Chamber of Commerce pushes back against drainage project

Lansing taxpayers could see tax bills for $35 million drain project this winter

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The Lansing Regional Chamber of Commerce is asking Ingham County Drain Commissioner Pat Lindemann to tap the brakes on a $34.8 million drain project on the east side of Lansing.

Plans quietly approved by the Lansing City Council this week call for tax-paying property owners in Lansing to shoulder about two-thirds of the cost of the reconstruction of the Montgomery Drain. Lansing’s portion is estimated to cost up to $41 million, including interest, over 30 years.

Chamber officials asked Lindemann — who has sole control over the cost and who must pay it — to temporarily halt or reduce the scope of his plans. More assessments to residents and businesses during a pandemic could be devastating, they said.

“It wasn’t that we’re against the project, it’s just the uncertainty of what this type of financial impact would have on our local municipalities,” said chamber Vice President Steve Japinga. “It’s really about hitting the pause button and making sure our communities are prepared for it.”

To fund the project, the city — as approved by the City Council — is expected to levy an additional 0.26 mills on property taxes for every city property beginning this winter. That equates to an estimated annual increase of about $13 for a home with a taxable value of $50,000.

However, owners of the 180 residential and commercial properties in the immediate area of the project would pay much more: $377 annually for residences and $11,831 for commercial, in addition to the city tax. Those bills, pending City Council approval, could also arrive by winter.

Japinga said with the financial toll caused by the coronavirus, this year might not be the best time to hit local residents and businesses with additional costs they might not be able to afford.

“Anyway, we can lessen the blow, by reducing or pausing this project, is a benefit,” he said.

Despite the pandemic-generated economic crisis, Lindemann has voiced plans to press forward with his decades-long plans to reconstruct the drain, which runs from Frandor to the Red Cedar River, in order to cut water pollution. City officials don’t have the authority to stop the project.

Under law, Lindemann decides the costs and how they’ll be divided among local municipalities. Lansing just eats the bill. The mayor and the City Council only decide how it’s eventually paid.

“I don’t get to make that decision. The drain commissioner decides the project, and we have to pay for it,” Schor explained last week. “I would be supportive of waiting, but the drain commissioner says that now is the time.”

Lindemann said he’s still exploring plans to piecemeal the upfront costs over the next several years, but city officials are preparing plans on how to cover the project entirely with new taxes.

And with $7 million already slashed out of the budget, and reserve funds at their lowest point in history, the mayor can’t reach much deeper into the city’s pockets to cover the costs, he said. His only viable alternative is to bill property owners directly for the next 30 years.

“It’s either going to be spread out among all the citizens of Lansing and everyone has to pay for it, or we’re going to assess that specific area,” Schor said. “We’re splitting it. Nobody wants to pay more. That would also be quite a bit of money if we just billed it to taxpayers in that area.”

Most bids for Lindemann’s project haven’t been received. The costs, he has repeatedly emphasized, are subject to change by the end of July. But Schor and the City Council had to figure out how to finance the project as part of the annual budget, which was passed Monday.

The largest single contributor will be the Red Cedar development itself, which is slated to pitch in at least $2.75 million in local assessment costs. The rest of the project will be covered through additional property tax funding from every taxpaying property owner.

The City Council doesn’t need to set the tax rolls until later this summer as costs are finalized.

Schor said his administration has encouraged Lindemann to pause his plans, especially considering the city would need to assess its residents during a public health crisis to pay for the early stages of the construction. Lindemann, however, has nearly total autonomy on the project.

“There are several options we can look at. We can hold up a little bit, but we also have some construction that needs to take place this summer. We’re looking at ways to minimize the impact,” Lindemann said.

Lindemann also emphasized that interest rates on bonds that would cover the costs of the project are particularly low, which could reduce costs if he strikes quickly to borrow. Some construction, he noted, is also already ongoing and must be completed before the winter.

“We’re going to do the project. That part is not going away, but I’m not at all opposed to borrowing this in pieces to lower those costs for the time being,” Lindemann added. “I have full sympathy for these municipalities, we just have to step forward and figure out our next move.”

While Lansing is expected to cover 64% of the project, the rest will be split up among Lansing Township, with 14%; the Michigan Department of Transportation, with 10%; East Lansing, with 7%; and the Ingham County Road Department, with 5%. Other municipalities, like East Lansing, plan to spread the new costs across every property owner in the city.

The Montgomery Drain Project has been in the works since Lindemann first noticed the crumbling drainage infrastructure back in the ‘90s. The stormwater retrofit, which Lansing petitioned to have done in 2014, is designed to reduce up to 75,000 lbs. of pollution from the Red Cedar River annually by constructing a series of natural features within the drain system.

Nearly three miles of service paths will also serve as hiking and biking paths for the public.

Schor and Lansing City Council members recognized the need for the project, but questioned whether now is the best time to hit Lansing’s already struggling residents with an assessment. Without wiggle room in the general fund, there aren’t many options at their disposal, they said.

“We’ve got homeowners that are looking at an increased assessment, and maybe this is the one that is too far over the edge,” said Council President Peter Spadafore. “Some compassion and some consideration needs to be given to what these residents can afford to pay right now.”

City Councilwoman Patricia Spitzley said she would prefer to delay the project — and its assessments — until residents begin to financially recover from the ongoing pandemic. But it’s clear the burden to taxpayers can’t be offset by the general fund, she said. The cash isn’t there.

“I think the 50/50 split, whenever that comes, might be the best way to go,” Spitzley added. “It’s always hard to convince people that don’t live near the project to pay for the project. I live on the south side. Justifying to the south side why they need to pay for these projects is always tough.”

Added Councilman Brandon Betz: “I personally believe these sorts of taxes should fall primarily on the piece of the community that is benefitting from the tax. The question is how we do this while also causing the least harm to the people who are the most vulnerable during this crisis.”

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