritsema has been crafting the Memorandum of Understanding since July amid concerns from residents about a lack of information explaining how the proposed Kalamazoo Foundation for Excellence would work and whether donors will have control on how the money is spent.

Ritsema assured that protections will be in place to prevent that.

“This whole model and this whole thinking has been built upon trust,” he told 24 Hour News 8. “And there’s a partnership. It’s not about one party controlling the other. That’s never been discussed.”

Under his proposal, the city will create a city-controlled fund to receive the initial donation, which will go toward creating the nonprofit foundation by Aug. 31, 2017. Some $20 million of the original $70 million donation would be allocated directly to the 2017 budget before the foundation is officially formed.

The rest of the donation will then go to the organization to develop a budget through 2019 that incorporate a 12-mill property tax — a decrease of more than 37 percent from the current tax.

>>PDF: Proposed Kalamazoo Foundation for Excellance Memorandum of Understanding

If approved, the foundation would eliminate the city’s deficit, fund key investments and improvements and cut property taxes for residents by more than 37 percent. The plan calls for allocating $10 million each fiscal year toward “Aspirational Projects” focused on:

  • Youth development
  • Poverty reduction
  • Capital and human infrastructure investments
  • Neighborhood improvement
  • Exploring shared services to reduce spending
  • Develop guidelines and metrics for donation impact

“It’s really about creating a community of excellence,” Ritsema said of the foundation.

As part of the plan, the $70 donation will be provided over the next three years to generate additional support and contributions for the foundation, with a goal of having it fully endowed with $500 million by June 30, 2019.

“The idea of it being fully endowed by the end of the third year means it will be sustainable,” Ritsema explained.

Anyone will be encouraged to donate. Additionally, property tax cuts could draw more business and money to area, in turn allowing for more contributions for the foundation.

The city commission plans to focus on the agreement during its meeting Monday, which will be streamed live on the city’s Facebook page for those who cannot attend. Commissioners could possibly vote on the Memorandum of Understanding that night.

City Commissioner Matt Milcarek expressed concerned over what he said is a lack of specific information regarding how the foundation will structurally fund the city — particularly after the initial donation is utilized. He told 24 Hour News 8 he still has many questions about this unique method of funding city government and will have a hard time voting for something he knows little about.

**Correction: A previous version of this article stated that the city wanted to raise $20.1 million in additional funds for the 2017 city budget. That was incorrect. The $20.1 million will come from the overall $70.3 million donation and would be put into the 2017 budget before the official creation of the foundation.