The BIG LIE

Arguing against positions that no one has taken

A consistent theme has developed and been used by City Commissioners who vote for additional bars. A close analysis of their comments at the City Commission meetings and sound bite sized quotes offered to the press disclose that their position is usually framed to oppose someone who is advocating that there should not be any liquor served in Royal Oak at all, or that we don't want a vibrant Downtown. The truth is that no one has taken that position. Most of us believe that a balanced downtown requires some Liquor licenses to compliment other business activities and their patrons. For example, retail shoppers may wish to have lunch after shopping. Office workers may desire to walk to restaurants with their clients. Residents in and near the Downtown may enjoy walking a few blocks to have dinner.

The Commissioner members who keep approving bars fail to comment or rebut the true position and concerns of those who disagree with them. They do not engage in a dialog that could acknowledge that those who object to more bars base their objections on sound public safety concerns, along with solid economic and planning criteria. They avoid the real issues about being totally oversaturated with liquor and the costs associated with their decisions. Instead, they speak in generalities and clichés that can be sound bites such as "Let’s just hang a CLOSED FOR BUSINESS sign at every entry point to Royal Oak.", if we fail to approve the next license. They are quick to condemn anyone who disagrees by claiming that all other points of view are somehow opposed to jobs, growth and progress.

Their positions are based on either a lack of true analysis, false conclusions, or no proven relationship between causes and effect. It is important to analyze the statements made by these City Commission members. When they attempt to publicly justify and create plausible reasons to explain why they vote for more bars, they present no facts, evidence, data, or experts to support their decisions. A pattern of similar statements emerges, and it is very frustrating to hear repeated and unsubstantiated claims, made over and over, as justification to continue approving additional bars in our city. A fairytale like story is promoted that claims that the economic engine that powers our city is the additional bars that have been added in the last few years.

The claims now have evolved to the point where some Commission members are claiming that the influx of bars/restaurants have somehow magically increased our property values in the last year. Some Commissioner members who support additional liquor licenses claim that Royal Oak has "IT" and must approve more bars to remain relevant. Of course, none have defined what "IT” is, or more importantly, the true cost to our community of being "IT". Following that logic, why would there be a need for a millage when the Commission only needs to keep approving more bars. It's a ridiculous and unsubstantiated claim. Hopefully, we will not be forced to hear newly fabricated evidence or so called facts that are produced now, after the fact. If there was any evidence to support their position, it would have been produced before the votes granting approvals. The truth is that at the time of approving the increased capacity for thousands of additional drinkers, there were never any facts or evidence in existence to justify the approvals. All we heard were the sound bites and conclusionary statements.

For many of us, being relevant would be striving to become more like our neighboring city of Birmingham. They seem to have followed a long term plan based on sound economic and planning principles that resulted in a balanced mixed use downtown. There is great danger of substituting sound planning with political gamesmanship.  As a city, we do not want to gamble on a game and become the last one tagged “IT”. Currently the city of Pontiac and some others have been tagged “IT” after years of dealing with a failed entertainment district among other problems. Pontiac currently finds itself under the thumb of a State appointed Emergency Manager. 

Additional bars generate a tax revenue windfall for our city

This claim simply is not true! In a fully developed city where almost every property already has a building on it, tax revenues don't materially increase when a bar goes into an existing, taxpaying building. They do not pay more taxes than other types of uses of the same land and building. However, they do use a lot more city services (public safety) than other types of businesses.

The City Manager with the help of the City Assessor prepared a study that clearly shows that all the bars in the entire city of Royal Oak only pay real and personal property taxes to the City and DDA in the amount of about $250,000, or enough to pay all the costs for only 2 police officers. While other taxes are also paid, (i.e. County, Schools, and O.C.C) it is only the City tax that is used to pay for public safety within the City of Royal Oak. The City Manager points out that he was surprised that the total was so small. This should be expected because most bars approved are moving into existing tax paying buildings. If the building would have had a retailer, the building would pay about the same amount of taxes, but require much less public safety services.

What happens is that without a newly constructed building built on vacant land, the tax revenue does not materially increase. Most of the additional bars merely move into existing buildings that have been paying taxes. The incremental increase is tax is so small that it cannot possible pay for more police, but their liquor establishment requires more policing!

If the City Commission's approval pattern continues, the City Commission could, absurdly, double the number of bars, but the increase in tax revenue would be immaterial, or not even enough to pay for 1 more police officer. Of course, under that scenario, crime would greatly increase in the Downtown, without sufficient additional tax revenue to pay for the policing.

