Citizens Object to Gateway TIF; Council Again Approves 3-2

Image: City Council last night debating TIF

Although last night’s City Council meeting lasted only about an hour, it was permeated with debate about Tax Increment Financing, or TIF. The lively TIF discussion stretched from public comments into councilmember reports into the discussion of the City’s budget and finally into the main reason it had come up: a re-vote on the Gateway Project “Amended Brownfield Plan #4” for the project DTN plans to build at 300 West Grand River Avenue, between Biggby’s and the West Village townhouse condos.

As Chris Root has reported for ELi, technically the Gateway Project’s TIF was already approved on May 6 by Council, to the tune of about $1.9 million in tax increment give-back over the next 21 years. The money captured in taxes from the new project will be given back to the developer DTN to reimburse for costs, including for the two levels of private underground parking for renters in the building.

At the May 6 meeting, Mayor Nathan Triplett, Mayor Pro Tem Diane Goddeeris, and Councilmember Susan Woods voted for this TIF, with Councilmembers Ruth Beier and Kathy Boyle voting against. But because City staff had forgotten to put the right paperwork in the May 6 meeting packet, the vote had to be redone last night. The vote went the same way, but not without a lot of argument about this TIF plan and more generally the place of TIF in the City of East Lansing.

Public comments on this issue were unusually heavy and universally against granting the TIF. Nine letters were submitted to Council on the matter from citizens. (Read them here starting on page 66 of the PDF.)

In his letter to Council, Larry Zbanek, who identified himself as a resident of Chesterfield Hills for 30 years, “encourage[d] the NO vote” because, he noted, Brownfield TIF funding is supposed to be directed at public benefits, and, he said, “I am at a loss to understand how building apartments can be considered a public benefit.” Zbanek told Council he was also “concerned that the City’s infrastructure has been ignored for too long and to continue to support tax giveaways will just prolong providing the necessary funds to focus on the infrastructure.”

Breezy Silver of Touraine Avenue also objected in writing, saying the developer DTN should have to pay for City resources “just like I have to do with my increasing taxes as a homeowner.” She added that “I will be watching to see how this plays out, and I can tell you that my neighbors and I are not happy with what is happening.”

Stacey Adams of Durand Street wrote to Council that, “The very last thing this city needs is another student housing unit that we, the citizens, will be supporting with our taxes for infrastructure.”

Teresa Dunn of Cowley Avenue strongly urged Council “to reconsider what appears to be an irresponsible and potentially detrimental financial decision.” She wrote, “For the amount of property taxes residents of East Lansing pay, we should be seeing benefits to our community for the people who live here. I do not want to see money being thrown away that equals profits for a developer and city services to student housing whose revolving door of residents don’t contribute to the city’s budget in any significant way. To consider increasing our taxes and fees on services before taxing development is offensive and confounding.”

Michael Koppisch of Kensington Road wrote to say he is “not at all opposed to the development of our community. . . . However, the kind of ‘development’ that is taking place and its cost to the residents of the city are unacceptable, especially in the context of the financial situation in which, we are told, the city finds itself.”

Brandon Scott of Highland Avenue, President of the Chesterfield Hills Neighborhood Association, called the TIF deal “contrary to good sense, and . . . incompatible with Council fulfilling its obligations to city residents.” Scott said he was “absolutely in favor of continuing to develop our downtown” but not in favor of “giving away potential tax revenue, yet again, for developments which are capable of being wholly self-supporting.” He wrote, “These sorts of giveaways are doing damage to our city finances and to the residents’ trust in our elected officials.”

During oral public comments, I asked why, when the City has a debt of nearly $200 million, Council members Triplett, Goddeeris, and Woods are voting to give back about 1% of that for private parking for students and a developer that don't need financial help. I suggested other uses for the $2 million. April Callis of Kensington Road seconded my remarks. She said that in her neighborhood people can’t drive down the road without their fillings falling out from the potholes.

