Council Considers What to Do with Extra Funds

Tuesday, June 11, 2019, 7:05 am
By: 
Dan Totzkay

The City of East Lansing may see some one-time, relatively large chunks of income this coming year, so City Council is talking about how to spend that revenue if it materializes.

At the May 14 discussion-only City Council meeting, City Manager George Lahanas presented Council with a list of priority projects curated by City staff. These include projects not earmarked for support in next year’s budget but that could be funded if extra revenue comes through.

City staff recommended Council consider funding the following projects:

  • Repairing a basement ceiling in the Hannah Community Center, just below its swimming pool ($77,000)
  • Replacing the boiler in City Hall with a higher-efficiency model ($126,000)
  • Renovating Hannah Community program areas, including conference rooms and rental spaces ($650,000)
  • Installing a solar panel park in front of the current Department of Public Works (DPW) building ($350,000)
  • Making an extra contribution to the City’s Pension Fund ($1,000,000)
  • Reimbursing the City General Fund for the purchase of the West Road property ($444,778; read more about that here)
  • Reimbursing the Sewer Fund for special assessments related to the West Road property ($233,111)

Lahanas told Council that staff believes the repair to the Hannah Community Center basement ceiling was most urgent, as is the replacement of the City Hall boiler and reimbursement to the General Fund.

He explained that the Sewer Fund has “gotten by for over a decade without that money” owed to that fund on the West Road property, so it was not a larger priority for now.

Mayor Mark Meadows responded that he was “all in on some amount of money going into a pension payment if we start to look at $2 to $2.5 million worth of additional funds rolling in in December.”

He also said he hoped to get “at least $350,000 out of this” to go toward the DPW solar park. He said this was a high priority for him and said it sounded like the “whole Council is geeked to getting that done.”

Extra funds could come from the State and from land sales

Lahanas described three potential big-ticket, one-time revenue sources: (1) Public Act 289 of 1977; (2) the sale of property on West Road; (3) the sale of the old DPW site on Merritt Road.

Michigan Public Act 289 mandates that the State government fund fire services to cities if State buildings make up more than 1 percent of the total value of the area. Since the East Lansing Fire Department services Michigan State University, it should be reimbursed by the State for the services ELFD provides to MSU.

However, as reported back in January in the Lansing City Pulse, this funding has never come through fully. Following signing of a bill by Governor Rick Snyder at the end of last year, East Lansing may receive around $1.5 million to make up for past underfunding.

At the May 14 meeting of City Council, Lahanas explained City staff anticipates that some if not all of that extra funding will come through. He said that the City has budgeted for a 60 percent increase in current PA 238 funding, so extra funds (about $650,000, according to Lahanas) could be put into the General Fund if that comes through.

The City-owned approximately 26-acre property on West Road could also bring additional revenue, if voters approve authorizing Council to sell it, and Council does sell it. (The net revenue anticipated from this sale was not estimated at the May 14 meeting.)

Finally, Lahanas projected $1 million in revenue from the controversial sale of the old DPW site on Merritt Road. As ELI has reported, Council voted in early March to approve a Purchase Agreement with Kodiak Landarc LLC to sell that land for $1,000,900 after Jeff Yatooma, representing Kodiak Landarc, won the right in an eBay land sale that was only revealed to the general public after it was over and ELi found out about it.

Now the site plan for that property is before Planning Commission. If Council doesn’t approve that site plan, the sellers can pull out of the purchase agreement, and the City can try again to find a buyer for that property.

Questions about Hannah Community Center rise to the top

The presentation of Staff’s priority list for special spending elicited questions from Council particularly with regards to possible improvements to the Hannah Community Center. The “Planning for Hannah Community Center’s Future” committee is currently reviewing how to better utilize the Center and is expected to provide a report to Council in September.

Lahanas noted that Parks & Rec Director Tim McCaffrey “has been asking for several years to look for money to spend to begin renovating … conference rooms and rental spaces” at Hannah. Lahanas explained this included things like repainting, repairing drywall, replacing carpeting and lighting, adding new technology, and making gym equipment upgrades.

But Council member Shanna Draheim said she viewed the Hannah Community Center items were more of a “maybe list” and a placeholder until the Committee makes recommendations.

For instance, she said, the study committee may find that a gym is no longer needed, which would mean no investments in it need to be made.

Meadows noted that Council was just being asked to consider these items for now, and would have to revisit this issue after receiving the study committee’s report in September, though he said he was willing to approve funding for these sorts of projects.

At the end of Council’s discussion of these revenue sources and possible expenses, Council member Aaron Stephens said he would “like to leave room for public input” on these matters. He wanted to see communication of the issues to neighborhood associations and neighborhood presidents in order to be “up front” on Council’s thought process.

 

 

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