On Tuesday, May 2, 2017, the Manistee City Council did an action which seemed rather courageous; they turned down a request by a developer to get a rather generous tax abatement in order to develop the old Oleson's Market property into a senior center and low income housing project.  This amounted to rejecting a 'payment in lieu of taxes' (PILOT) set at an incredibly low rate negotiated between the developer and city officials by four of the seven councilors.

Ludington residents should take notice of what happened here, in order to see how our city leaders plan on handling the tax abatements in process for the development of the 'bowling alley block', where both PILOTs and Municipal Service Agreements (MSAs) are also being considered to assuage the developers.  Citizens will have to remain vigilant and insistent on keeping such giveaways under control in Ludington so that the onus of the development won't break their back .  And usher in other developers ready to take advantage of their generosity and the citizen's apathy.

The development was depicted without a lot of extra details back in November 2016, as seen below.  The plans originally were for a senior center, but the option of Low Income Housing Tax Credits (LIHTCs) and other incentives had them looking to put in plenty of housing for poor seniors.

But as we will see, the vote by the council to narrowly avert a 2% PILOT was a rather big concession given what the Manistee City Code had said before this project reached this stage. In practice, PILOTs are drafted to compensate a local government for some or all of the tax revenue lost due to tax exempt ownership or use of a particular piece of real property. 

For example, a 2% PILOT for a qualifying 40 unit building with completely occupied rooms at $500 per month each, will have a 'tax liability of $400 per month, or $4800 per year.  This is about the equivalent, in taxes, of a single family residential house with a taxable value around $120,000 ($80,000 if the owner lives elsewhere, and does not receive a homestead exemption).

So consider that if we had a small town with 40 owner occupied houses and 40 vacation houses with average values as above, a smaller version of some of our local areas, and then one of these 40 unit projects with a 45 year 2% PILOT moves in.  The 'tax base' will improve as if one more house of either type were made (a little over 1% increase), but now there will be an effective doubling of the population and a near doubling of 'city services' being needed, and of usage on the infrastructure.  To provide for funding of those increased amount of services, infrastructure maintenance, etc., they have only one source to go to for the next 45 years, the homeowners.

This example is somewhat extreme, but it shows the point that such development practices create challenges for the community at large whenever the PILOT is set at a level too low to be sustainable over the period of the PILOT.  While 4/7ths of the council may have seen this 2% PILOT proposal this time, it is unknown whether there will be a counterproposal that will be more fair to Manistee.  Still, as seen at the city council meeting of May 2, 2017, there were quite a lot of people wanting to take the deal.

During the public comment period, fully eight people stood up and took the time to urge the council to pass this lemon of a deal, they included three current county commissioners (all seven commissioners approved it at their meeting), only three people went to the podium and urged them not to accept, including the DDA executive director (arguing it would provide nothing for that agency), and a former county commissioner and consummate official Shari Wild (shown below) who made some good points saying how she was for the initial project-- until the tax abatement issue went over the top with the low-lying PILOT, and listed several other concerns often overlooked on the cutting room floor of these deals.

She read the words from someone who was wanting to move into the area from Norway, but was unsure whether he would stating:  "I plan to pay my fair share of taxes, and I expect everyone else to do so too."  The May 2, 2017 MCC minutes does a brief summary of all others who spoke. 

The issue itself was argued shortly thereafter, with Mayor Smith encapsulating a very wise argument against this particular agreement, and how he believes it was unfair as written, starting about 32 minutes into the video.  As noted earlier, despite the commissioners urgings and the preponderance of commenters for the deal, the council rejected the proposal and the PILOT crashed and burned.

This action was commendable given what was at stake.  But this really should have never gotten this far except for some rather secretive wheeling and dealing, and even secret passage of new ordinances under the radar to facilitate this corruption.  Here's the timeline of this bad deal.

Up to February, both the city and the developer, who had been in talks since 2016 or even before about this project knew that any PILOTs the city could offer would have to be at 10% by Chapter 1489 of the Manistee city code, and it could last no longer than 35 years.  So here's what went on at

the February 21st, MCC meeting:

The state law City Manager Thad Taylor mentions is not clear, but there's nothing I could find in state law that would restrict a city from making an ordinance restricting PILOT percentages and lengths.  As you see, the city council now has the leniency to have PILOTs at any rate less than 10%, and extend the PILOT 15 extra years.  Quite a big change, and due to the timing, their talks with the developer outside of any public meeting suggests that the developer considered this rate proper for them, even when Manistee already has 10% PILOTs in action.

At the April 18th MCC meeting, a meeting I attended and raised issues regarding the Lee Pat Milks shooting and the city's unlawful record withholding, they had this nugget, which confused me then:

 

This was in what Manistee calls the "Consent Agenda", just like it was during the first reading on April 4th.  Being in a consent agenda means that unless some councilor brings up something in opposition to any of the topics, it will be considered to pass as it is otherwise controversial.  I would dare say it was not controversial, however, even though it was on the agenda and proposed (supposedly) the changes noted in February, the details were not explained to the public, and it became law on April 18th without even being seen by the public. 

Even now, as of this writing, Ordinance 17-01 remains a mystery to the public, for you can't find it anywhere in the city website or anywhere else.  The best you get is when you look for the old law it repealed, and replaced with much more flexible (and developer-friendly/citizen unfriendly) PILOT restrictions. 

It's too bad, that the public is being shut out of major decisions in Manistee, just like they are in Ludington.  But that should come as no surprise when they have failed to provide the public with the name of the city official, two months after the fact, who shot a citizen while they trespassed on his property without any need to be there.

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Manistee is mostly senior citizens. The 1% are just now figuring out that low income and seniors have front row river view apartments with free utilities!! They feel they are footing the bill and that really pisses them off.  Another low-income/senior residence is changing it's policy to seniors only, due to the need for senior housing. There will be more blight than Oleson's from all the jobless crack heads that become homeless when the low income housing goes to seniors.. Can't get blood from a senior turnip but, they could elect to attract wealthier seniors. Maybe the Tribe could build a senior living center with a mini casino,lol. Call Trump! Senior center already purchased Oleson's so it could still be just that. The project could also be a joint project of Tribal/non Tribal. Find the money, put a real plan together and make it happen.

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