2014-06-12 / Front Page

City gains land for path, grapples with legal issue

Easement for SMH water line prompts questions, concerns

MANISTIQUE – Manistique City Council members addressed a variety of issues Monday, including land acquisitions and a water line easement issue with Schoolcraft Memorial Hospital. The meeting also consisted of discussion regarding the Manistique Downtown Development Authority’s budget, which has been negatively affected by recently enacted legislation from the state.

According to City Manager Sheila Aldrich, the city recently received letters from the Michigan Department of Natural Resources awarding the city three parcels of land. These properties will join three others the city has acquired through DNR programs to eventually create a river walk and pathway that extends from the west end of the boardwalk, loops around the city, and ends back at the far east end of the boardwalk along the Lake Michigan shoreline.

The newly acquired parcels include a Manistique River waterfront north lot, a Manistique River U.S. Hwy 2 lot, and a Manistique River waterfront Elk Street lot. While the funds to acquire the parcels are pending the city will now work with the “Walk Manistique” group to apply for grants for construction of the walkway.

Council members voted unanimously to allow Mayor Jan Jeffcott to sign and accept the terms of the acquisitions. Councilperson Dan Evonich was absent.

In other business, City Attorney John Filoramo updated council members on the status of Schoolcraft Memorial Hospital’s transfer of the water and sewer main lines which extend from the city limits to their new facility. While constructing its new facility in 2012, SMH took on the approximately $700,000 cost of building the lines, and has been in the process of turning them over to the city, which will maintain and operate them into the future.

Two years later, the city council has obtained the last needed document to close the deal, but Filoramo said he has concerns with some of the wording within that document. The agreement addresses, among other items, the water line located behind the hospital, and an easement pre-approved by the city. However, one of the parties granting the easement made a last minute change to the agreement, Filoramo said, hand writing in the words “environmental” and “sole”, altering the scope of one section of the easement.

“There’s a chance that these changes may never affect anything, but there’s also a chance that it could affect something further on down the road,” he said. “I don’t like it.”

Filoramo explained that he had expressed his concern with SMH and said their attorney approached the parties granting the easement, but they refused to change the added wording. He noted that council could approve the document, but it would be without his “blessing”.

Councilperson Rick Hollister made a motion to not accept the agreement and send it back for clarification. Aldrich added she would like Filoramo to investigate whether an environmental study was conducted in that area, as this could possibly reveal why additions to the agreement were made.

In addressing the DDA budget, Aldrich explained to council that legislation phasing out personal property taxes, resulting in taxable income reductions, could negatively affect the organization.

With property values already on a decline within the city, Aldrich said the authority has been facing a few challenges dealing with their budget, the biggest one being a reduction in taxable income.

Three bills signed into law in 2012 reduced property taxes on different types of personal property depending on several factors, according to the Michigan Legislature’s website. Public Act 402 exempts all commercial and industrial personal property owned by a single taxpayer and contained within a local tax collecting unit, if the total value of the industrial and commercial personal property is less than $40,000. The exemption was available to tax payers beginning Dec. 31, 2013.

Both PA 401 and PA 403 eliminate personal property taxes on industrial and commercial personal property if the property meets the definition of “eligible manufacturing personal property. Public Acts 401 and 403 will eliminate taxes on affected personal property over a period of years.

Despite the loss in potential revenue to entities the legislature also passed Public Acts 404, 406, 407, and 408 to provide various mechanisms to potentially replace a portion of revenue lost, if these measures fail personal property assessments will be restored.

Aldrich noted that the DDA’s total tax capture decreased from the 2013-14 level of approximately $595,000 to around $525,000 in 2014-15.

“We had a reduction of a substantial amount in a personal property statement that was filed from one of our utility companies,” she said. “We are researching that and, most likely, will be appealing that personal property statement.”

In the meantime, Aldrich said, the DDA will be forced to work with the budget they have, noting the state of its financing would affect the city.

“Their reduction in tax capture will be far reaching to the rest of the city,” she said. “It’s a challenge for them.”

This will include a reduction in what the DDA spends in maintenance and operations within the district, as well as the elimination of the payment the authority makes to the city’s waste water treatment fund. Aldrich said the city will absorb these costs.

The DDA’s budget was unanimously approved by city council members.

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