Ludington City Council Meeting, 1-27-2020: A (102) Second Look

[XLFD]

102 Second Chance

The January 27, 2020 meeting of the Ludington City Council lasted over two hours.  Most of that time seemed to be devoted to attorneys and legal issues (which I will cover in another article).

Although I was watching and listening intently to the City's treatment of those topics and others of a less controversial nature that came before them, my one and only public comment at the beginning of the meeting touched on the proposed revocation of an Obsolete Property Rehabilitation Act (OPRA) Certificate on the property located at 102 Second Street.  It used to look like this in 2015, the year before the OPRA was okayed by the state:

A little more than three years after the OPRA Certificate it now looks like this from the outside:

Despite the marked improvement of appearance and dedication of funds by the homeowner (Nolan Family Investments LLC, ran by musician Edgar Struble) reported at about $100,000, the new city assessor was wanting to revoke the tax abatements offered by the OPRA based on the rehabilitation being incomplete.  His rationale, in my estimation, was also very incomplete

This is among the many documents included in the council packet (starting on p. 59), but the only one purporting or supporting that the rehab is incomplete.  Assessor Litwiller was hired in 2018. after the OPRA was granted, so he should minimally be listing the reasons why the project is incomplete in his estimation.  He neglects to do so entirely, saying his physical inspection was enough. 

A physical inspection is at a minimum, an exterior observation of a dwelling to determine what physical improvements have been made and whether they increase its true and fair value.  Litwiller offers nothing, he doesn't even offer up that the building has undergone extensive exterior and structural work.  It's completely subjective, without an iota of objective reasoning.  The OPRA agreement was also lacking details and criteria for completion.

It's at a minimum, grossly unprofessional when you consider that his determination will help create several thousand more dollars of a tax burden each year for the property, and that money will land in the coffers of Litwiller's employer.  This will make them happier than if Jared actually took the time to be fair at his job, and do it without making the City of Ludington look crooked.  There's plenty of that as regards to this property owner...

102 Second Wind

And so the council packet as you can see has a memo from the city manager urging the councilors to revoke the OPRA certificate and free up several thousands more dollars to the taxman because efficient and effective enforcement of OPRA agreements is a core responsibility of the City.   The resolution follows along with historic documents and a recent E-mail from Struble bemoaning the City's decision, wondering why he can't get grants and rental rehab money in the Fourth Ward like they can get downtown, and notifying them that he won't be around to plead his case at the meeting.  

I took up his cause like I did the first time it came before the council; it's not because I like tax abatements, I don't.  It's because the City assessing team has screwed him over big time in the past, and they owe him big time for their sloppy work, Assessor Litwiller's poor performance here just shows it's an ongoing problem.  I was the only person from the public to comment starting at 2:15 in.

January 27th, 2020 Ludington City Council meeting from Mason County District Library on Vimeo.

XLFD:  "In 2011, an OPRA certificate was revoked by the city council for the bowling alley property a couple years after it was issued because the owner abandoned the idea of rehabbing and decided on demolition instead. Tonight the council may decide to revoke an OPRA certificate for 102 Second Street, which I propose that they either vote against or table. I propose not on behalf of those who benefit from the tax break, rather I propose so on the concept of fairness and sound policy.

This OPRA predates the current assessor's tenure, he may be unaware of the vast improvement of the property and of how it satisfies the OPRA's definition of a 'rehabilitated facility' by anybody's interpretation. The disputed fact is whether it is 'completely' rehabilitated (as defined by the OPRA) within the two years agreed to by both parties.

The assessor's memo comes to several legal conclusions without offering any evidence other than saying he performed a physical inspection and found it not 'rehabilitated'. Physical inspections at a minimum, are visits that make only exterior observations, nothing in the memo indicates an interior inspection was made. When you consider only the exterior of 102 Second Street and compare it with how it was before the OPRA was granted, nobody could deny that it has been completely rehabilitated.

Without any specific directions as to what complete interior rehabilitation would consist of in the original OPRA documents we are dependent on OPRA statutes to define what 'rehabilitation' is. What needs to be shown to revoke the certificate is to show that the property is not in an 'economically efficient condition'. If you can't determine with what has been given to you why it isn't economically efficient, you need to table this resolution until you have some evidence in front of you proving that to your satisfaction.

The Nashville owner of the property saw incredible rises in both assessed and taxable value after inheriting the property in 2003, with an unexplainable twenty-eight-fold jump in property taxes for the adjacent vacant lot in just three years. Did the City decide to take advantage of somebody who toured with famous country stars and wouldn't likely notice such a blip. I look to a former associate of Edgar Struble's for my final words with advice that you can keep:

You've got to know when to OPRA,
Know when to NO!- PRA,
Know when to tax abate,
Know when to run,
You don't count the taxes,
When they're fixin' up the building.
There'll be time enough for counting,
When the OPRA's done.

I would tell outgoing City Attorney Richard Wilson after the meeting that if it was any consolation, he wouldn't have to hear me try to sing again, but like any good lawyer he twisted the truth and complimented me on a tune well-carried.  But the levity I threw into my comment at the end came right after a very sore spot for me, a tremendous jump in taxes that has remained unexplained on Struble's vacant lot directly to the south of his building.  I brought this up back in 2015, in an article called The Gambler and showed some of the problems involved with this tax jump.  I want to further elaborate on that by comparing Struble's empty lot to a vacant lot on Washington just one block further south.  

Wait a 102 Second! 