54 Liquor Serving Establishments versus 66 Police Officers 

The expert opinion contained in the ICMA study recommends hiring more police officers and creating a special police detail dedicated to the downtown. Hopefully, the need to pull police out of the neighborhoods every time a problem occurs Downtown would be diminished. Unfortunately, the tax revenue from the bars is not enough to pay for it. The City Commission is preparing to ask the taxpaying residents of Royal Oak (and other non-alcohol related businesses) to shoulder the cost of their self-created "entertainment/bar district" by asking them to adopt the largest city tax increase in Royal Oak's history!  One can make a strong argument that the taxpayers of Royal Oak will be asked to subsidize security for the local liquor industry.  

The truth is that additional bars do not create a tax revenue windfall. The opposite is true when the city has passes the breakeven point and is oversaturated with bars. Adding more will only increase the taxpayers burden  for public safety. Any increases in tax revenue will only materialize if all other property owners and homeowners are forced to pay more via a millage increase. 

In Royal Oak's 90+ year history, Royal Oak has always been a "family city". That reputation was greatly enhanced with the City's residential building boom after World War 2, and when many families were started in our great community. Yet, the three most common City Commission Agenda items in 2011, as identified at last year's Strategic Planning session were liquor issues, guns, and marijuana. These issues certainly do not convey a "family friendly" type of environment.

Additional bars enhance other businesses

Often, landlords will leave a building vacant when a retailer moves out and will speculate that they can earn more income if a bar rents their building. There is nothing illegal about speculation, but another political fairytale has developed that claims that an empty building must be filled with anything because the City needs the tax revenue. Their claim is that another bar is apparently better than nothing. This is a distortion of reality because during the periods of speculation, landlords are still required to pay property taxes. They do not receive a tax abatement. Taxes are based on the value of the property.

Of course, having viable business activity may generate additional spinoff customers for other nearby businesses, but in Royal Oak most of the Bar crowd arrives after 10 p.m. At that late hour, mostly, only bars and restaurants are still open, not retailers or other types of businesses.

The bar business consumes a much greater amount of taxpayer funded resources than most other types of use (public safety is the most expensive part of the taxpayer funded city budget). This unfunded economic liability to the City's General Fund is increased once the City has reached the oversaturation level, and every time another bar is added, or expanded. 

Do we want Main Street or Bourbon Street?

For the most part, taxes collected from the dozens of bars within the DDA (downtown) district are not directed to the City's General Fund, but are directed to fund the DDA. Since most public safety (Police/Fire) is paid for out of the General Fund, the tremendous cost to babysit some of the unruly patrons of the Downtown is mostly paid for by all of us. The so called tax revenues (or lack thereof in the General Fund) do not even cover the service provided to patrol and service all these bars. What does that mean? It means the public safety service being provided in the Downtown is being subsidized from somewhere else. Somewhere else equals the taxpayers living in all four corners of our community.

Some of the newer members of the Commission appear to be oblivious to past memos and information that quantify the issue... City Commission Letter #015-11 dated January 24, 2011 addresses the Property Taxes Collected from Class C, Resort and Bistro Licensed Business Establishments in our community. The result? The combined City taxes from ALL the bars citywide that will only pay two police officers each year!! This memo alone should forever refute unsubstantiated claims about tax revenue windfalls from bars. There is no silver bullet in bar tax revenues. Case closed!  Commission Letter #015-11  http://www.ci.royal-oak.mi.us/portal/sites/default/files/meetings/City%2...

The Biggest Millage Request in Royal Oak's History is Coming 

In the very near future, the City will be asking citizens to approve a substantial millage increase. This millage will stand out because it will dwarf the failed 1.75 mill increase that was requested in 2005. You will recall that the 2005 request failed 10,920 to 5,115, or by over a 2 to 1 margin. It is expected that the City will request a millage increase of between 3.95 to 5 mills, which will by far be the largest millage increase request in Royal Oak's history! Keep in mind, the City portion of our current taxes is 7.49 mills. This future proposal will ask Royal Oak citizens to increase their city taxes by upwards of 55% or more! 

Additional bars create jobs and growth

There is no disputing that there is growth, but the growth is occurring in ways that create very little benefit to the entire city. The City Commission fails to consider all the associated costs. A review of the discussion at Commission meetings when bars are approved reveals that there is an absolute lack of any cost/benefit analysis. The growth of additional bars is not supported by the Master Plan. The growth has occurred in the ever-expanding unneeded "entertainment district" that is never mentioned in the Master Plan. When addressing the Downtown the Master Plan is specific. It has goals and objectives of creating a balanced mixed-use downtown center, enhancing mixed uses, encouraging retail, and creating buffers with residential uses. Following this plan would have resulted in a true net growth of jobs, with real employment benefits, not restaurant jobs paying minimum wage without health benefits.

