Ludington City Council Meeting, September 9, 2019: Grace in De-fee it

[XLFD]

The September 9th, 2019 Ludington City Council meeting will be remembered as the meeting where the 1% Property Tax Administrative Fee (PTAF) was considered by the council but never voted on. It will also be remembered for an amazing amount of civility between officials and the public, even without the engaging new city manager, Mitch Foster, being present.

There were basically three other topics that came before the council at the meeting also, which paled in interest and were mostly rote. The council unanimously passed an ordinance allowing buskers (street musicians) to ply their trade in the plaza area and potentially elsewhere. Yet, nobody showed to advocate for busking, nor did any busker thank the council for their vote of confidence.

The council after a public hearing for each set up three Obsolete Property Rehabilitation Act (OPRA) Districts situated in the Second, Third, and Fourth Wards for 801 N Rowe (The Haskellite/Wolverine Building), 115 S James (the Grateful Heart and Home building) and 925 S Washington (a mostly vacant commercial building between 1st and 2nd Street). These were all passed w/o controversy, and so the council set the next meeting on the 23rd to conduct another public hearing for each and establish their tax exemption.

OPRA exemptions effectively freeze the taxable value at current rates for properties for a period of up to twelve years on qualifying properties (deemed 'obsolete'). All buildings qualify, all developers seem intent on fixing the buildings up, so it's likely these exemptions will be passed for the period of time figured out through standard formula (up to 12 years).

The only other item beside the PTAF considered was the creation of the TIF Plan's Development Area Citizen's Council (DACC) and the staffing of same. Neither this nor the 1% PTAF would have found itself on this agenda if it were not for the Ludington Torch's investigative reporting which found that neither the DACC or PTAF had been approved by the Ludington City Council as required by statute (see related stories on each here and here).

I had spent my public comment going over why the DACC needed to be approved at the last meeting, they obviously took it to heart. They will not be able to approve the TIF Plan until the December 16th meeting, unless they have a special meeting on December 9th or later. They still plan on having a public hearing for the TIF Plan at the September 23 meeting, so expect them to try and circumvent state law again if and when they decided to adopt the plan before December. The prior TIF Plan expires at the end of October, which may make for additional legal considerations since they waited so long to follow statute.

If this doesn't give you much confidence in the person entrusted with moving the TIF plan forward (Community Development Director Heather Tykoski), it should also make you wonder why the City's legal counsel (City Attorney Richard Wilson) wasn't on top of things here-- and definitely not when it came to the 1% PTAF. He was at meetings where the idea was introduced last year (see the meeting's agenda packet stating at p 64), you'll have to ask him why he thought that this fee/tax could be added to tax bills without a vote by the council, at least. I'm not an attorney, but that seems logical that it should.

The 1% PTAF

Despite the unlawful imposition of the PTAF, Attorney Wilson still thought it could be passed and imposed on the tax bills already sent out. Acting on that advice, and wary that the loss of $40,000 on the budget might affect the long-term solvency of the City (not to mention the refund process on taxes already paid), Mitch Foster recommended that the council pass the PTAF (packet, p. 60).

But neither Mitch nor Rich has to answer to the taxpayers at the ballot box, as all the councilors would (none are term-limited as of this term). This gives them a different perspective and an interest in how this tax-fee looked to the people of Ludington. And nobody seems to have shown up to advocate for it, I came closest in my statements, effectively daring them to do so.

Citizen Tom Tyron advanced quickly to the mike at two minutes into the meeting even before the mayor finished his opening of public comment. He thought the fee was a tax on a tax, he described taxes and fees creeping up on everyone, and that the fee was just one more way to take money away from the public.

Steven von Pfahl went next, wondering about the justification for the fee, and wondering about whether a cost analysis for how much it cost to collect taxes would be needed.  He may need to do more research than just reading what the COLDNews says.  Nancy Mustaikis followed stressing how this would affect, in particular, tenants.

My own comment followed:

XLFD: "Just four months ago, the citizens of Ludington generously voted for raising their taxes to provide over $100 million to their schools. Last August, they proved themselves incredibly generous, renewing Oakview, Senior Citizen and the jail millages and a new road patrol millage by surprising margins. You may be hard pressed to recall a time when the citizens of this town have voted against raising their taxes when a cause has come across the ballot box. Despite this generosity, the City Treasurer added a new line in our taxes this year without having that tax voted on by the people-- or even considered by this council.

Our city attorney will tell you that the property tax administrative fee is not a tax, but when a Ludington property owner pays 56 mills in summer taxes, the unauthorized, inposed 'fee' equates to a .56 mill tax increase. This amount is larger than the money collected from several other millages, and it has been carelessly thrown on our property tax bills without any kind of authorization. Our city attorney believes this council can authorize this fee and impose it retroactively onto our summer tax bill after it has already been unlawfully levied. If you think that's a strong legal and ethical argument, by all means you should vote for this ex post facto legislation, pay your own share of the fee you made lawful after the fact, and explain to your constituents why the City needed this extra tax money more than they did.

After the city council voted against this fee by a two-thirds margin in 1983, this fee has never came before this council for a vote. Thirty six years, through some dire budget deficits, this fee has never been reintroduced, until now. Your vote tonight will be remembered by your constituents well beyond tonight, well beyond this month, well beyond this year. You might want to choose wisely."

