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CITY OF MUSKEGON
CITY COMMISSION MEETING
JUNE 12, 2012
CITY COMMISSION CHAMBERS @ 5:30 P.M.
AGENDA
CALL TO ORDER:
PRAYER:
PLEDGE OF ALLEGIANCE:
ROLL CALL:
HONORS AND AWARDS:
A. Recognition of Spring 2012 Citizen’s Academy Graduates. PUBLIC
SAFETY
INTRODUCTIONS/PRESENTATION:
CONSENT AGENDA:
A. Approval of Minutes. CITY CLERK
B. Environmental Program Mowing and Trash Clean-up Contract.
PLANNING & ECONOMIC DEVELOPMENT
C. City – MDOT Agreement for the Reconstruction of Sherman Blvd. from
Lincoln to Estes. ENGINEERING
D. Approval of Contractor for New Construction of House at 605 Jackson.
COMMUNITY & NEIGHBORHOOD SERVICES
E. Liquor License Request from Top Spin, Inc., 2536 Henry. CITY CLERK
F. Fireworks Display Permit for Muskegon Country Club. CITY CLERK
G. Polling Sites Relocation. CITY CLERK
H. Approval of Title Company for Community and Neighborhood Services.
COMMUNITY & NEIGHBORHOOD SERVICES
PUBLIC HEARINGS:
A. 2012-13 Budget. FINANCE
COMMUNICATIONS:
CITY MANAGER’S REPORT:
UNFINISHED BUSINESS:
NEW BUSINESS:
A. Proposed Betten Development Agreement Changes/Promissory Note
with BRA. CITY MANAGER
B. Engineering Services Agreement for Williams Street Storm Outlet.
ENGINEERING
ANY OTHER BUSINESS:
PUBLIC PARTICIPATION:
Reminder: Individuals who would like to address the City Commission shall do the following:
Fill out a request to speak form attached to the agenda or located in the back of the room.
Submit the form to the City Clerk.
Be recognized by the Chair.
Step forward to the microphone.
State name and address.
Limit of 3 minutes to address the Commission.
(Speaker representing a group may be allowed 10 minutes if previously registered with City Clerk.)
CLOSED SESSION: Attorney/Client Communication and Pending Litigation.
ADJOURNMENT:
ADA POLICY: The City of Muskegon will provide necessary auxiliary aids and services to individuals who
want to attend the meeting upon twenty four hour notice to the City of Muskegon. Please contact Ann
Marie Becker, City Clerk, 933 Terrace Street, Muskegon, MI 49440 or by calling (231) 724-6705 or TDD:
(231) 724-4172.
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Ann Marie Cummings, City Clerk
RE: Approval of Minutes
SUMMARY OF REQUEST: To approve minutes of the May 22nd City
Commission Meeting.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Approval of the minutes.
CITY OF MUSKEGON
CITY COMMISSION MEETING
MAY 22, 2012
CITY COMMISSION CHAMBERS @ 5:30 P.M.
MINUTES
The Regular Commission Meeting of the City of Muskegon was held at City Hall,
933 Terrace Street, Muskegon, MI at 5:30 p.m., Tuesday, May 22, 2012.
Mayor Warmington opened the meeting with a prayer from Pastor Tim Cross
from the Living Word Church after which the Commission and public recited the
Pledge of Allegiance to the Flag.
ROLL CALL FOR THE REGULAR COMMISSION MEETING:
Present: Mayor Stephen Warmington, Vice Mayor Stephen Gawron,
Commissioners Sue Wierengo, Byron Turnquist, Eric Hood, Lawrence Spataro,
and Willie German, City Manager Bryon Mazade, City Attorney John Schrier,
and City Clerk Ann Marie Cummings.
2012-38 HONORS AND AWARDS:
A. Hackley Library Proclamation.
Mayor Warmington recognized the Hackley Library who has been named a
National Literary Landmark based on its relationship with Verna Aardema
Vugteveen. Martha Ferriby, Director of the Hackley Library thanked the
Commission and public and invited them to the June 12th Dedication
Ceremony.