Councilmember Ruth Beier presented a report from the Citizens Research Council of Michigan, a nonpartisan think tank, questioning the use (or overuse) of TIF. The report suggests that what developers save via TIF ends up costing property owners, including homeowners, as they are forced to make up the differences in city service costs. The report also questions “shadow governmental structures” created through TIF schemes. Beier also said that East Lansing Citizens Concerned had been hosting meetings to educate the public on TIF.

Councilmember Kathy Boyle said she is not opposed to TIF but she questioned why the City should use TIF to support “another development that replicates much of what we already have and may have too much of.” She questioned the claim that no project would be built at 300 West Grand River without TIF. She said the pick-up in the economy suggests otherwise. Boyle said that continuing to give TIF “to all or virtually all new development basically robs us of any meaningful tax increase in commercial property.” She added, “I don’t think we can afford to do that.”

Mayor Pro Tem Diane Goddeeris said each project needed to be looked at individually and that she was voting for this project for reasons she had stated previously. She said projects that were in an area relatively new to redevelopment deserved more TIF because they took a risk by being ahead of the pack.

Councilmember Susan Woods said she supported the TIF because she believed it was “necessary.” She said the site plan had been carefully negotiated and she felt the project would bring “an enormous amount of energy to that area,” that it would “benefit Crunchy’s and Biggby’s and the farmers’ market and the moonlight film festival and all the other events we have down there.”

To this, Boyle responded, “I am certainly in support of Crunchy’s. I think this is a good project. It’s a nice-looking building. I voted against this because I don’t think TIF is appropriate here.” She said that we have “reached too many cups of TIF water in the bowl.”

Beier noted that the letters to Council were universally against the tax abatement. Mayor Triplett objected to her use of the word “abatement,” noting that abatement is a forgiving of taxes necessarily owed, while TIF uses newly-generated taxes to reimburse costs from a redevelopment. Triplett also objected to Beier having called this TIF “corporate welfare” on WKAR’s “Current State.” He said that language was like when some call estate taxes “death taxes.” He said he found such rhetoric “both dishonest and counterproductive.”

Triplett insisted the property at 300 West Grand River would be unlikely to be developed without a TIF. He noted that two previous projects designed for the spot, both of which had been offered TIF, had failed to be developed. (Later this led to debate: Did that prove that TIF matters, or prove that TIF doesn’t matter to what gets developed?) Triplett also said that most TIF in the City has gone to public infrastructure, not things like private parking, and that without the TIF, the parking was likely to be built above ground which would raise the building from four to six stories above ground.

Triplett said the TIF from The Residences (above Hop Cat) and St. Anne Lofts (above Peppino’s) had gone into water and sewer rebuilds and the redo of the Ann Street Plaza, and that both projects had increased parking revenue, which was good for the city’s finances. He said he was voting for the Gateway TIF because it “provides more housing and commercial options downtown.”

Beier said the building would use costly city services without paying its fair share, which meant homeowners would pick up the costs of those city services, including police, fire, and city-provided infrastructure upkeep related to the building. Woods asked whether the base tax on the land would cover those costs. Beier responded that, in the absence of TIF, every property is expected to pay its fair share of City service costs based on its assessed value.

Woods noted the residents would pay for their water and sewer, like other residents do. Triplett said those payments would ”go back into the neighborhoods.” He said the school system would also benefit.

Boyle said she saw no reason why we need TIF to encourage development in places like 300 West Grand River, given all the building occurring without TIF in the region. She said it was “very hard for me to believe it would not go forward if we did not allow the project to capture our taxes.” She also said that there had never been a study showing any increase in spending or employment because of TIF developments. She said study after study failed to show local economic benefits from TIF. She said, “We should not just assume there is a benefit from a new building. We shouldn’t assume it won’t be built if we don’t have TIF.”

Woods said construction workers would be employed from the project and so would people who work in the building.

As noted above, the vote went as follows:

• in favor of the $1.9 million, 21-year TIF for DTN: Nathan Triplett, Diane Goddeeris, Susan Woods;
• against: Ruth Beier and Kathy Boyle.

The project itself has yet to receive approval from the Historic District Commission, which last week tabled the matter pending more information from City staff about the history of the portion of the property that falls within the historic district.