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Above: the Avondale Square neighborhood
East Lansing’s City Council looks likely to follow City staff’s recommendation to cut funding to local social service organizations in favor of putting funds towards infrastructure repairs and City debt associated with prior development. This would override the recommendation of a citizens’ panel convened to advise the City on how to spend funds obtained by the City via the HUD Community Block Development Grant (CBDG) program.
City Council has been holding a series of budget work sessions on Tuesdays at 5:30 as it prepares to pass a budget in May for the next fiscal year. Last Tuesday, April 17, Council Members discussed the question of what to do with the CDBG funds. Dana Watson, who served on the citizens’ advisory committee, came to read a letter to Council about how disappointed she was to see staff disagree with the committees’ recommendation.
After considerable deliberation, the advisory committee had advised Council to target funding for a number of social services, including the Youth Scholarship Program of the City’s Parks & Recreation Department, Haven House (the emergency shelter located near East Lansing’s post office), Legal Services of South Central Michigan, and the Tri County Office on Aging “Meals on Wheels” program.
Watson told Council she was coming “from a social service perspective. From a community service perspective. From a health equity and social justice perspective. And I am thinking about impact and who loses. Do I want to see a nice sidewalk or know that a child received a scholarship to remain on a track team that her single father couldn’t afford?”
Watson noted that the example she was giving, of a single-parented child able to pursue sports, was not hypothetical but came from a true story in East Lansing of what the Youth Scholarship Program had provided.
Watson read her letter during a public comment period near the meeting’s end. Earlier in the meeting, Amy Schusler-Schmitt, Community Development & Engagement Manager, had told Council that although staff understood the committee’s recommendation, with the budget problems the City is facing, “staff decided to recommend not to fund human services agencies and to redirect funding to more infrastructure work” along with additional payments on the federal loan associated with the Avondale Square project.
As ELi has previously reported, East Lansing’s Avondale Square project, located near Marble Elementary School, has turned out to cost taxpayers millions more than originally planned. The project brought 26 new, privately-owned owner-occupied houses to the area, with half of them reserved for low-to-moderate income families.
When it was planned, City leaders had expected to pay for a large chunk of the project through a HUD grant. But what was hoped to be a grant became a Section 108 loan, which the City has had to use HUD CDBG funds along with money from the General Fund to pay off.
About $100,000 a year from East Lansing’s CDBG funds is being used to pay for that loan. Ultimately, East Lansing taxpayers are paying about $200,000 per house in subsidies for that project. Taxes coming off the properties are not going into the City’s general fund, but are instead, through a tax increment financing (TIF) plan, going to pay for the project’s costs.
On the issue of Avondale Square, at last Tuesday’s meeting Council Member Ruth Beier said she hated “to harp” on the issue, but she wanted to note, as she has at other meetings, that the original plan for Avondale Square “was not to have a deficit that would be funded by the General Fund.”
Director of Planning Tim Dempsey confirmed that that had not been the intention. City Manager George Lahanas said the problem was that the City had to pay more than anticipated to buy up the land for the project, and that the economic downturn of 2007 led to the properties selling for less than anticipated.
Beier said in response, “as we ask taxpayers for new revenue, we need to admit when we make errors. This was a financial error in the long run….We don’t have the expertise or capacity to make this mistake again. I am not interested in acquiring more property.”
She said she believes Avondale Square to be a “huge improvement,” but said that she wanted to tell citizens she would not undertake it today, “so that they don’t ask [taxpayers] to give these 'fools' more money.”
Mayor Mark Meadows, who was also Mayor back when the Avondale Square plan was developed, said he thought it was important to put more of the City’s CBDG funds towards the Section 108 loan so that it could be paid down sooner, to reduce the amount of interest the City is ultimately putting towards that loan.
But Meadows objected to Beier’s framing of Avondale Square as a “mistake,” saying he thought the project is likely to help redevelopment in the area, as was always intended, moving away from low-price rentals towards owner-occupied housing.
Meadows said the project has “cost a lot more than anyone ever imagined but I can’t say it is a mistake, because you make a decision based on what you have in front of you when you make the decision” and “no one could predict the Great Recession.” Meadows said that, “From my standpoint, it was worth the risk. I agree with you in this sense [that] it is not time for us to be doing this over again.”
Council then had a discussion of whether the Avondale Square project was “a mistake.” Beier reiterated that she thought it a mistake: “I don’t think City Council should be a developer. I don’t think that is our role, to take risks with taxpayer money which turned out to be a bad risk. That’s what I’m saying to people as I’m going to ask for an income tax.”
Meadows said the intention was never for the City to be functioning as a developer. Lahanas said he believes “staff is now much more cautious in a lot of areas.”
In discussing what to do with the CBDG funds available, Council Member Aaron Stephens, who served with the advisory committee, said he thought it necessary to see CBDG funds go now to pay for infrastructure repairs, but that he wished the City would not have the advisory committee spend so much time and energy when its recommendations were not followed. Schusler-Schmitt said that the committee understood that its role was advisory, and the agencies whose funding was being cut were kept informed that this might happen.
Council Member Shanna Draheim said she has “been a proponent of making this change for a long time. As much as I want to support organizations, it takes a huge amount of time and energy [to do so] and the administrative costs don’t cover it.” She has said that “funding priorities” called for the community finding support for those agencies’ work through some other way than through East Lansing’s strapped budget.
Asked about how much the approximately $110,000 at stake could achieve, Director of Public Works Scott House said it could pay for about a half-mile of road repaving, or that it could be used for things like alleyway improvements or sidewalks.
At last Tuesday’s budget work session, Council also discussed the budget of the City’s parking system and what to pay for in terms of infrastructure repairs among the many repair projects staff say are needed around the City.
Council decided against putting $25,000 towards a new sound system for the theatre at the Hannah Community Center, even though the City can obtain a grant match of $25,000 for that, because the future of the Hannah is not clear. Draheim strongly recommended having a citizens’ committee come together to discuss what to do with the Hannah.
Council did decide to fund two repair jobs at Hannah – the ceiling in the basement below the pool and emergency exit stairs – as well as repair of the large garage doors at East Lansing’s main fire house. All these were considered by Council to represent essential safety concerns.
There was considerable discussion about what, if anything, to fund in terms of repairs to the Orchard Street Pump House in the Bailey neighborhood, but a decision on that was not reached.
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