COUNCIL CAPSULE: July 7, 2015

Image: East Lansing City Council’s first of two meetings this week

This Tuesday, there were two Council meetings, one “work session” and a “regular session.” This Council Capsule combines the two.

Present: Mayor Nathan Triplett, Mayor Pro Tem Diane Goddeeris, and Councilmembers Ruth Beier and Kathy Woods were present, with Beier arriving about ten minutes late to the work session. Councilmember Susan Woods was absent from both meetings.

Three new developments discussed: During the regular session, Council discussed three new development projects, approving two. See our special reports:

• 565 East Grand River, planned as a five-story building with commercial on the first floor, kitty-corner and paying architectural homage to the Broad Museum, with the owner planning to ask for tax increment financing (TIF); click here.
• a new Lake Trust Credit Union building on the Meijer parking lot, approved with no TIF by Council over objections by residents in the neighborhood; click here.
• a six-story building at the corner of Grand River and Spartan Avenues, with a Brownfield TIF request to follow; click here.

Planning Commission vacancy: In her Councilmember report, Kathy Boyle said Planning Commission is losing a member because he is moving (Stephen Wooden is returning to Grand Rapids) and asked those interested to consider applying. She noted that it is a major amount of work and a big time commitment. The application form is here.

National Development Council’s report on PDIG sharply criticized: Two public comments and one Councilmember’s comments involved criticism of the National Development Council’s report on PDIG. PDIG is the company seeking to build a large project at the corner of Grand River Avenue and Abbot Road. (Read ELi’s report on the DDA’s June meeting about this.)

Ray Vlasin of Cricket Lane said during Public Comments at the work session that he was very troubled by having what is essentially a development advocacy organization conduct “financial due diligence” on behalf of the City of East Lansing. He said the report was lacking in many key respects, and it wasn’t clear NDC had asked the questions needed to get at whether the principals of PDIG are financially stable and trustworthy. He alluded to the many lawsuits and foreclosure actions in which the developers are embroiled. He said the “crowning blow” to the report was the failure to provide any convincing documentation about the company allegedly managing the hotel deal.

Don Power of Blanchette Drive echoed Vlasin’s comments when he spoke during Public Comments of the regular session. He said NDC’s report was inadequate in many ways, especially compared to the due diligence conducted by Plante Moran for the City Center II project proposal that predated the PDIG proposal for a project centered on the same property, which is across from the main entrance to MSU on Grand River Avenue. He said NDC is not an independent judge of the type we need. He said NDC’s approach “relies heavily on the lender [to the project] doing a complete financial colonoscopy.”  Power said 63% of the taxable base in the City is single-family homeowners who need protection against bad deals. He praised Eliot Singer for his diligence in looking into the financial and legal problems of those associated with PDIG. He said MSUFCU is managing to build a $50 million structure that will employee over 500 new employees without ever asking for any TIF or Brownfield funding.

During her “Councilmember report” during the regular session, Ruth Beier said her view of the NCD report was similar to Power’s. She said anyone who reads it and thinks it involved appropriate financial due diligence is being misled. She called NDC “a pro-development outfit” and said “that’s fine” but that it is not the same as financial due diligence, which she called “expensive and difficult.” She said asking NDC to take a careful look at a developer was like asking the teachers’ union how much teachers should be paid and simply accepting their answer. She said she didn’t want to see another “due diligence” report from NDC, as this one was “closer to due negligence” because, she said “we’re calling it ‘due diligence’ and it is not.”

Budget amendments explained, after being approved at a work session in June: Finance director Mary Haskell explained why at the June 23 work session of Council she asked for (and got) approval of FY2015 budget amendments totaling about $4.2 million. You can see the details of the budget amendments here. According to Haskell’s memo to Council:

 “Under the Uniform Budgeting Act, the State of Michigan requires municipalities to adopt not only a balanced budget, but also one where all of the actual expenditures have been budgeted for a fiscal year. As staff begins to estimate the preliminary financial results of the fiscal year, budget amendments for the General and several Special Revenue Funds appear to be necessary to comply with the state act for the fiscal year ending June 30, 2015.”

Retirement debt discussion: In her Councilmember report, Ruth Beier followed up on the Municipal Employees’ Retirement System (MERS) report to Council from June 23. (Read a summary of that here.) She said she had asked the City Manager to have them present and that the information was “worse than I had feared” both in the sense that the retirement system of East Lansing is both underfunded and has been so longer than she thought, with a bad trend towards a very low funding rate.  She said that in 2000 the retirement system was 86% funded—meaning we had about 86% of what we would need to pay 100% of our pension obligations at that time—and that now we are only at 58%. Beier said payment is going to have to come out of the City’s general fund, and if the general fund is not to be bankrupted, that means either increase in taxes or slashing spending on services. She said she wasn’t sure how to fix it but it was her intention to start trying.