Since the approval of Black Finn, these goals and objectives have been ignored by the City Commission under the pretext of more tax revenue, jobs, growth, and progress. These types of political buzzwords appear in almost every campaign advertisement with claims that a particular candidate or issue being promoted somehow is positive for creating jobs. These phrases are also frequently used by new liquor license applicants, their attorney, and the politicians who vote to approve additional bars.

We must remember that the type of jobs that President Obama or Governor Snyder talks about is the full time jobs with benefits that will allow someone to make a mortgage payment and raise a family. While all job creation is good, it is unfortunate, that most bar owners do not provide all their employees with benefits, or pay enough to raise a family. While there is some full time and well paid positions, most are part time or temporary. Many of the bars only increase their staffing levels a few nights a week when the late night drinking crowd takes over. This is sort of the bar/restaurant Industry standard. Jeff Horner, a lecturer in Wayne State University's Department of Urban Planning (and Royal Oak resident) states, “The average job at such an establishment may help pay the rent, but those are not usually lifetime jobs. Bars are not economic development engines for cities.”

For example, when Black Finn was seeking approval they promised incredible claims that were contrary to industry standards without any verification or guarantees. The claims promised: Jobs(75) with health insurance benefits, employees purchasing homes in Royal Oak, increased tax revenues, and a non-trouble causing white table cloth upscale restaurant that would sell 75% FOOD and only 25% ALCOHOL.

Instead, two years later at a Liquor Committee meeting, and in a letter to the Royal Oak City Attorney, the attorney representing Black Finn admitted that only 6 of their employees had health care insurance, none had purchased a home in Royal Oak, and that 75% of their revenue was from alcohol sales. None of the promises used when obtaining support, and votes for the initial liquor license approval proved to be true. Instead of a white table cloth restaurant the City received one of the highest volume distributors of liquor in Oakland County. They have also been an organizer and home site for some of the all-u-can drink party buses that drop their patrons off in Royal Oak. Most of the all-can-drink participants have cars parked in Downtown Royal Oak and attempt to drive home after hours of imbibing at the all-u-can drink bussed events.   

The case by case analysis fallacy

The bigger problem is that many new applicants use similar false claims when applying for a new license, a transfer, or expansion. The City Commission fails to conduct any meaningful due diligence or scrutiny of the facts. Then they use the unverified claims as support to approve the new requests. This is now called the case-by-case analysis and approval process designed to instill public confidence that the decision makers are doing their job. The City Commission appears to accept these claims as fact, and regurgitates the unsubstantiated claims to the public when granting approvals. Most of the claims are never proven to be true. Frankly, there is no follow up, accountability, or consequences for not delivering a promise that was made during the approval process for another license. Typically these promises deal with, alcohol-to-food ratio, or how many jobs were actually created, or how many people have actually received health benefits, for example.  

This process completely omits any consideration for the most important factors that should be weighed. Those factors should include the following: How can the city afford to police the oversaturated downtown? What is the point of no return (oversaturation), and how does additional liquor service benefit the rest of the city and not just a few new bar owners? The Commission skips over the important initial criteria because all the facts and evidence would lead to immediate denials without proceeding with the charade of the final step of a case by case analysis. 

Planning Experts have said that adding more bars and creating concentrated entertainment districts it is not the best strategy for a downtown. Bars are not economic development engines for cities. Furthermore, bars often can be a burden on city resources, especially police. Bars are not good financial propositions for cities. (Jeff Horner, Wayne State University Department of Urban Planning). Most cities understand this and create long term strategies that avoid creating an entertainment district. The central component of the successful strategies is to limit liquor licenses.  Royal Oak did this in the past by making good policy decisions, adhering to the Liquor Ordinance, and with the Master Plan. The planning has now been discarded and ignored. The next City Commission will have its hands full dealing with the decisions that are being made today.

Smart Planning = Sustainable Vibrant Downtown

Let us be crystal clear, every member of this community desires a vibrant Downtown Royal Oak in our city, including us. A vibrant and SUSTAINABLE downtown only happens by following the primary planning documents of the community, starting with the Master Plan and the Statement of Purpose of the Liquor Ordinance.  We aren't anti-alcohol, and never were. We are pro-smart planning! 

Opening Pandora`s Box?

