A little while ago, in the thread "Ludington Welcomes New Owners of Longfellow Towers...", it was announced that Longfellow Towers was being purchased and would be renamed the Arbors. In the change of hands, the City of Ludington decided to retain its payment in lieu of taxes (PILT) equal to 4% of contract rents charged at the Towers, about $10,300 annually, and charge a new municipal services fee equal to $20,750 on top of that. A quick calculation shows that this more than triples the amount of fees/payments/taxes the city charged this property prior to this sale. Many Torch members showed their disapproval, and wondered about the fate of the elderly tenants therein on their fixed incomes.
Not surprisingly, the city council unanimously approved the retention of the PILT at 4% (see attachment, pp 3-5, Ordinance 209-10). In these pages, the PILT is rightly ascribed as encouraging the provision of housing for the lower-incomed (and elderly, in this case) and the new owners must extend the PILT to receive tax credits from the state. It says the PILT is an annual service charge for public services in lieu of taxes. All this and more is in the ordinance.
At the very end of two pages of the PILT ordinance the clerk put this in one sentence: “A Municipal Services Agreement (MSA) was also presented which would require Longfellow Towers to pay a new “municipal services fee” in the amount of $20,750 per year in addition to the PILT.” This MSA was voted on and approved on a quick voice vote with no discussion, before the PILT ordinance was agreed to on a roll call vote.
Here’s the problem, the PILT is a fee for use of public (municipal) services, so why is this “municipal services fee” differentiated from the PILT, and more than twice the amount? As the city distinguished them separately, I did some research…
And uncovered some disturbing facts. In the Ludington Charter and City Code there is no such mention of a “municipal services fee”. In Michigan law there is only two mentions of a “municipal services fee”, both deal with casinos/gaming (see attach 2). MCL 432.213 and 432.224 (13). A Google search of “municipal services fee” is likewise fruitless to justify this fee via the laws of Michigan and its localities, beyond gambling.
Is the Arbors going to be turned into a high stakes bingo hall, or is it just going to be more than $20,000 overtaxed due to an illegal , baseless fee tacked onto the backs of cash-strapped senior citizens living on fixed incomes?
In the meeting it was said that the combination of the PILT and the municipal services fee would equal about the same as what would have been collected under the current millage rate. This goes against the rationale for having a PILT in the first place, to encourage low-rent housing.
One must also wonder, what’s to stop the City of Ludington from adding this “municipal services fee” to anyone’s property taxesin Ludington? I am passing my concerns over to the Michigan Attorney General’s Office, and I would suggest you should too if you know anyone who lives in these 149 apartments, live there yourself, or are just concerned that the laws should be followed and taxes shouldn't be tripled in the middle of a recession to those who can't afford it.