B. Recognition of Smash – Karli Baldus.
Mayor Warmington presented Jon Felske, Muskegon Public Schools
Superintendent and Cindy Larson, Vice President of the Board of Education with
a resolution recognizing Muskegon High School’s theatre group as one of thirty
finalists and ultimately one of ten schools throughout the nation that will
participate in a fully staged musical.
2012-39 CONSENT AGENDA:
A. Approval of Minutes. CITY CLERK
SUMMARY OF REQUEST: To approve minutes of the May 7th Commission
Worksession Meeting and the May 8th City Commission Meeting.
FINANCIAL IMPACT: None.
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BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Approval of the minutes.
C. Permanent Traffic Control Order to Install Yield Signs on LeBoeuf at
Miner. PUBLIC WORKS
SUMMARY OF REQUEST: Authorize staff to install two Yield Signs on north and
south approaches of LeBoeuf at Miner.
FINANCIAL IMPACT: Cost of signs and man-power to install, if approved.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Authorize staff to install the Yield Signs on LeBoeuf.
D. Consideration of Bids for City Hall Tuck Pointing. ENGINEERING
SUMMARY OF REQUEST: Award a contract for the Tuck Pointing and sealing of
the City Hall building to Kent Companies out of Grand Rapids since they were
the lowest responsible bidder with a bid price of $37,925.
FINANCIAL IMPACT: $37,925.
BUDGET ACTION REQUIRED: None, project was budgeted for in the 2011-2012
CIP.
STAFF RECOMMENDATION: Award the contract to Kent Companies.
E. Vacation of Waalkes Street between Delano Avenue and Young
Avenue. PLANNING & ECONOMIC DEVELOPMENT
SUMMARY OF REQUEST: Staff is requesting for the vacation of Waalkes Street
between Delano Avenue and Young Avenue, with all utility easement rights to
be retained.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Staff recommends vacation of the street, with the
condition that all utility easement rights be retained.
COMMITTEE RECOMMENDATION: The Planning Commission recommended
vacation of the street at their May 10th meeting, with the condition that all utility
easement rights be retained.
G. Transmittal of 2012-13 Proposed Budget. CITY MANAGER
SUMMARY OF REQUEST: At this time staff is transmitting to the City Commission
the proposed budget for fiscal year 2012-13 which starts July 1, 2012. Both
hardcopy and electronic versions of the budget have been distributed to
Commissioners. Additionally, the budget is available for public inspection on the
City’s website and at the City Clerk’s office or Hackley Public Library.
The proposed budget will be reviewed in detail with staff at the June 11th
Worksession. A public hearing on the budget will be held at the regular
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Commission meeting the following evening. City ordinance requires that the
budget be adopted by the Commission on or before the second Commission
meeting in June.
FINANCIAL IMPACT: The budget is the City’s financial plan for the coming fiscal
year.
BUDGET ACTION REQUIRED: None at this time.
STAFF RECOMMENDATION: None.
Motion by Vice Mayor Gawron, second by Commissioner German to approve
the Consent Agenda as presented minus items B and F.
ROLL VOTE: Ayes: Turnquist, Warmington, Hood, Spataro, German, Gawron, and
Wierengo
Nays: None
MOTION PASSES
2012-40 ITEMS REMOVED FROM THE CONSENT AGENDA:
B. Liquor License Request from Dolgencorp, LLC, 381 E. Laketon. CITY
CLERK
SUMMARY OF REQUEST: The Liquor Control Commission is seeking local
recommendation on a request from Dolgencorp, LLC, a Chain Applicant for a
new SDM license for 381 E. Laketon (Dollar General Store #10842).
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: All departments are recommending approval.
Motion by Commissioner Spataro, second by Commissioner Turnquist to approve
the liquor license request from Dolgencorp, LLC, 381 E. Laketon.
ROLL VOTE: Ayes: None
Nays: Warmington, Hood, Spataro, German, Gawron, Wierengo,
and Turnquist
MOTION FAILS
Motion by Commissioner Spataro, second by Commissioner Wierengo to deny
the request for a liquor license from Dolgencorp, LLC, at 381 E. Laketon.
