I've been co-plaintiff of a fairly complex lawsuit against the City of Ludington (COL) since the latter part of 2017 which has accomplished some of its objectives in getting city hall to be more in line with the letter and spirit of the Open Meetings Act (OMA), and has frankly failed in others.

One of the successes that we thought we had achieved was getting the city to officially recognize and properly set up boards/committees established for a public purpose. The Splash Pad Committee may or may not have been a grassroots group, but when they were effectively developing public policy through a public official who was part of the group and doing this primarily in committee meetings that weren't following the OMA, it gave the process a huge appearance of impropriety and illegality. The end result was that most of the public, even those most affected, were disenfranchised from the process and provoked the lawsuit to correct it from happening again.

Yet, early this year the new mayor and city manager seemed to take our ideals to heart when they established formally the ad hoc Recreational Marijuana Committee. The city council created the committee on February 11, 2019 completely delineating its powers and restrictions. They appointed the members at a later city council meeting after holding 'tryouts', they have been following the OMA. Great job.

Yet, while this example of how to do things right is encouraging, another part of city hall is going in the opposite direction concerning another new public committee. At the January meeting of the Downtown Development Authority (DDA) it notes: "The TIF [Tax Increment Financing] plan was discussed, a copy has been handed out to everyone. A citizen council will be established recommendations are being sought."

Nothing is heard about this 'citizen council' again until August when it's reported at the August 5th DDA meeting: "Timeline for TIF plan, if approved today, would go to Citizens Advisory Council on August 13 for approval, then public notice in early September, property owners would then be
notified, first reading at City Council on September 23rd, could be adopted October 14. Needs to be approved by end of October." They also discussed the (citizen) council's concerns, and made some changes to the TIF plan, and as I attended the meeting and asked for it, I got a copy of the 7-9-2019 CAC meeting's notes.

Now the August 13 afternoon meeting of the citizen's council was cancelled due to the lack of a quorum, so it was rescheduled for August 20th. The city website put the announcement up the next day:

And whereas the COL noticed the two August meetings of the citizen's council, there's no record of them ever being established, empowered, or peopled either by the DDA Board or the city council. There was an undated application available at the Downtown Ludington website:

Oddly, enough, both the announcement and application says the membership needs to be approved by the Ludington City Council, but that has never been done-- I know, I have attended all meetings, I have even double checked the minutes, agendas and packets. Others share my curiosity; city officials often weigh in at the Concerned Locals of Ludington (CLL) Facebook site, but nobody touched the questions posed about this council from the administrators for a week:


By the way, MCL 125.42249(1) says: "Meetings of the development area citizens council shall be open to the public. Notice of the time and place of the meetings shall be given by publication in a newspaper of general circulation not less than 5 days before the dates set for meetings of the development area citizens council." The notice for the August 20th meeting was not published in the City's newspaper of record on the two days after the August 13 meeting was cancelled due to a lack of a quorum. The council is not only illegitimate, but it's scheduled meeting is also.

The City of Manistee is also reworking its TIF Plan this year and has established that their downtown district will now need a 'citizen's council' too, as it has many more people living therein than 20 years ago. In April, their local newspaper noted: "Since more than 100 residents live within the DDA district, (City Manager Thad) Taylor said this time around there has to be a citizens’ council. He said they are searching for nine residents of the DDA district to join." At the May 7th Manistee City Council meeting, they voted to create the committee and appointed and approved its first two members.

Are they doing more than they should, or is Ludington not doing enough? It's the latter as state law has a very specific recipe for doing this properly:

For that section of law, the term 'governing body' means the elected body of a municipality having legislative powers. In Ludington, this is the city council, not to be confused with the unelected DDA Board which is referred to as "board" throughout the TIF statutes.

The citizen's council establishment is mandatory (by the 'shall') and that establishment must be done by the Ludington City Council at least 90 days before the TIF plan's public hearing. The members need also to be approved by the city council. Likewise, in looking at the ten people named absent or present on the July 9th meeting notes of this bogus council, two people definitely do not live in the DDA district (the mayor and Heather Tykoski) and two appear to live in nearby townships, without a clear address in the district. So the citizen's council appears to have between 6-8 legit members, depending on whether those two are recent move-ins.

