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Tuesday, October 19,2010

Kids in the Hall

Was it illegal for the City Council to block tax incentives for Pat Gillespie’s Market Place project?

by Andy Balaskovitz
Tuesday, Oct. 19 — Developer Pat Gillespie is exploring the option of suing the city over the City Council’s decision last week to block tax incentives for his $23 million Market Place project downtown.

Gillespie’s attorney John Fifarek said “all options are being considered right now” on filing a suit against the city for denying the 24-year brownfield incentive plan. He added that the Council had no authority to deny it because of contentious prevailing wage agreements with labor unions.

Under the Michigan Brownfield Redevelopment Act, a governing body (the Council) must first decide whether or not the plan is for a public purpose. If it does, the Council must determine:


  • Whether the plan meets the requirements of Section 13 of the act, which basically outlines how the plan should be written and how tax increments can be spent;

  • Whether the financing plan is “feasible”;

  • Whether the cost of eligible activities — such as site cleanup — is “reasonable”; and

  • Whether the amount of the captured taxable value is “reasonable.”

Using those guidelines, it can approve, modify or reject the request.

Fifarek cited precedence set by the U.S. Supreme Court in what’s commonly referred to as the 1993 Boston Harbor case. In it, the Court ruled that the government couldn’t impose requirements like prevailing wages or project labor agreements (PLAs) on private projects. These types of agreements set wages and benefit packages prior to work on the project. They often are used when hiring union labor, but can also include non-union workers.

“It was a clear violation of the law and their action was illegal,” Fifarek said. “It was clearly in breach of the development agreement.”

City Attorney Brig Smith declined comment after Monday night’s Council meeting.

“There is an indication that litigation may be pending,” Smith said following Monday’s meeting. “I will reserve comment for the point at which litigation commences.”

During the meeting, City Council Vice President Kathie Dunbar made a motion to reconsider the Market Place brownfield plan, which was to last 24 years for the $23 million project.

Dunbar spoke sternly to fellow Council members urging them to reconsider the resolution.

“We are not legally allowed to let labor issues affect the decision on the brownfield,” she said. “There’s a lot at stake here.”

Yet the Council voted 4-4 on reconsidering the brownfield plan, with At-Large Council members Derrick Quinney, Carol Wood and Brian Jeffries and First Ward Councilman Eric Hewitt dissenting — the same four who voted against the original proposal.

The failure to reconsider Dunbar’s motion all but sank the possibility of the Council approving Market Place tax incentives. It would take a six-Council member vote to suspend the rules of the City Charter to reconsider the resolution a second time.

Fifarek said the Market Place project is now “in turmoil, if not dead.”

Monday’s public comment period was on the Knapp’s redevelopment, which is also up for a brownfield Michigan Business Tax credit, and also Market Place. Seven people representing labor unions and 19 who wanted the tax incentive approved for Market Place spoke up.

Union representatives maintained that they are not trying to block the development, but only want to see fair wages in place before construction starts.

Jake Jacobson of UAW Local 652, thanked the Council for the 4-4 vote last week to block the incentive plan. He spoke passionately about the need to include unions in construction contracts.

“I believe you folks are trusted with our lives,” he said. “These people here are asking you to support them and get them back to work.”

Glen Freeman III, president of the Greater Lansing Labor Council, also thanked the Council and reminded them that PLAs do not have to include 100 percent unionized workers on job sites.

“We are here in support of area standards,” Freeman said, hopeful that a deal between the unions and Gillespie will come to fruition. “We can get there.”

Conversely, dozens of members from the local #LoveLansing contingent showed up at Monday’s meeting. Many of them were wearing “I heart Lansing” t-shirts being sold by Joe Manzella in the Council Chamber lobby. The shirts were going for $12 and were a play on the “I heart NYC” symbol.

The #LoveLansing people who spoke implored the four Council members for voting no and blocking what they see as an important development downtown.

“We can’t let this derail us,” Manzella, of the Lansing Economic Area Partnership (LEAP), said. “These are not labor issues. We’re talking about politics — we can’t play these games anymore.”

Manzella announced last week that he intends to challenge First Ward Councilman Eric Hewitt, who voted against the incentives, for his Council seat in the 2011 election.

Rick Preuss, owner of Preuss Pets in Old Town, also urged the Council to reconsider their vote on Market Place.

“It’s unfortunate Pat Gillespie is in this position. He should be complimented in any way — he started the movement,” Preuss said, referring to economic development downtown.

In other business, the Council passed a late-item resolution that temporarily changes a polling location in south Lansing from South Washington Apartments, 3200 S. Washington Ave., to the South Washington Office Complex, 2500 S. Washington Ave. due to road construction.

City Clerk Chris Swope said each registered voter in the second ward, precinct 3, will be notified prior to the Nov. 2 General Election.

“It’s literally right up the street,” Swope said of the new location.

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