ROLL VOTE: Ayes: Hood, Spataro, German, Gawron, Wierengo, Turnquist, and
Warmington
Nays: None
MOTION TO DENY PASSES
F. Concession Contract for City of Muskegon Parks. PUBLIC WORKS
SUMMARY OF REQUEST: Staff is asking permission to enter into a one-year
3
contractual agreement with Tom Williams of Messy Dogs at Pere Marquette,
Seyferth and McGraft Parks located within the City of Muskegon to sell hot dogs
and other minor snacks from a Mobil cart.
FINANCIAL IMPACT: Contract revenue will be 10% of gross receipts, per
Concession Agreement.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Authorize staff to enter into a concession agreement
with Mr. Williams.
Motion by Commissioner Turnquist, second by Vice Mayor Gawron to approve
the concession contract with Messy Dogs with the City of Muskegon for 2012 and
that it be no closer than 500 feet from any existing concession.
ROLL VOTE: Ayes: Spataro, German, Gawron, Wierengo, Turnquist, Warmington,
and Hood
Nays: None
MOTION PASSES
2012-41 UNFINISHED BUSINESS:
A. CJ’s on the Beach. CITY CLERK
SUMMARY OF REQUEST: CJ’s on the Beach, 1601 Beach Street, asked
Commission to reconsider the renewal of their liquor license.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: None.
Mayor Warmington recused himself at 6:49 p.m. during this discussion and Vice
Mayor Gawron continued the meeting.
Motion by Commissioner Spataro, second by Commissioner Hood to deny the
request by CJ’s on the Beach to reconsider the renewal of their liquor license
until all fees and taxes owed to the City of Muskegon are paid per existing City
policy.
ROLL VOTE: Ayes: German, Gawron, Wierengo, Turnquist, Hood, and Spataro
Nays: None
Abstain: Warmington
MOTION PASSES
2012-42 NEW BUSINESS:
A. Rezoning Request for Property Located at 1776 Division Street.
PLANNING & ECONOMIC DEVELOPMENT
SUMMARY OF REQUEST: Request to rezone the property located at 1776
4
Division Street from R1, Single Family Residential District to B-4, General Business
District.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Staff recommends denial of the request due to lack
of compliance with the Master Land Use Plan and zoning district intent.
COMMITTEE RECOMMENDATION: The Planning Commission voted to
recommend denial of the request at their May 10th meeting. The motion was
approved by a 7-1 vote.
Motion by Vice Mayor Gawron, second by Commissioner Spataro to deny the
request to rezone the property located at 1776 Division Street.
ROLL VOTE: Ayes: Gawron, Wierengo, Turnquist, Warmington, Hood, Spataro,
and German
Nays: None
MOTION PASSES
2012-43 PUBLIC PARTICIPATION:
Mr. Jon Felske, Muskegon Public Schools Superintendent requested Muskegon
Big Red football team be allowed to sell on City streets.
Motion by Commissioner Turnquist, second by Commissioner Spataro to allow
the Muskegon Big Red football team to have a tag day on Friday, June 30, 2012,
and for it to be grandfather claused in with the Big Red Band and Goodfellows.
ROLL VOTE: Ayes: Turnquist, Warmington, Hood, Spataro, German, Gawron, and
Wierengo
Nays: None
MOTION PASSES
Public comments were received.
ADJOURNMENT: The City Commission Meeting adjourned at 6:53 p.m.
Respectfully submitted,
Ann Marie Cummings, MMC
City Clerk
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Commission Meeting Date: June 12, 2012
Date: June 4, 2012
To: Honorable Mayor & City Commission
From: Planning & Economic Development Department
RE: Environmental Program Mowing and Trash Clean-
up Contract
SUMMARY OF REQUEST:
The contract for mowing of lots and trash clean up of public and private
properties previously held by Freelance Enterprises Inc. had expired on
March 31, 2012. A request for bids was advertised and four companies
placed bids. Freelance Enterprises of Muskegon Township is the low
bidder for a three-year agreement.