Apparently, the City Commission believes that if mistakes are made, someone else can fix them later. Unfortunately, the City Commission ignores the basic legal principles and property rights that are created when a Liquor license is granted. These rights make it very difficult to revoke a license once granted. The owner of the license has all the constitutional protections that all property owners have in their property.

For example, if the Government chose to take away your home (property) to build a project, the homeowner would have many constitutional protections to ensure that the government was acting properly. The Constitution rightfully places restrictions on government when its actions conflict with an individual’s property rights. The Courts have extended the same protections to the owners of a liquor license.

It is very difficult for a city to reduce the number of liquor licenses if they acknowledge the mistake of approving too many licenses. We know, because both of us were there when revoking the license of the bar that was the site of Royal Oak's only drive-by shooting. Most would think that revoking that license was easy, but even in this extreme case, it was difficult, expensive and took a long time. We also remember when the City of Royal Oak was sued for $10 million dollars by the petitioner for SPACE nightclub. That was the applicant that wanted to promote dwarf tossing and feature the 300lb dominatrix named Brutal Betty. The City prevailed but expended much time and money defending from having such an undesirable and unwanted operation within Royal Oak. Another example was the old Jukebox on Woodward Avenue that frustrated the adjacent neighborhood and created a long and protracted legal battle to shutter an undesirable liquor licensed establishment.   

There is one way to avoid this problem. Constitutional rights only accrue after a license is granted. They do not exist before. Most cites realize this and act with great care, and caution, before granting a liquor license, because once granted, it could be in the city forever. Neither one of us can recall an example of a license from Royal Oak requesting to transfer out to another city.

It is exponentially easier to address a liquor problem before a license is granted, than after another bar opens up and becomes a problem. In the past, Royal Oak has had some success closing problem establishments after they were open, but only because there was a political will to do so, along with the money and manpower to investigate and litigate.

Currently, the City Commission has not expressed the will to correct their mistakes and take action before the problem gets worse. In spite of all the trouble in the Downtown, very few liquor license violations have been issued for over serving patrons. A typical weekend in Downtown ends with many arrests of individuals for alcohol or drug related crimes, but without any liquor licenses violations issued to the bars that over serve their young customers late at night. Instead of addressing the source of the problem, the City Commission has done the opposite and encourages more liquor service in our community.

We now have more of our establishments selling alcohol as their primary source of revenue instead of food. A violation of their plan of operation and promises made when they received their original approvals are ignored. Many existing restaurants are adapting to the City Commission's new pattern of ignoring the Master Plan, the Statement of Purpose of the Liquor Ordinance, and the Police Chief's recommendations and reasons for denial.  Existing liquor establishments are competing with the newly approved bars by selling less food and more alcohol. In fact, existing restaurants, even a burger joint, and a burrito restaurant feel the need to seek (or have sought out) approval of a liquor license in Royal Oak, just to compete. 

In 2 years, when a new Commission is elected, it may be too late to put the genie back in the bottle. Even if the new City Commission has the wisdom to correct the problem, they will lack the tremendous amount of money to pay for police and investigations of liquor license violations. They will not have enough resources to correct the mistakes that are currently being made by the sitting City Commission.

While it is true that a previous City Commission was able to calm the downtown in the late '90`s, things will be much different this time around. The problem is much greater in scope now, because of all the recent approvals that have expanded the number of drinkers in the Downtown by thousands. Hundreds of additional seats will also be added with the soon to open Jolly Pumpkin Brewery and Hamlin Corners Sports Bar. At the same time the City does not have money to fund an effective effort to bring things back under control. Even the pending millage request that will soon be on our ballots does not call for restoring the same number of police that were available in the late '90s.

All Units Downtown

Back in 2011, at a City Commission meeting, a Royal Oak police officer confirmed what some of us have known for a while. During public comment, and from the podium, the officer testified that "all units" are called to the Downtown nearly every single weekend. What does that mean? It means that all patrol officers, from all four corners of this community are diverted away from patrolling and protecting our neighborhoods, to go and deal with some unruly, inebriated fools in the Downtown. Plain and simple, that is just unacceptable! 

Instead of taking a cautious approach, the current Commission is making decisions that may end up being irreversible, resulting in the permanent need to take additional public safety resources out of the neighborhoods to control the Downtown late at night. Worse yet, a future Commission may end up in the position where it is impossible to keep the City safe.

Michael Andrzejak            roprotem@aol.com

Charles Semchena, Jr.      csemchena@wowway.com

Next Week: We're taking a one week break for the Fourth of July holiday. We wish everybody a happy and safe Fourth of July! We'll conclude our series the following week.