Mayor Pro Tem Diane Goddeeris said that she wanted to add to Beier’s remark on the pension issue. She said the new accounting methods, which force the City to put long-term financial obligations to employees right up front, happened because nationwide people’s pensions were not being protected.  She said the City started using plans in 2000 that put more of the financial burden on employees, so as to try to deal with the financial burden. She said the crash of 2008 had had a big effect, and it wasn’t the case that the City and Council hadn’t tried to address the issue.

Mayor Triplett added then that all of the financial parts of the City are interconnected. He said that when people say it seems like it would not take a lot of money to keep operating Scene Metrospace or the Bailey daycare, they don’t seem to appreciate the pension liability, OPEB debt (read more), etc. He said the City was working to manage these debt obligations and that they amount to daunting, multi-year challenges.

During his report, City Manager George Lahanas said he was glad Beier had brought this issue to Council and that the City started making significant changes to financial packages for new hires and to health care plans as long ago as 1994. He said there was work left to do on the debt. (Read about the City’s mounting debt here.)

Finance Director Mary Haskell recognized for excellence: Mary Haskell and the City of East Lansing received the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association. City Manager George Lahanas praised city workers for accountability and transparency and said the City and staff have received this recognition for thirty years running. Haskell thanked Lahanas and Council for their support and leadership. She also thanked engaged citizens for asking her questions. She said the new accounting requirements are going to make our pension debt significantly more visible.

DTN’s Park District pre-development agreement up for renewal: Developer/landlord DTN wants to try again at redeveloping a chunk of the Park District and is seeking renewal of the “pre-development agreement” with the City. (See DTN’s letter to the City.) At Tuesday's Council’s work session, City Planning staff Lori Mullins asked Council to accept changes of dates and one item in the prior agreement and to put approval of the revised agreement on the consent agenda for Council’s August meeting; this means it would be approved by Council without discussion. (See the proposed new pre-development agreement.)

Council nixed that suggestion after Mayor Pro Tem Goddeeris said she wasn’t comfortable having it on a consent agenda. She said she thought it was important to “put it out there” so the community could see it before approval.

The prior agreement assumed DTN could obtain a private property in the area, a rental property at 404 Evergreen Avenue owned by Hagan Realty. DTN’s legal option to buy the property has expired, so there is a question of what the site plan would look like if DTN can’t obtain that property.

Staff said they also want to put two City-owned parking lots on Abbot Road back up for sale, possibly on the ballot in March, August, or November 2016. Councilmember Ruth Beier said it would be best to have a site plan essentially in place so that people would know what they were voting on with regard to the parking lots’ sale. She also said Council would have to decide what the ballot question would look like—whether it would give Council the right to sell the properties, or give Council the right to sell the properties for this project.

Mayor Nathan Triplett raised the question of when the City will have to start paying principal on the bonds for the Evergreen Avenue properties bought by the East Lansing Downtown Development Authority for City Center II, the project proposal that predated the projects now under consideration. His concern seemed to be that the City find a way to sell the properties before large principal payments must be made.

Ordinance against rooftop partying:  Council discussed an ordinance (1351) that is currently set to make it a misdemeanor to illegally party on a roof that is not set up for safe occupancy. See the staff memo on this and the draft ordinance.

Councilmember Ruth Beier, who began discussion of this at Council Tuesday, said she thought it was a good idea to stop people from trying “to kill yourself by having a party up there,” but questioned whether a misdemeanor was the wrong categorization given that it would leave young people with problematic records.

Mayor Nathan Triplett concurred with her concerns. He said there was, for example, a difference between one person tanning on the roof and many people partying. He said he would “love” to see a version of the ordinance presented to Council that had the offense as a civil infraction instead of a misdemeanor.

Councilmember Kathy Boyle said that Council would need to hear more from the police about what the different options would allow them in terms of enforcement. City Attorney Tom Yeadon asked for clarification on whether Council wanted it to remain an ordinance for the Disorderly Conduct Code. Triplett and Boyle, who are attorneys, said yes.

Council voted unanimously to hold a public hearing on this on August 4.

Transparency and Public Access to Council: During public comments, I noted that while the mayor has been advising citizens to try to “limit their comments to between three and five minutes per the Council’s operating procedures,” the Council operating procedures actually say “the Mayor shall encourage members of the public to limit their comments to a five minute presentation.” I also said I was concerned that work sessions are being used for major business, sometimes approval of matters in the millions of dollars, off camera, contrary to the stated purpose of work sessions in the Council operating procedures.