I felt good about my content and delivery of the various messages I had, and after a brief pause, Mayor Steve Miller closed the public comment-- but a 'new face' asked to speak before the meeting moved on. This would be my second favorite part of this meeting.

Mark Peterson made his way up to the podium and spoke mostly off the cuff, initially wanting to ask some questions, and made his point (whether he was aware of it or not) by using the Socratic method which I found oddly refreshing. He started by wondering if all of these years whether the City had been operating in the red, since they now want to introduce a new fee. But he noted that wasn't true, because the budget has been balanced.

He then wondered how if it is a fee, then why is it showing up on a tax bill, ergo it's a tax. He wondered why the council never voted on it in the nine months since it was introduced and now doing it after the bill has been sent out. He wondered why there was no proofreading before that happened and how could they make such a glaring mistake when it should be obvious it needs approval.

He opined that somebody noticed it and they let it go anyway. He presumed (because no group of officials could be so oblivious) that it was all planned so that they could pass it after it had been iposed, so it would be harder to vote against it (an interesting theory). He finished by remarking that he hasn't met one person who was in favor of this, and so they can't vote it in, because they have-- should vote the way their constituents would want them to. He advised them to consider the people's views for once, and that nobody wanted the fee. 

Councilor Les Johnson would take up the PTAF at around 19:30 in, after reading about the topic, he made an unusual motion to discuss the PTAF among the councilors. Councilor Dave Bourgette started the talking and stated it was something he did not feel the council could approve since the ball was dropped.

Councilor Serna followed and called it a tax upon a tax, something we already pay for, and went over the various costs that were incurred by collecting taxes. She described how the PTAF was a bit of an unfair tax, cementing her reputation as a bona fide populist.  More of those are needed. Councilor Rozelle and Johnson followed by stating they did not feel the PTAF was needed at this time.

The statements of the four indicated that this tax-fee would not pass on this day, yet Councilor Winczewski gave a rather rambling statement saying how nice it would be to have extra money freed up to buy new snow fence and playground equipment. She indicated that it might be a bad time for the PTAF, however. Councilor Lenius brought up tax appeals and how other tax authorities make up the majority of the property tax bills which seemed to indicate he would likely vote yes, Attorney Wilson supported his views.

The legal counsel denied that the City had done anything wrong, but the fact remains: the City Treasurer imposed a 1% PTAF which was unauthorized by council, that is illegal, it could rise to the level of a misdemeanor (public extortion) and worse if Mark Peterson's theory was true. He also mischaracterized the meaning of ex post facto in regard to non-criminal matters. Councilor Miller echoed fellow Councilor Bourgette and felt that right now it looks like a money grab, since the extra money wasn't needed right now.

Every councilor having spoken, the decision was made not to have a vote on the resolution, so the PTAF was not authorized. This was the best part of the night. This means that property owners will not need to pay this tax, and that this will be billed as a credit to the winter tax bill if the bill has already been paid in full, or if unpaid property taxes include the 1% PTAF due to rote or not getting the news.

Later on in the second comment period, Nancy Mustaikis cited a problem with the tax-fee that wasn't passed due to how mortgage lenders handle payments.  Scott Sitler congratulated the council on doing the right thing, Chuck Sobanski was upset they didn't vote on the 1% PTAF rather than avoiding it, he encouraged them to get more informed rather than have things sneak up on them. Dianne Seelhoff appreciated the actions by the council and City Manager Foster's ability to admit the mistake and thank the messenger. Tom Sanders followed and was concerned that his taxes was going to be used for playground equipment, and urged them to put the PTAF (if it's ever passed) in a separate budget.

I followed by personally thanking the council for not adopting the property tax administration fee and doing a very good thing, at which point the comments finished, but then a strange thing happened, perhaps the third best part of the night. Before asking about how people wanted to best get their information from the City, Mayor Miller thanked me (1:10 in) for answering a question posed on social media about the fee and following through which brought forth a conversation that needed to be had. Wow.

Let's review.  Before the meeting, the city manager admitted a mistake was made and thanked the citizen who brought it to his attention, the Finance Committee met and decided they did not need the $40,000 extra in taxes.  At a meeting where the city manager was absent, despite being admonished by some citizens for doing their work sloppily, most councilors admitted a mistake as being made, several admitting it wasn't a good tax-fee, and took the issue off the docket.  Following two heartfelt 'thank yous' to the council from citizen watchdogs Seelhoff and Rotta, the mayor returned gratitude to the oft-officially-scorned Rotta for his work in getting information out to make the City do its job properly.

Have stranger things ever happened at Ludington City Hall?

[AQUAMAN]

Many thanks for this article and report X, and no, stranger things have NOT happened in many decades at City Hall mtgs.. Good job again X.

[XLFD]

Many welcomes for your support and honest praise; I look to have a follow up article on this coming up on the weekend, and beyond, for I am going to be looking at whether the other villages and townships of Mason County have actually passed resolutions to be able to collect PTAFs-- and if they actually are collecting them with or w/o such legislation.  The one over the weekend will be looking at a metamorphosis of thought, and will ask for some input from our members.