FINANCIAL IMPACT:
None - Funds budgeted for this activity.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION:
To approve a 3 year contract with Freelance Enterprises Inc. and to
authorize the Mayor and City Clerk to sign the agreements, for the
mowing of lots and trash removal on properties located within the city.
COMMITTEE RECOMMENDATION: None
Planning Department
Memo
To: Honorable Mayor and City Commission
From: Hope Mitchell, Code Coordinator
Date: June 4, 2012
Re: Environmental mowing & trash contract bids
Staff requested bids for a possible two year contract with an optional contract extension typically set at
two years. The bid documents also had an area for submission of a three year bid with an option to
extend that, which is typically set at two years. This request for bids resulted in four submissions from
area contractors to perform the services needed and are shown in the tables located later in this
document.
In reviewing the bid documents staff discovered irregularities in some of the bidding documents, except
for the documents submitted by Freelance Enterprises. The errors ranged from minor errors such as a
name area being left blank to one set of documents submitted virtually empty.
Because of the varying prices submitted by the different bidders, staff would like to recommend that a
three year contract be awarded to Freelance Enterprises with a two year extension possible.
Awarding contracts as indicated would be accepting the low bidder, Freelance Enterprises. The
reasoning for the three year agreement with Freelance Enterprises is that they had submitted a lower
bid for a three year contract versus a two year agreement.
Staff believes that the management of two contractors, versus one contractor, would still be the best to
do.
Page 1
The four bids for a two-year contract were as follows:
Helping
Tractor Mower
Bidders Trash Crew Labor (Two
Crew Crew
Persons)
Freelance
$34.00 $41.00 $36.00 $30.00
Enterprises
Quality
Landscape $34.00 $42.00 $38.00 $34.00
Management
Community
EnCompass/YEP
$0.00
$25.00 per
(requested 40
$0.00 $0.00
lot
public
properties for
mowing only)
Rays Lawn
$0.00 $0.00 $0.00 $0.00
(incomplete bid)
The following contractors submitted a 3 year bid:
Helping Labor
Bidders Trash Crew Tractor Crew Mower Crew
(Two Persons)
Freelance
$31.00 $40.75 $35.75 $30.00
Enterprises
Quality
$31.00 $40.00 $37.00 $34.00
Landscape
Management
Page 2
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Engineering
RE: City – MDOT Agreement for the Reconstruction of:
Sherman Blvd. from Lincoln to Estes
SUMMARY OF REQUEST:
Approve the attached contract with MDOT for the reconstruction of Sherman Blvd.
from Lincoln to Estes. And approve the attached resolution authorizing the Mayor
and City Clerk to sign the contract.
FINANCIAL IMPACT:
MDOT’s participation is limited to the approved federal funds of $481,000. The
estimated total construction cost is $1,110,500 plus engineering cost.
BUDGET ACTION REQUIRED:
none
STAFF RECOMMENDATION:
Approve the attached contract and resolution authorizing the mayor & clerk to sign
both.
COMMITTEE RECOMMENDATION:
RESOLUTION__________
RESOLUTION FOR APPROVAL OF A CONTRACT AGREEMENT BETWEEN THE
MICHIGAN DEPARTMENT OF TRANSPORTATION AND THE CITY OF
MUSKEGON FOR THE RECONSTRUCTION OF SHERMAN BLVD. BETWEEN
LINCOLN & ESTES TOGETHER WITH OTHER NECESSARY RELATED WORK
ITEMS AND AUTHORIZATION FOR MAYOR STEPHEN J. WARMINGTON AND
CITY CLERK, ANN CUMMINGS, TO EXECUTE SAID CONTRACT
Moved by_____________________________________and supported by
Commissioner___________________________that the following Resolution be
adopted:
WHEREAS, entry by the City of Muskegon into Contract no. 12-5241 between the
Michigan Department of Transportation and the City of Muskegon for the
reconstruction of Shernan Blvd. between Lincoln St. & Estes within the City is in
the best interests of the City of Muskegon.
