DEARBORN HEIGHTS — After opening its doors last May, the H.Y.P.E. Athletics Recreation Center located on Warren Ave. in Dearborn Heights is currently facing a challenge from the city,  which claims the organization does not have the credentials to qualify as a non-profit charitable organization, a title that would grant them tax exemption status. 

Despite being recognized as a non-profit charity by both the federal and state government, the city of Dearborn Heights is claiming the H.Y.P.E. facility located on Warren Ave. is not qualified for a tax-exemption.

H.Y.P.E. Athletics, founded by CEO Ali Sayed, has serviced over 60,000 youth and adults since it was established in April 2001, with a goal to provide Wayne County children with a positive and constructive outlet through organized sports. In 2010, the organization was able to acquire a property owned by Wayne County in the city of Dearborn Heights that would eventually turn into the H.Y.P.E. Recreation Center in 2012.  

Sayed says that when it came time to choose a facility for the organization, he had over 30 locations that he could have chosen from, but settled on the location in Dearborn Heights after Mayor Dan Paletko was very supportive of the idea of opening up the facility in the city,  verbally telling the organization that the city would do their best to recognize them as a non-profit charity. However, the tone from the city began to change when they billed H.Y.P.E. with $26,000 in property taxes in December 2011, while the building was still under construction. The organization is currently in the process of appealing that bill. 

After receiving a second tax bill of over $114,000, Sayed is now taking extra measures to ensure that the city changes the status of the organization, claiming that H.Y.P.E. is more than qualified to be considered as a non-profit charity. According to the Supreme Court, an organization must abide by six factors in order to be considered a charity, including that a charitable organization can charge for its services “as long as the charges are not more than what is needed for its successful maintenance.” 

Sayed says that his organization meets all six factors under the Supreme Court ruling, which also includes “organizations remaining as a non-profit” and “organizations not offering its charity on a discriminatory basis,” rules that H.Y.P.E. continues to practice. In fact, it was because H.Y.P.E. was considered a non-profit charity that they received a $6.8 million federal grant from the Department of Housing and Urban Development as well as an additional $829,000 from the state that went towards building the facility, which ended up costing near $11 million. The rest of the money came from donations made by the community, according to Sayed. 

But despite the organization’s certification by the Department of Energy, Labor & Economic Growth as a non profit organization in 2006, as well as being exempt from federal income tax by the Internal Revenue Service since 2008,  the city is still giving the organization a hard time. According to Sayed, one of the main issues the city has with the organization is the membership rates that they charge individuals to use the facility. Adults for example are charged $29 a month for a membership, but Sayed says the costs are to maintain a staff of over 20 as well as provide equipment and uniforms for the facility.  When comparing the membership rates to other venues, H.Y.P.E.’s rates are actually on the lower end. The YMCA, a tax exempt non profit charity for example, charges $59 a month for a membership. 

The city of Dearborn Heights has even gone as far as hiring a law firm to defend their case. Secrest Wardle, a firm based in Troy, wrote a letter on behalf of the city that was later forwarded to the H.Y.P.E. facility, which stated that the organization did not meet  the requirements to be tax exempt, but failed to give their reasoning. At press time, calls made to both the law firm as well as Mayor Paletko’s office were not returned. 

Sayed says the organization must continue to fight for the tax exemption because they are positive that they qualify. 

“We feel confident that the taxable status of H.Y.P.E. Athletics and the recreation center should be tax exempt and that we hope for a positive outcome and decision by the city as they reassess the decision they have taken. We hope for a diplomatic and speedy  resolution for this issue as we fully depend on the laws that govern these cases. We are very confident of the status of H.Y.P.E. It’s an IRS granted, 501(c)3 non-profit organization that is recognized by the state,” Sayed stated.  

The facility has received positive reception from locals since opening its doors. On a daily basis, the venue caters to around 200-300 children and includes five basketball courts, 1/8 of a mile track, a co-ed waiting room, a women’s waiting room, a library, a cafeteria, a computer wing and two classrooms. Individuals and families can purchase monthly memberships to have accessibility to the center Monday through Sunday.  

In addition, Sayed says that the organization should be considered a charity just from the free services it provides alone; They offer programs such as Health Education, Career Leadership, Life Skills, Substance Abuse, Anger Management, and tutoring. Approximately 75% of their membership comes from Dearborn Heights residents, but they also have strong out-reach in cities like Livonia, Plymouth, Wayne, Westland and Dearborn.   

H.Y.P.E.’s recreation center in Dearborn Heights will continue to expand. There is still an additional space of over 35,000 square feet that is expected to be used within the next year. Another goal for the venue is to eventually install an indoor pool. Sayed says if the organization is not tax exempt, their annual tax bills could be as high as $300,000, which could force the organization to increase costs and start charging for services that they wouldn’t usually charge for. 

Sayed says the entire ordeal has been time consuming for him. He’s had to file appeals, compose a petition for the Department of Labor and Economic Growth, meet city and state representatives as well as provide documentation during the meetings. He is hoping to eventually put this behind him. 

“It’s been such a long and exhausting process. This isn’t my battle…I really just want to go back to serving and bettering the kids in our community,” Sayed added.  

But first H.Y.P.E must spread the message about the difficulties they are facing with the city. H.Y.P.E. is expected to hold a town-hall meeting at their facility sometime during the second week of September, where they hope locals will turn out in support of the organization.