ASK ELi: How Would Council Candidates Vote on the New TIF?

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Saturday, September 12, 2015, 12:16 pm
By: 
Alice Dreger

Above: The site at issue; photo courtesy City of East Lansing.

ELi readers have been asking us to try to find out how the six candidates would vote on real and important issues before East Lansing’s City Council. The Tax Increment Finance Plan on 565 East Grand River Avenue is coming to a vote at Council this Tuesday, and as I reported for our readers earlier this week, it looks like it will be a contentious 3-2 split vote. This, then, seemed like a good issue to ask candidates about. So I wrote to candidates early Thursday morning and asked them:

If you were on Council, how would you vote on the TIF plan for 565 East Grand River, and why?

I asked candidates to keep their responses to 500 words or fewer and indicated I would reproduce the responses in full. I asked them to get me responses by this morning (about 48 hours after I asked). In response to a question from one candidate, I told all the candidates they could include hyperlinks if they wished. Here are the responses, presented in the order in which they were received:

Steve Ross:

If I were on Council, I would vote no on the proposed $1.4 million TIF. Below, I’ve outlined four reasons I oppose this.

1. Much like the Gateway project located on Grand River Avenue next to Biggby, the location for this most recent proposed TIF plan at 565 East Grand River Avenue, directly across from the Broad Museum, is a prime piece of real estate. If this developer were to walk away, I am confident another would come in and build on this desirable plot of land.

2. At this time, the City is already *not* collecting about $830,000 per year in potential revenue due to TIF projects. This is money that could otherwise be going toward improving our dated and crumbling infrastructure, investing in our neighborhoods, funding our unfunded pension liabilities, or even potentially providing new services to our residents.

3. Similarly, the City admits it is facing deep budgetary issues and has therefore made some controversial decisions to cut costs like closing the Bailey Center and leasing Scene: Metrospace to MSU. In this tough financial climate, it is unacceptable for Council to claim poverty on one hand while providing public subsidies for private development on the other.

4. East Lansing residents pay very high taxes. Every time a TIF is provided to a private development, the City is basically asking homeowners to subsidize things like emergency services for said developments (many of which are student rentals). Council needs to stop balancing the needs of private development on the backs of its residents. Our tax dollars should be better used.

Simply put, our residents and our City can not afford this TIF.

 

Erik Altmann:

I would vote no on the TIF plan for 565 E Grand River.

Taxes pay the costs of running the city. That’s what taxes are for.

Taxes on a development project pay for the infrastructure and city services required for that project. When we forgive all new taxes on a project, as this TIF plan does, the project still uses the same infrastructure and services, just doesn’t pay for them. Our property taxes make up the difference.

So TIF plans shift costs from developers to homeowners.

The cost of any one TIF plan may be only $40,000 or $50,000 a year, but there are about 20 TIF plans currently active in East Lansing, and the costs add up. By one estimate, the total deficit in fiscal year 2015 was $830,000. If we had that money to spend every year, we could make the additional payments we need to make to cover our pension obligations to city retirees (about $600,000) and have enough left over ($230,000) to mill and fill a few local streets – every year.

We can’t do anything about existing TIF plans, but we can start saying no to new ones. Other municipalities are doing this and finding that projects get built anyway, as happened recently in Traverse City.*

New TIF plans may also make sense if the benefits outweigh the costs. In Ithaca, NY, small TIF plans that phase in full taxes quickly have helped revitalize a business district.

But in East Lansing, TIF plans have been used to subsidize a lot of student housing projects, including The Residences downtown, the Trowbridge Plaza redevelopment, and the Gateway project by Valley Court Park, which will break ground soon. None of these projects needed subsidies, because they’re on some of the most profitable real estate in the city for student housing. And they’re contributing nothing that the city doesn’t have already. The project at 565 E Grand River is no different.

Taxes in East Lansing are the highest in the county, and among the highest in the state, yet we don’t have money to do things we urgently need to do, like fix the roads and sewers and parks and playgrounds. Money is leaking out of the budget in lots of places, and on Tuesday, Sept. 15, probably by a 3-2 vote, the City Council will poke another hole.

Which is one reason why, if we want an attractive and affordable East Lansing, we need a new majority on the East Lansing City Council.

 

* — Thanks to Planning Commissioner Don Davis for bringing this example to the attention of the Planning Commission.

 

Mark Meadows:

First, I think it is inappropriate to ask a question regarding TIF financing on a specific project pending before the council for a couple of reasons. Projects are fluid and proposals change, even up to the night a decision is made. Second, two candidates have voted or are about to vote on the specific proposal. A fairer question to all would be to generally weigh in on the use of TIF.

Having said that, TIF financing is designed to pay for the cost of public improvements and for Brownfield financing, the improvement of contaminated and functionally obsolete sites. Here, the site was rendered obsolete by action of the developer (constructing a more modern Taco Bell across the street and moving his tenant there) and the contamination is questionable since the gas station identified as the source was located at Collingwood and Grand River on a site owned by the developer and was cleaned up via a TIF when that site was improved in the 1990’s.

I think the site should be improved and would support some TIF if the project added diversity to the Downtown. But, as currently proposed I feel it is too short (should be 6 stories) and since all residential construction in the Downtown since the completion of this developer’s project at Albert and Bailey has been student apartments, it does not add to the diversity of the Downtown. If this were a condominium project, I would probably have supported the TIF originally requested by the developer because of its location and the ownership aspect of the project.

Generally, I am opposed to TIF financing for student rentals for the reason that such rental projects need no public financing support. The developer should have no problem getting private financing for the project. And, as a design, policing, transportation and management consideration I am opposed to student oriented apartment rentals adjacent to the downtown that contain anything other than one and two bedroom units.

I am not opposed to TIF financing, I just think that the use of such a development and redevelopment tool should be limited to projects that accomplish age, income, retail and housing type diversity in our Downtown. While TIF creates debt, it is a debt that is more like a revenue bond and does not rely on or provide the threat of additional taxes on the general population of the City. In this case, the developer proposes to perform some public improvements that would be in the nature of a loan to the City and receive the return of the cost of the improvements from a portion of the increased taxes the completed project would pay. However, this project, as currently proposed, would not be likely to get my support for TIF financing. The developers here, David Krause and Doug Cron have produced some very good projects in East Lansing and I am sure a better proposal can be developed for this site.

 

Shanna Draheim responded that she is not submitting a response.

Jermaine Ruffin did not respond.

Nathan Triplett did not respond, but you can hear his comments on this particular TIF plan issue by listening to Council’s discussion this week. Click here and move the playback to start at 1:11:00.

 

Read profiles of all of the candidates by going to this page.

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