RESOLVED, that entry by the City into Contract Agreement Number 12-5241 be and
the same is hereby authorized and approved and the Mayor and Clerk are
authorized to execute said contract for and on behalf of the City of Muskegon.
Adopted this____________day of____________, 2012.
BY
Stephen J. Warmington, Mayor
ATTEST
Ann Cummings, City Clerk
CERTIFICATION
This resolution was adopted at a meeting of the City Commission, held on
____________, 2012. The meeting was properly held and noticed pursuant to
the Open Meetings Act of the State of Michigan, Act 267 of the Public Acts of
1976.
CITY OF MUSKEGON
By___________________________
Ann Becker, City Clerk
Commission Meeting Date: June 12, 2012
Date: June 5, 2012
To: Honorable Mayor & City Commission
From: Community and Neighborhood Services Department
RE: Approval of Contractor for New Construction of House
at 605 Jackson
SUMMARY OF REQUEST: To approve the contract with DeRose Builders
Inc, 7786 Wiczer Drive, Whitehall, for the new construction of a house located
at 605 Jackson for the cost of $117,446.
The property was purchased with Neighborhood Stabilization funds from the
Michigan State Housing Development Authority and HOME funds from HUD
will be used for the construction. After the new construction is completed, the
home will be marketed to sell to an eligible homebuyer with an annual income
less than 80 percent of the area median income.
The City received six bids as listed on the attached spreadsheet.
FINANCIAL IMPACT: Funding for the project has been approved in our
current budget (2011 – 2012) from the HOME Investment Partnership funds.
BUDGET ACTION REQUIRED: None
STAFF RECOMMENDATION: To approve for the Community and
Neighborhood Services office to prepare an agreement with DeRose Builders
and direct the Mayor and Clerk to sign the contract.
COMMITTEE RECOMMENDATION: None.
605 JACKSON BID RESULTS
Tuesday, MAY 29, 2012
CONTRACTOR Bid Amount
Beattie Bros. Construction
Tony Beattie
$119,460
5369 Brunswick
Holton 49425
231-821-0892, 231-638-3516
DeRose Builders Inc
Dave DeRose
7786 Wiczer Dr
$117,446
Whitehall 49461
231-893-0025, 231-206-4760
Gray Space Construction
Curtis Holden
$99,585
601 Amity Ave
Muskegon 49442
231-955-9701
JD Fisher Builders
Jeff Fisher
$117,400
123 N 8th Ave
Fruitport 49415
231-720-9393
Kramer Builders
Jerry Kramer
$133,224
123 Fruitport Rd
Spring Lake 49456
616-846-9559, 616-402-0808
North Country Construction
Michael Fraley
$169,482
PO Box 52
Newaygo 49337
847-308-1571
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Ann Marie Cummings, City Clerk
RE: Liquor License Request
Top Spin, Inc.
2536 Henry Street
SUMMARY OF REQUEST: The Liquor Control Commission is seeking
local recommendation on a request from Top Spin, Inc., of 2536 Henry
Street to transfer ownership of Escrowed 2011 Class C-SDM Licensed
Business with Sunday Sales Permit (PM), Dance-Entertainment Permit,
Outdoor Service (1 Area) and Specific Purpose Permit (Food) from
Team Red Dawn, LLC.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: All departments are recommending
approval.
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Ann Marie Cummings, City Clerk
RE: Fireworks Display Permit for Muskegon Country
Club
SUMMARY OF REQUEST: Melrose Pyrotechnics, Inc. is requesting
approval of a fireworks display permit for July 4, 2012, at the Muskegon
Country Club, 2801 Lakeshore Drive. Fire Marshall Metcalf will inspect
the fireworks on the day of the event.
FINANCIAL IMPACT: None.
BUDGET ACTION REQUIRED: None.
STAFF RECOMMENDATION: Approval contingent on inspection of the
fireworks and approval of insurance.