Ergo, the meeting held on July 9th, was not of a recognized public body and the meeting to be held tomorrow will be more of the same. Provided the Ludington City Council establishes and appoints the members at their next meeting, the timeline will look more like this:

August 26: Creation and appointment of citizen's council
November 25 (no earlier than): public hearing on TIF plan
November 26-December 15: citizen's council issues its final report on TIF Plan
December 7 or December 21: First reading of ordinance to approve TIF plan
December 21 or later: Ordinance could be passed

With multiple special meetings and a rush job by the citizen's council, this TIF Plan could get approved by the end of November, but no earlier, and this may be substantial when they claim it must be approved by the end of October. The DDA Board has nobody to blame other than themselves for trying to keep the details of this TIF plan secret and the citizen's council even more secret.

What happens if the TIF Plan does not go through?  According to the optimistic projections of 2008, the DDA should have received over $138,000 last year from just the TIF (it was less).  It gets that money by capturing (robbing) 12% of the taxes from each taxing authority in the DDA district.  

Around $80,000 of that would come from the city's general revenue, around $40,000 would come from county coffers, and around $20,000 would come from WSCC and LMTA budgets.  So would you rather see this money go to these taxing authorities that actually give us valuable public services or see them squandered by the DDA in order to make $1.5 million of 'improvements' in an oddball plan to spruce up the James Street Plaza, among other things?

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Hmmm ... Very interesting.  I thought I've heard officials say that the DDA is "self-funded" and "independent" of city budget.  So how does $80k come from city general revenue?

Just to be clear, the projection was for $140,000 but the actual amount found in the budget for money received by the TIF was only around $65,000.  That means they expected a lot more growth back in 2008 when they made the current plan.  In that sense, only $35,000 comes out of the regular COL budget.

Tax increment financing is hard to explain, but it's essentially a district's taxation on other taxing authorities; in Ludington it went from a smallish 2% to 12% when they snuck through most of the details then.  So if say $20,000 of taxes collected in the district normally go to the local libraries, then 12% of that money (or $2400) would end up as DDA funds, and the library would be effectively shorted that money it would otherwise get.

This is why TIF schemes are dangerous, because when taxing authorities start losing money they need for operations, they begin to look elsewhere, and that is typically done by increasing fees and taxes.

So who gets to vote on if we continue this 12% shifting of funds to the DDA? The fox voting on whether to tax the henhouse?  I'm sure the Chamber member is a conflict of interest, and who living downtown would not vote to get 12% of the taxpayers money?

So this is confusing and hard to understand because I've heard officials say that the DDA budget is its own money and has nothing to do with taxpayer money.  Are you saying that the DDA budget comes from12% of the three tax revenue funds: city, county, and WSCC/LMTA?  In other words, if there were no DDA, the city could decide to do what they want with $80k, the county would have $40k more to fix county roads, etc., And WSCC/LMTA could help fund their new water lines/and buy new tires for their buses for instance?  And instead, they get a fake icerink downtown that very few use, and a group of people out to party decide how to use money to fund downtown entertainment?  If this is the case, it seems like a no-brainer.  How is it that a handful of downtown residents hand-picked by the chair of the DDA gets to decide a 12% use of general/county/WSCC/LMTA revenue?  No wonder the city and county infrastructure is falling apart.

You basically have it, but the TIF is only latching onto 12% of the taxes collected in the DDA district.  If you live outside of the district, they don't capture any of your money for the TIF.  This is meant to be confusing, because rational, efficiency-minded people wouldn't be funding things this way.  Those people would not think their 'rational' public servants would do something like this either.  Once the Mason County Promise Zone gets to use TIF, we will see another depletion of local taxing authority coffers.

But to put it simply then, what ever DDA receives is taking revenue from the other entities? I think this should be taken care of by the Chamber of commerce without a TIF. History has shown how the DDA has used the money (ice rink and two people to market entertainment?). What else do we get for 12 percent? The other entities (city/county/WSCC/LMTA) should have their 12 percent back and quit raising taxes and do something for the greater good.
Good article, questions and answers and explanation. Not only can't the DDA properly set up a committee meeting, perhaps their need has been met. Could the 12% be reduced back to to 2% or less? It seems there is an excess of money going for superfluous projects rather than utilitarian needs and parking and they've created a traffic jam that may wear out its welcome. But the concept that the DDA committee itself votes on the tax seems inherently wrong.

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