Ludington City Council Meeting, November 13, 2023: Automatic PILOTs Flying Too Low

[XLFD]

Just before the November 13, 2023 meeting of the Ludington City Council meeting they had a reception for outgoing Third Ward Councilor Les Johnson.  From past experience, these receptions were always paid for by the taxpayers without their consent rather than by voluntary donations by his co-workers or sponsors, so I avoided it so as not to be a part of the corruption our city is infected with. 

This may have negatively affected my effort to become the next Third Ward councilor, which would be decided at a special meeting the next day (that I lost), but I refuse to have bacchanals on the taxpayer dime while they are suffering throughout the city.  Not to mention it would have been weird since I had started a recall against Johnson before he had the opportunity to go on to another job.  

The elitist mindset the city has recently adopted reminds me of some of the worst years of John Shay's tenure.  This summer they tapped the taxpayers by overriding Headlee rollbacks, effectively raising the taxes here in Ludington by nearly $300,000, without any introspection about it.  And while they were trying to call the Foster School playground a historically commercial property for the second time this year in order to give a developer monstrous tax breaks, and after they nearly quadrupled the public financing of the 106 Laura project by creating their own Brownfield Authority ensuring $2.3 million would be granted to the developer, most citizens will not notice their actions, but see only the expected rise in their taxes and fees growing faster than normal.  

Thousands of Ludington property owners helped fill the punchbowl at Johnson's send-off gala, which the city-elite drained without a care, then about a dozen of these people would within the hour go behind their dais and drain the taxpayer's punchbowl even more to finance two out-of-town developer's efforts.  

The agenda packet showed limited activity mostly dealing with PILOTs (Payment In Lieu Of Taxes), a mechanism used to spur residential housing growth.  While the city council wrings their hands about a crisis in affordable housing (of their own planned creation), they feel the need to increase everybody's tax burden unfairly in order to 'fix' their problem.

This is the "I told you so" moment eight years later that I will mention the next day during my WMOM interview and cross-examination by the council.   I wasn't the only one saying that the rental inspection ordinance would be the official end of having affordable rental housing in Ludington, but I was one of the few explaining the rationale behind the city's "progressive" leaders choosing to go this way and how today's crisis could have been organically averted by keeping the government out of our homes and out of the business of being 'benevolent' landlords.

Though I wasn't heard during Johnson's soiree, after the invocation and pledge were spoke, I would be the only speaker with a public comment that asked the derelict landlords why they weren't engaged in fair and just business practices in their landlord capacity.

XLFD:  "The PILOT ordinance and the two PILOT agreements being considered tonight by the council are all very reckless and here's why.  The PILOT ordinance gives no direction as to a sound method for calculating what percentage of rental income should be collected from Low income housing projects, in the two immediate cases our city leaders have calculated that it should be 4%, which is a very, very low percentage when compared to two of our most recent low-income projects, especially when that's all you get from them according to this ordinance.

When the original depot project came before the council in 2018, which failed because it wasn't able to get enough money from the state and federal governments, the City set the PILOT at a mere two percent of rental income, but at the same time it imposed a "municipal services fee" of 8%, which it didn't need to share with any other taxing jurisdiction.  Combining those two fees, the city was effectively getting the same amount they would have with a PILOT of 20%.  You have reduced their tax burden in five years by a factor of 5.

When the bowling alley block's low-income housing came in you once again offered a 2% PILOT, but once again you imposed a "municipal services fee" that amounted to over eleven times what that PILOT generated for the city, equivalent to a PILOT of 22%.  These PILOTS tonight both need to be reconsidered as they are unreasonable if the city wants to keep up with the infrastructure demands they will need but not pay for over the next thirty years.

In your hysteria to bend over backwards for out-of-town developers, you have cut the amount you have historically taken by over a factor of five.  Yet, if a normal landlord in Ludington wanted to offer low income housing he is generally paying over 25% of his rents for property taxes.  Consider, if one rented out a two bedroom house in Ludington for $1000 per month, under the low-income housing threshold, and the house has a modest taxable value of $50,000, one would normally pay over $2800 in property taxes, but if that person had a PILOT of 4%, they would pay at most $480, about six times less and save over $2300 a year for thirty years.