Both 1001 S Washington (Struble's) and 1103 S Washington have the exact same dimensions (130' X 50') and they both had summer taxes of the same amount (rounded to nearest dollar) in 2003, at $35.  Then something happened, and it wasn't due to the uncapping of Struble's taxable value when the lot came into his possession.  It wasn't due to the opening of the Pier Point Condos either, as adjacent properties values illustrate.  

But by 2006, Struble would be paying over $1000 in taxes for the empty lot, the owners of that other empty lot would be paying $0.  

This may be one of those other errors made by assessors, because taxes seem to have been gradually rising by $1-3 in all of the other year periods, but even had the 2006 value been the midpoint of the 2005 and 2007 summer taxes, the taxes rose for the other lot by roughly 20%, not 2889% like Struble's lot saw.  The City will never own up for this mistake, they will never refund the error, which is exactly why they should be bending over backwards to make things right for the decade plus they were charging him $1000 too many.  

In the last year, the other lot is still at $60 for their summer taxes, while they have finally rolled Struble's lot back to $560.  City councilors showed they did their diligence by their comments when they voted on this revocation.  Not.

102 Second Guessing

At 37:30 into the video, Councilor Winczewski read through Foster's notes and the resolution.  They mentioned that the previous city manager had nudged Struble, which I found odd.  First, there is no written evidence of that, but we also note the previous city manager's last day of work was in July 2018, and Litwiller's letter notes that Struble couldn't begin work until January 1st, 2017.  John Shay was a bit of a jerk, but I don't think he was doing a lot of nudging for a project that still had several months left to it when he amscrayed.  

Councilor Lenius used the rationale that Struble admits to putting in a little over $100,000 and stated he would be spending $250,000 on the project, as if that was a disqualifier for receiving OPRA benefits.  Councilor Winczewski made statements that were not in any part of the record about what was left unfinished inside.  The OPRA was revoked unanimously.  

The explanation of why Struble's taxes increased by a factor of twenty-eight for a vacant lot, when other lot values were increasing over a hundred times less was not touched.  Nor will it ever be.

[Freedom Seeker]

How can you say that the explanation for the vacant lot increase will never be "touched"?  Maybe the new assessor is just getting caught up on discrepancies in lot/home valuations throughout the years?  I agree with the overall sentiments that lot/property valuations need to be "equalized" in the sense that all should pay taxes fairly.  I definitely agree that OPRA, tax abatements, rehab grants. etc need to be fairly  distributed throughout the city, not given primarily to downtown.

[XLFD]

I say that it will remain untouched because even if Nolan Family Enterprises LLC seeks legal redress, the City will argue that any error made prior to the statute of limitations for such issues are off limits, and the courts would agree.  If there was a movement among 'activist councilors' to rectify the situation by refunding over-collected taxes, there would be hues and cries from two parts of the public:  1) Those who recognize the unfairness, and notice they have also been taxed unfairly too and 2)  Those who do not recognize the unfairness, and wonder why the City is paying off a wealthy guy. 

Suffice it to say it wouldn't happen even though it would be the just result.  The only result now is that NFI LLC will see their taxes (which continued at the prior taxable value throughout the OPRA) triple with the OPRA revoked and all those improvements made to the exterior.  

[Freedom Seeker]

You might be right about taxes now going up, but maybe they were "undercharged" at only $35ish a year on vacant lot for many years? Some thing is not right if someone else is being charged zero? I hope our new assessor can straight things out so that there are fair taxes for all because people are will start taking notice of their tax with new school tax.

[Du Wright]

What would happen to the city if there were a global currency reset?  I've been contemplating the same thing for years, watching the city spend extravagantly on really frivolous projects while neglecting our major infrastructure projects, or having to take massive debt to handle improvements.  And we are just touching the top of the iceberg.  I feel the administration that has been, was skilled in marketing and "beautification" projects and have put an emphasis on downtown "beautification."  Such projects are good, but in the long run, businesses and people are not dumb to resettle here when they see the debt load and tax increases.  That will undo most of the good of the "beautification."

This is such an involved subject it could take pages, but, imo, to make a quick answer, this city and any other cities and states, for that matter, will be in the same boat as all the other debtors as our federal government.  If it gets really bad, there will probably be no more lending and there could be chaos.  It is so important for our city leaders to learn to save, instead of blow money, but they've been blowing like crazy.  Every "consultant fee," "engineering study," etc. adds up.  Every non-competitive bid, every unnecessary, poorly thought out project is just another debt on the scale of bringing Ludington closer to financial collapse if the economy takes a tank.  The young marketers driving this city have never really experienced a global currency reset, and dare say their parents have  lived a high life on credit too.

I was hoping that our new city manager might start advising that "debt is dumb, and cash is king," but so far he seems to be enjoying the party.  Even though he cries to our reps at the Scottville townhall, he doesnt seem to have much say to the council who barely blink an eye to raise our water rates 7.5 percent this year and again next.  I think it's going to be the citizens whose pockets are picked more and more to pay for the downtown improvements, until there's some sort of massive crash. 

[XLFD]

Mr. Foster's cover photo on his Facebook page happens to be for his appearance on the Dave Ramsey Show, just put up in December, so maybe he's feeling nostalgic about that time when he learned that 'debt was dumb and cash was king'.  

He hasn't yet finished his freshman year, so I hope he is learning how to navigate through the Ludington swampland on Harrison Street and assist those who have been in charge to work towards more fiscal responsibility and recognize that it isn't always cured by raising taxes and fees and seeking grants just because you can devise a scheme to qualify for them; in fact, it's often worsened.

[Du Wright]

Very funny, X! Except for the square halo around Mr. Foster's head and the enlarged perspective, I could almost have believed the picture. But good point about being only a freshman muking through the swamp.