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Oct 24

Character Is Like The Foundation Of A House

Comments (1) 4:00 PM posted by admin |

Last week, as reported by the Ann Arbor News, Ypsilanti’s City Council passed an ordinance on first reading to convert the property taxes for 300 Chidester Place into a PILOT (payment in lieu of taxes). The vote was 4-1 in favor, with me in the minority.

Chidester 2005, LLC currently pays $178K in property taxes with $52K of that going into the general fund and another $18K going towards sanitation, road bonds, and, for some mysterious reason, the DDA. The new PILOT would be for a little over $9,100 with an additional $35K “service charge” to be collected by the City.

Politics is mostly rhetoric and the rhetoric in this case was about the City supporting affordable housing. This is like people saying they support their grandparents living to a very old age, or support cute, fuzzy, yellow ducklings being so adorable. Of course people support affordable housing. As our population ages, it’s important that we allow for affordable housing.

Everyone agrees with that sentiment.

The problem is, this isn’t about sentiment, this is about making competent business decisions.

In the ordinance for this PILOT, there is a section that reads:

For calendar years 2008, 2009 and 2010 the payment in lieu of taxes shall be 0% of Annual Shelter Rents. Thereafter the annual service charge shall be of 4% of the collections from the total Annual Shelter Rents.

The ordinance is calling for the City to waive three years of PILOT payments. This comes on top of the City reducing the tax burden on Chidester Place from $178K to only $44K. They will be getting a $131K break, but they are still asking for an additional $10K per year for the next three years.

Say wha?

That’s right. The deal isn’t sweet enough. The majority of Council wants the offer dripping with saccharin. The reason for waiving the PILOT for three years is to make up for cancelling the PILOT in 2005 after the mortgage was paid. It is important to note that cancelling the PILOT when the mortgage was paid was the legal course of action. The City’s assessor was right in taking that action.

But that’s not all. American Community Developers, owners of Chidester 2005, LLC, are already contesting their tax assessment to the State Tax Commission. Said another way, even though we are already proposing to give them $30K back, they are still going to fight for a bigger slice.

This smacks of the way Edwards Communities and K&E Construction president, Rick Kirk, came back to City Council earlier this year demanding an additional $500K for the Penn Place apartments. This is essentially the same thing. A developer is asking for a break after the fact. The difference back then is we unanimously denied the request. Here, we are on the verge of giving away more money.

Admittedly $10K is less than one-tenth of one percent of this year’s budget of $16.1M, but this kind of action is symbolic of a style of governing that has resulted in our place in economic history.

At tonight’s final Town Hall meeting on the virtues of a City Income Tax, when the City Manager bemoans the amount of non-taxable property in the City, wonder aloud why he didn’t lament Council’s decisions to haphazardly tithe to out-of-town corporations.

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1 Comment »

  1. Comment by dave
    November 21, 2007 @ 2:29 pm

    How does giving tax breaks to the owner of a property help with affordable housing? Is there some commitment on the part of the company to lower rents by some concrete amount? If not, all thats really happened is that we’re pumping Ypsi tax payers money to a companies bottom line.

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