Nov. 19 2008 12:00 AM

Police department landlord pays his taxes

Local developer Harry Hepler today told the Lansing City Council Development and Planning Committee that he has paid over $97,000 in back taxes to the city owed on the North Precinct police station.

The city treasurer couldn't confirm receipt of the tax payment as of press time.

Hepler appeared before the Development and Planning committee today to set the record straight as to why the taxes were delinquent in the first place.

In short, Hepler said his company, Summit Street LLC, withheld taxes to retain capital, a common practice for developers.

By withholding the taxes for a certain amount of time, in this case a year, what Hepler's company was able to accomplish was a sort of in house "bridge loan." In fact, Hepler said, even considering the penalties incurred on the back taxes, the total cost of using that money for other purposes — essentially reinvesting in the company in the short term — was still less than securing a bank loan to cover expenses.

Hepler was in the news after the Oct. 9 Council Committee of the Whole meeting, where it was made public that Summit Street was delinquent on property taxes for the North Precinct police station on May Street. The city leases the building for approximately $25,000 per month, but has yet to enact the option for a 10-year lease renewal. The city had faithfully paid rent while Hepler’s taxes were outstanding. Shortly after the Oct. 9 meeting, Hepler paid to Ingham County around $100,000 in back taxes.

Hepler said he has been "disheartened" by the public discussion of the taxes and the insinuation of structural problems with the police station, which he said were the outgrowth of having a "political tenant."

"We understand the City Council gets outside information, but we didn't believe it was true, which is why we are here today,” Hepler said at Wednesday’s meeting.