You are giving away Ludington's future, and for what?" [END comment]

While I'm positive that other taxing jurisdictions do not like "municipal service fees" and appreciate higher PILOTS than the 2% the COL has offered in their past two projects, 4% just isn't fair to all of the other landlords who offer affordable housing and don't get their taxes cut by a factor of six, or more because it will help them fix up their place.  Nope, they just get the honor of subsidizing a competitor.

The new PILOT ordinance which allows for any rate and offers no guidance for setting rates was passed by councilors without issue, and the 4% rates for the two housing developments at 705 S Madison and at 201-205 E Foster Street (the Green House kitty corner to the city hall).  City Manager Foster offered an unsupported line of defense saying that these types of projects would not happen with much higher PILOTs (ignoring the recent history), and the self-satisfied councilors gave away another gift to out-of-town developers at everyone else's expense (except for those same types already receiving PILOTs, OPRAs, etc.).  

The council did a lot less damage to the rental housing market with the rest of their business which included:  

-- Appointing John Terzano to Johnson's former job of Mayor Pro Tem.  He was chosen 4-2 over Cheri Stibitz; there would have been a tie had she voted for herself, but this 'rigged' election set the table for the one to come the next night to replace Johnson's seat.  Wally Cain and Jack Bulger would be appointed to fill his two committee seats until the end of the year.  Johnson would also be granted a resolution of appreciation.

-- Approving an agreement with the Army Corps of Engineers to pay $7705 in administrative fees for construction projects along the coast (installing a gate and storm sewers along north revetment).

-- Approving resolution allowing the Summer's Inn to get a New Resort Class B liquor license for either their Ludington or Franklin address.

-- Approving a waiver application and plan resolution necessary because the MIchigan Employee Retirement System benefit plan's actuarial determined contribution exceeded 10% of total governmental fund revenues and the plan's funding ratio is less than 60%.  The city claims that when enterprise fund revenues are figured in that the ADC is less than 10% and that the problem will correct itself within four years.  This status will be monitored.

-- Appointing Jordan Gumm to the LMTA Board.

When Johnson was presented the resolution of appreciation for his service at 1:04 into the meeting, he gave a typical speech that mayors and city councilors have used since I have been keeping track:

Les Johnson:  "Thank you all very much for being here.  I appreciate this.  I was not expecting this.  Thank you for coming to the reception beforehand, and I'm certainly going to miss all of you on the council, mayor, chief, all of the city employees that have worked with me and helped me through this.  I never could have done this without all your help.  Thank you."

You will notice that, like others have before him, even those not escaping a recall election like he was, that he congratulated every city official and employee he could think of, but after nearly 13 years of service, he could not thank a single citizen in his important ward for giving him any sort of help or insight, those who voted to give him the opportunity to serve and who he supposedly is guided by in his decisions.  The reason he didn't is simple; any direction he received was from his city hall clique, not the unwashed citizens he was supposed to represent. 

[Willy]

Good post and analysis.

[XLFD]

Gracias.  The problem with the continuing giveaways recurring in Ludington (Lofts on Rowe, 106 Laura, Foster School DPRE (x2) and the two latest low-flying PILOTs) since Mitch Foster has arrived is that it makes the more cynical of us suspicious that our tax money is going to places where it shouldn't.   After spending millions already, we've yet to see any more affordable housing from the current administration coming up on its fifth year and we're definitely not seeing any kind of sustainable plan for future success as they continue to ruin the rental housing market with their existing policies. 

Strong Town's Charles Marohn would be rolling over in his grave, if he could see what Ludington has been doing under Mitch Foster since his visit to Ludington back in early 2020-- that is if he was dead.  He'd just shake his head in disgust otherwise if someone gave him a full recap.