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: City Clerk’s Office
RE: Polling Sites Relocation
SUMMARY OF REQUEST: Building closures, redistricting, and ADA compliance
have forced the City to move polling locations.
Staff proposes to move the following:
Bluffton School (closure) to Great Lakes Naval Museum
McLaughlin School (closure) to City Hall
Hackley Administration Building (ADA Compliance) to City Hall
Nelson School (redistricting) to Department of Public Works
FINANCIAL IMPACT: None.
STAFF RECOMMENDATION: To approve the polling location changes as outlined
above.
COMMITTEE RECOMMENDATION: The Election Commission approved the
changes as stated at their June 7th meeting.
Commission Meeting Date: June 12, 2012
Date: June 5, 2012
To: Honorable Mayor & City Commission
From: Community and Neighborhood Services Department
RE: Approval of Title Company for Community and
Neighborhood Services
____________________________________________________________________________________________
SUMMARY OF REQUEST: To approve Lighthouse Title, Inc. to be used by the
City of Muskegon for title work and closing agency for the CNS Housing program.
FINANCIAL IMPACT: Fees paid from proceeds of sale or project budgets.
BUDGET ACTION REQUIRED: None
STAFF RECOMMENDATION: To approve Lighthouse Title, Inc. for Community
and Neighborhood Services Title Agency needs.
COMMITTEE RECOMMENDATION: None required.
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Finance Director
RE: Public Hearing – 2012-13 Budget
SUMMARY OF REQUEST: The City Commission may take action to adopt the
2012-13 budget with whatever changes or adjustments it deems necessary. City
ordinance requires the budget be adopted by the second regular City Commission
meeting in June.
FINANCIAL IMPACT: The budget sets forth the priorities and overall financial plan
for operations in the year 2012-13.
BUDGET ACTION REQUIRED: Adoption of the budget resolution provides the
legal appropriation authority necessary for City departments to conduct operations in
2012-13.
STAFF RECOMMENDATION: Receive public comments. Upon closing the public
hearing, the City Commission may decide to adopt the budget.
The 2012-13 proposed budget is now available at:
http://www.muskegon-mi.gov/2012-13-proposed-budget/
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: City Manager
RE: Proposed Betten Development Agreement Changes/Promissory Note with BRA
SUMMARY OF REQUEST: The City’s Brownfield Redevelopment Authority (BRA) is
obligated to reimburse Betten Automotive Group for eligible costs incurred in the
redevelopment of their Henry Street project plus 6.5% interest. Total reimbursable costs
(plus interest to date) amount to $1,681,590. Under terms of the original development
agreement, these costs would be paid by the BRA over several years as tax increment
revenues were collected. Interest would continue to accrue on the unpaid balance.
As described more fully in the attached memo, this proposal is for the City to loan the BRA
$1.66 million to pay off Betten now. The benefits are as follows:
x Benefit to BRA: reduce interest costs from 6.5% to 3.25% payable to City instead of
developer
x Benefit to City: rate of return higher than can be achieved on investments like CD’s
or US Treasuries
x Benefit to Developer: cash received up front to help facilitate further development of
Henry Street corridor (also benefits the City and BRA)
The City would be repaid over thirteen years (or sooner) at a rate of 3.25% from BRA tax
increment proceeds.
FINANCIAL IMPACT: The City’s loan to the BRA would be carried equally by the
following City funds having adequate cash reserves: General Insurance Fund, Equipment
Fund and Cemetery Perpetual Care Fund. The 3.25% interest is much better than can be
earned on CD’s, US Treasuries or other investment instruments. A repayment schedule is
attached.
BUDGET ACTION REQUIRED: The BRA budget will be amended to reflect loan
payments to the City instead of reimbursements to developer.
STAFF RECOMMENDATION: 1.) Approval of proposed development agreement
changes and, 2.) execution of the related promissory note between the City and the BRA.
COMMITTEE RECOMMENDATION: The BRA met on May 29th and approved the
proposed development agreement changes and promissory note.
