White Lies on a Brown Field

[XLFD]

At the November 12, 2018 meeting of the Ludington City Council, a Brownfield Plan was presented for 704 Maritime Drive (formerly 602 S Rath).  It was passed with minimal opposition, the council marketing the project as great and the public subsidization of the environmental cleanup as necessary for its success.  A white lie.

Developers Jeff and Jean White came to the Ludington Planning Commission on May 1st after alerting the local media that they planned to install an event center in the land sandwiched between the Lake Michigan Carferry port and Harbor View Marina. This supplanted the prior plans to build a small townhouse community there.  After passing the LPC with glowing approval, groundbreaking ceremonies waited until August 24 with the usual pomp:

Despite that commitment, the Lake House was nominated (and lost) for the local chamber of commerce's Momentum Business Plan Competition in early September, the $50,000 prize being meant to encourage business startups in Mason County.  By late October, the skeletal structure had been erected on the concrete foundation, the parking lot was paved and finished. Local media noted this fact on October 27:

During all this time, including the LPC May meeting, there was no talk of environmental cleanup for the parcel of land where this structure was erected. One could easily believe that it had either been previously rectified by LMC magnate Bob Manglitz who sold the property to the Whites for $375,000 on June 15th.

… or dealt with shortly after groundbreaking, with some oversight by the DEQ. Nevertheless, on November 12, the foundation and parking lot mostly covered this parcel of land, and a Brownfield Plan came before the city council. Summarized, it was a twenty year tax increment financing (TIF)plan that would capture 50% of the taxes that would normally accrue from all taxing authorities and give that money, projected to be about $215,000 total, back to the White's.

In my opening comment, I was mistakenly on the impression that the local Brownfield Authority was city-based rather than county based, and therefore the city council would have had to hold a properly noticed public hearing. A reading of MCL 125.2664(1) says: "Before approving a brownfield plan for an eligible property, the governing body shall hold a public hearing on the brownfield plan." A governing body in that section of law is "the elected body having legislative powers of a municipality creating an authority under this act."

What I never read is that "municipality" had it's own meaning in that act; rather than equating exclusively to a city as it usually does, it equated to villages and counties as well. Thus, Attorney Wilson was right at this meeting in saying that the public hearing was properly held at the county board meeting being held the next morning.

Councilor Bourgette properly asked at the meeting about why wasn't the environmental clean-up performed before the constructions, to which Jeff White replied they had no idea of the extent of the cleanup that was needed when they purchased the property. He followed up to ask Jim Rossi, who was in charge with complying with the cleanup work, whether the structure was built prematurely, to which he replied that it was intentionally done the way it was, building on the old railroad base rather than removing the soil, since the process would have been twice as expensive otherwise.  Rossi also emphasized that school funding would not be affected by the plan.  Another white lie.

The council's unanimous approval of the plan was more formality than anything else, showing they did not object to the loss of 50% of the assessed taxes of this property over the next 20 years.  Other taxing authorities affected may have done the same.  Wiser about this plan, I addressed the county board at their public hearing the next morning with my concerns and some fresh perspectives.

Mayor Holman and City Manager Brock were there to give their own branding of consent for this tax break, as were the Whites and Rossi.  After they had their say, I made a simple presentation.

I read the various taxing authorities and the amount of funding they would lose over the twenty years, beginning with West Shore Educational Service District and the $1901 they would lose, all of the way down to the County Jail and the $3995 they would lose, pausing meaningfully at the $35,110 the county would lose.  

I added that these taxes have to be made up some other way by these authorities, and that our educational school district and our poorest citizens will suffer economic hardship simply because a wealthy car ferry owner could not either mitigate the environmental damage his business had done to his own property, or offer it to another wealthy developer at a reduced cost so they could afford to do it without having to take money from the community chest.  

Consider, had Bob Manglitz sold this land for $175,000 (rather than $375K) with the understanding that $200,000 more would be needed for environmental remedies to make the land whole again, all of this other inconvenience to all of these public bodies and to their source of funds (taxpayers) would not have to be done.  Wealthy business folks would actually pay for their private ventures, rather than save their money while the rest of our community pays their way for speculative investments-- even those in the community who believe the event center is a bit redundant and a poor business decision.

Rossi would offer a refutation that the land would just otherwise sit vacant for those twenty years and earn the taxing authorities a mere fraction of what they would get with a successful event center operating there.  Well, maybe we should just get rid of all those city parks returning nothing and costing us a lot to maintain and let developers chop and clear to invest public money into risky endeavors.

Brownfield plans should be properly made and established before the ground is broke for a project, not afterwards.  The Brownfield Recovery Act is predicated on the idea that if not for the tax breaks/TIF offered, the development would be unlikely.  In November, this project was already done except for finishing touches on the event center, it wouldn't be held up just because they couldn't get around $10K per year from local governments in a  tax break beginning in 2020.  This was a gift made with your tax dollars.

And now that our county and city leaders have locked us into funding this private enterprise, we have become 'shareholders' who actually have more to gain if this project goes belly-up than if it succeeds.  Imagine that.

[Freedom Seeker]

Good point, X.  How many more private enterprises will the city cut taxes for?  How about cutting all the struggling citizens taxes in half for 20 years so we could catch up?  What's next?  City code blue with too much red ink due to TIFs or let the struggling taxpayer bear the brunt?  When will the city council learn?  I think TIF decision making is above their pay grade.

[shinblind]

Wonder if it would it be possible for the owners of the event center to sell their TIF stake to one of these outfits that buys up the payment over time for a lump sum cash offer? Probably no way to find out, but this would give the owners more funds to pay down their debts.

Seems like this would have been better location for a restaurant than an event center. What will the event center employ in the winter months? One part-time worker to show the place in case someone wants to view it before they  make a commitment?

I wonder how long they will keep it plowed out in the Winter or if they are all ready making arrangements to shut down the quiet months from October to May like the now shuttered Biercamp Market or the soon to be Cops and Doughnuts.

If there is one thing that the city and county are both  guilty of, it is emphasizing developments over jobs. And the developments always seem to come with a corresponding tax giveaway. 

Makes me wonder if the county board will hold sway over the Brownfield environmental costs that will certainly be incurred in the ''Depot'' low income apartments planned for the Madison and Dowland Street area. Or will the board will kick the can down the road and wait until construction is almost finished before they actually examine if there is an issue.

[XLFD]

I had the same thought that they would think of introducing a Brownfield TIF for the Depot development since that area probably would qualify as a Brownfield, and the developers do not have any qualms with shafting the Ludington public.  That was rather clearly shown when their own informal assessment of their property was much different and much more in their favor than City Assessor's Brent Bosley's professional assessment.  

Go ahead and ask Steve Brock why Bosley retired in the middle of his one year contract, missing a healthy balloon payment at the end to Bosley, just after he maintained his assessment was proper and not long after he offered a caveat to the city council in spring that the pension liabilities of the city were troublesome.  Steve 1.0 will tell you the reason is just between Bosley and him.

[Willy]

The Council has still done nothing for the marina's on the bayou. Nothing says cronyism and corruption like ignoring the people who really need the help. All this development and not a peep out of City Hall or a helping hand to save the businesses and people who have been here the longest and who have supported and contributed greatly to the Ludington community.