I added that I thought it was unseemly for a Council member to advocate for her employer from the Council seat, although it is not prevented in the operating procedures, as had happened with Councilmember Susan Woods. I also said that I thought Council members ought to disclose to the public when they have taken campaign donations from individuals with financial business before council, as was the case for Triplett with Kevin McGraw (principal on the Trowbridge Plaza and other major projects before Council) and David Krause (principal on a project before Council that night), and for Woods with Thomas Kuschinski and Colin Cronin, President and Vice President of DTN.

Triplett responded in his Councilmember report that he would encourage voters to go to the Ingham County website to look up these issues for themselves so that they would get “full disclosure.” He said that I had failed to disclose that I had given Ruth Beier campaign funding when she ran in 2013. (See my report on Beier’s funding, and summary comparison of campaign financing.) Triplett said this would allow voters to “keep a full picture in mind.”

Plans for Bailey Community Center moving forward: At the work session, City staff updated Council on movement forward on the plans for redeveloping the Bailey Community Center. (Regarding those plans, see this and this.) Staff and the City Attorney have been working on an option agreement and forty-five year lease which would enable the Capital Area Housing Partnership (CAHP) to redevelop the property to include low-income senior housing, community space, a daycare, and offices for CAHP.

The draft option agreement and lease were only provided to Council and the public a couple of hours before the meeting. At least two Councilmembers said they had not really had time to read the documents. City Planning Director Tim Dempsey told Council the goal is to have a site plan approved by the October 6 Council meeting, because CAHP is trying to meet an application deadline for financing on October 15.

Answering questions from Mayor Nathan Triplett, City Attorney Tom Yeadon said the plan was a 45-year lease, with a provision that both parties could agree to extend for another 45 years. If both parties did not, the property rights, including the rights to the building and all improvements, would revert to the City. Triplett also asked about the PILOT (payment in lieu of taxes), and Dempsey said staff would probably be ready to discuss that in August.

Staff is planning to provide Council and the public with a timeline of next steps. CAHP Executive Director Mikki Droste was at the meeting and said they are working with the City staff to keep on the schedule needed to apply for tax credits.

Tri-County Office on Aging Plan resolution: Council voted unanimously to approve a resolution to approve the Tri-County Office on Aging Area Plan for Fiscal Year 2016, but not before Mayor Pro Tem Diane Goddeeris pointed out that they had to strike the fifth “whereas” clause because Council hadn’t actually done what that clause said (“East Lansing City Council Member of the Consortium Administrative Board has reviewed the plan and recommended approval”).

Consent agenda: The following items were approved in a “consent agenda,” which means they were approved without any discussion at the meeting:

• Approval of contract Change Order No. 1 to add Division Street Garage & City Center Garage LED lighting to the existing contract with Pylman Power in the amount of $281,215 and authorize the City Manager to sign said change order: memo and contract
• Approval to authorize the City Manager to sign the MDEQ Consent Order regarding the mercury spill at the Wastewater Treatment Plant: memo and consent order.
• Approval of the appointment of Daniel Papineau to the Parks, Recreation & Arts Commission for a partial term ending December 31, 2017: more info.
• Approval of a resolution recognizing Regency Group Foundation as a non-profit organization located in the City of East Lansing for the purpose of obtaining a charitable gaming license from the Michigan Lottery Bureau: memo and resolution.
• Approval of the Housing Commission recommendation for a change in classification for a rental license at 220 M.A.C. Avenue, Unit 204 from a Class I rental license to a Class III rental license for 2 unrelated persons or a family. The commission added two conditions to the rental license, the first being that the owner must have a designated local legal agent and the 2nd condition is that the issuance of any rental license be held until such time that any fines resulting from tickets for renting without a rental license are paid in full: memo and neighbors’ opposing.
• Introduce and refer to the Planning Commission Ordinance No. 1350; an Ordinance to amend the Zoning Use District Map of Chapter 50 -- Zoning -- of the Code of the City of East Lansing: memo and ordinance.

Communications from the public: Recent written communication from the public is included in two PDFs provided by the city here and here. There were a number of public (spoken) comments throughout the two meetings, including during the public hearings on developments, and these are included in those topic-specific reports and/or sections above.

Reminder: You can communicate with Council in person at its weekly meetings or write to Council directly at council@cityofeastlansing.com. You can speak or write on any issue involving the City, not only what is on the published agenda.