Finance
Administration
Memo
To: Brownfield Redevelopment Authority & City Commission
From: Finance Director
Date: May 25, 2012
Re: Proposal to Change Betten Development Agreement
Background
The 2008 Brownfield Development and Reimbursement Agreement between Betten
Automotive Group, the City and the Brownfield Authority provides that tax increment
revenues from development in the Betten BRA district be primarily used to reimburse
the developer for brownfield eligible costs incurred. The agreement further provides
that until these costs are reimbursed, interest shall accrue at the rate of 6.5%. Total
costs reimbursable to the developer are capped at $3.0 million or the amount of tax
increments available for this purpose during a 16-year period ended December 31,
2025.
Current Status
The project is essentially complete and costs eligible for reimbursement amount to
$1,464,310. Total interest accrued to date is $217,280 (thru 5/31/12) and is accruing
at a rate of $260/day.
Current year tax increment revenues generated by the now completed project will be
$157,111.
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O:\FINANCE\PAUL\MyDocuments\MEMO - CITY COMMISSION BRA Betten Project.doc
Proposal
For several months, City staff and Betten have discussed whether a lump sum
payout at an agreed to amount might be mutually beneficial. This payout would be
facilitated by a loan from the City to the BRA at a rate of 3.25% repaid over thirteen
years (see attached amortization schedule) – or sooner if tax collections permit.
x Benefit to BRA: reduce interest costs from 6.5% to 3.25% payable to City
instead of developer
x Benefit to City: rate of return higher than can be achieved in investments like
CD’s or US Treasuries
x Benefit to Developer: cash received up front to help facilitate further
development of Henry Street corridor (also a benefit to City and BRA)
Proposed Lump Sum Reimbursement $ 1,660,000
Reimbursable Costs $ 1,464,310
Accrued Interest to Date 217,020
Total Payable to Date $ 1,681,330
Estimated Total Tax Increments Anticipated During 16-
$ 2,442,334
year Period (assumes no TV growth)
Estimated Net Tax Increments Paid Out to Betten During
16-year Period (after admin fee and amounts deducted $ 1,952,917
for Heny Street resurfacing)
As the above table summarizes, the lump sum payment amount that Betten and City
staff have tentatively agreed to is $1.66 million. Betten is already owed $1,681,330
and interest continues to accrue. If the original agreement is followed, it is estimated
payouts to Betten would total $1,952,917, assuming no increase in taxable property
values. If property values (and tax increments) did increase, payout would be higher
and ultimately be capped at $3.0 million.
Risks and Other Considerations
Clearly this type of proposal involves risks that decision-makers must be aware of.
The primary risk is that projected tax increments could fail to materialize for a variety
of reasons:
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x Taxable property values could fall
x Property owner could appeal taxes
x Legislative changes (e.g. elimination of personal property tax)
These risks are very real, but there are some important offsets to weigh as well:
x Unlike other TIF projects (Mall, Smartzone), development is not anticipated
but has actually occurred and is generating taxes.
x Current personal property reform discussion centers on manufacturing and
industrial taxpayers – not larger commercial enterprises like Betten.
x If tax increments did falter, the BRA can still collect them beyond the original
development agreement timeframe (12/31/25). In other word, even in a worst
case scenario, the City would be repaid but over a longer period.
x Betten has been among the City’s brightest developments in recent years and
there is good reason to help them facilitate further property acquisition and
development along Henry Street.
Attached to this memo is an amendment to the Brownfield Development and
Reimbursement Agreement that incorporates the proposal outlined above. This will
be discussed at the May 29th BRA meeting.
Thank you.
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PROMISSORY NOTE
$1,660,000.00 Muskegon, Michigan
May ____, 2012
FOR VALUE RECEIVED, the undersigned, BROWNFIELD REDEVELOPMENT
AUTHORITY OF THE CITY OF MUSKEGON, with a mailing address of 933 Terrace
Street, Muskegon, Michigan 49443 (hereinafter the “Authority”) promises to pay to the order of
CITY OF MUSKEGON, a municipal corporation, with a mailing address of 933 Terrace Street,
Muskegon, Michigan 49443 (hereinafter the “City”) at its office, or such other place as may be
designated in writing by the holder hereof to the undersigned, the principal sum of One Million
Six Hundred Thousand Sixty Dollars ($1,660,000.00) payable over a term of up to thirteen years.
Interest shall accrue from the date hereof on the principal balance of this Note at a rate of
3.25 percent per annum.
Payments of all accrued interest and principal amortized shall be due and payable in
twenty six semi-annual payments, July 1 and January 1, with the first payment being due and
payable on July 1, 2012. A final payment of all principal and accrued shall be due and payable
to January 1, 2025.
All interest due and payable under this Note shall be computed on the basis of the actual
number of days elapsed over a 360-day year.
Authority may prepay this note in whole or in part at any time. Early payments will
reduce the principal balance due.
Authority hereby grants to City, a continuing lien, security interest and right of setoff as
security for all liabilities and obligations to City, whether now existing or hereafter arising, upon
and against all deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of City or any entity under the control of or common control
with City and its successors and assigns or in transit to any of them. At any time, without
demand or notice (any such notice being expressly waived by Authority), City may set off the
same or any part thereof and apply the same to any liability or obligation of Authority even
though un-matured and regardless of the adequacy of any other collateral. ANY AND ALL
RIGHTS TO REQUIRE CITY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWERS ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
The acceptance by the holder hereof of any payment after any default hereunder shall not
operate to extend the time of payment of any amount then remaining unpaid hereunder or
constitute a waiver of any rights of the holder hereof under this Note.
{R0728293.1 19266-060763 }
The word “holder” as used herein shall mean the payee or endorsee of this Note who is in
possession of it, or the bearer, if this Note is at the time payable to the bearer.
This Note may not be amended, changed or modified in any respect except by a written
document which has been executed by each party.
If this Note is placed by the holder hereof in the hands of any attorney for collection
through legal proceedings or otherwise or is placed in the hands of any attorney for
representation of the holder hereof in the proceedings commenced by or against the undersigned
under any bankruptcy or insolvency law of the United States or of any state and whether in
adversary proceeding or otherwise, then the undersigned shall pay reasonable attorneys’ fees to
the holder hereof together with reasonable costs and expenses of collection or such
representation.
THE AUTHORITY AND THE CITY AGREE THAT NEITHER OF THEM NOR ANY
ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR
ARISING OUT OF, THIS PROMISSORY NOTE, ANY RELATED INSTRUMENTS, OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS
OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AUTHORITY AND
THE CITY, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
NEITHER THE AUTHORITY NOR THE CITY HAS AGREED WITH OR REPRESENTED
TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
Presentment, notice of dishonor, protest, notice of protest, demand, and notice of default
are hereby waived expressly by each and every party as maker or endorser hereon.
WITNESS: BROWNFIELD REDEVELOPMENT
AUTHORITY OF THE CITY OF MUSKEGON,
__________________________
By:
Its:
{R0728293.1 19266-060763 }
2
Date: June 12, 2012
To: Honorable Mayor and City Commissioners
From: Engineering
RE: Engineering Services Agreement for Williams Street Storm Outlet
SUMMARY OF REQUEST:
Authorize staff to enter into an engineering services agreement with Flies &
Vandenbrink Engineering out of Muskegon to perform an emergency survey, design
and permitting project to replace/repair a 54” storm sewer outlet at the northerly end of
Williams street just north of White Street for an estimated cost of $9,800.
FINANCIAL IMPACT:
The engineering cost of $9,800 at this time.
BUDGET ACTION REQUIRED:
This project will have to be added to the 2012/2013 budget
STAFF RECOMMENDATION:
Authorize staff to enter into an agreement with F & V engineering. This recommendation
was arrived to due to the urgency of the current condition of the storm sewer outlet and
complexity of the project.
COMMITTEE RECOMMENDATION:
C:\Documents and Settings\Potter\Local Settings\Temporary Internet Files\OLK8\Comm agenda item eng
agreement-F V 6-12-2012.doc