Oct. 12 2010 12:00 AM

The Lansing City Council votes against tax incentives for two developments: ‘We now have a beautiful parking lot along the river’

This story was updated October 12 

Tuesday, Oct. 12 — Developer Pat Gillespie said today that unless the City Council brings back a proposed brownfield plan on his Market Place project for another vote at Monday’s meeting, the site will remain a surface parking lot.

"The urban village mentality is what Lansing is missing," Gillespie said, adding that his Market Place project fills that void. "Without (this plan), it will be a surface lot."

Market Place is a $23 million mixed-use development adjacent to the new City Market. Gillespie wanted City Council to approve a 24-year brownfield tax incentive for it. The Council rejected it on a 4-4 vote.

Gillespie hosted a “media roundtable” today with Bob Trezise, head of the Lansing Economic Development Corp.,  to discuss what comes next for Market Place and the Marshall Street Armory project, which were dealt setbacks Monday when the Council rejected plans for tax incentives, both on 4-4 votes.

Gillespie said that he had no idea At-Large Councilmember Brian Jeffries voted a deciding no Monday night because there was no wages set for workers on the Market Place site. He added that it’s “way too early” to set those rates at this point in the process.

He added that the Council’s vote has an even bigger ripple effect than he originally thought, referring to other developers in town that have expressed concern to him over their own projects since Monday’s votes.

On the armory project, Gillespie wanted a two-year extension on a brownfield plan. The $14 million armory project would convert the space to offices for five nonprofit organizations. The Council also rejected it, 4-4.

Gillespie focused on the Market Street project today because plans for the armory will still move forward. The Council approved the 18-year version of the plan 5-1 on June 7. (At-Large Councilwoman Carol Wood objected, while First Ward Councilman Eric Hewitt was absent.) That agreement is still in place.

Plans for the two projects began to unravel at about 6:40 p.m. Monday at a meeting of the Development and Planning Committee in the uncomfortably packed City Council meeting room.

City Attorney Brig Smith issued a swift legal opinion on the city inserting a project labor agreement, or PLA, clause into a tax incentive agreement for the armory development.

Basically, it would have been illegal to do so. The committee, chaired by At-Large Councilman Brian Jeffries, unanimously voted to send the resolution unchanged for a vote later in the evening by the Council.

“We are talking about the city as owner versus the city as a regulator (of the property),” Smith said about “retroactively” inserting the PLA. “I would caution the committee and (the) Council.”

Nels Raynor, who owns Bach Steel in Holt, said that he has been involved with the bidding for the armory since June. Bach Steel is non-union, but he also hasn’t been guaranteed the work. He said he found out through e-mail while working on a bridge in Iowa that a PLA clause was being considered.

“Now that was frustrating,” he said, considering the time he put in just to be considered by Gillespie.

Andy Mosser, president of the Mid-Michigan Construction Alliance, said the PLA would have been good for his organizations’ members, and that PLAs are not uncommon. His organization represents a “revolving” number of unionized construction workers, sometimes up to 1,000, he said.

“They’re everywhere,” he said. “Some people choose to do it on their own, some people are afraid of them (PLAs).”

PLA or not, the City Council began its regular meeting with 28 speakers lined up to comment on Gillespie’s two projects, as well as tax breaks to Jet Engineering for expanding in south Lansing, the sale of a Parks and Recreation Department garage to Neogen and the rezoning of a home in the east side neighborhood.

Most of the comments focused on Gillespie’s plans.

Trezise took a broader approach to the idea of competitiveness in a place like Lansing. He spoke of the importance of economic incentives in Lansing.

“When a business or developer comes into your front door of the city, odds are already stacked against the city,” Trezise said, adding the taxes here are three times higher than in townships, properties are almost always blighted and contaminated and politics here are “unlike those in townships.”

More often, he said, developers are looking at expanding in “green spaces” outside the city. “We try to even the playing field with our competitors through the use of incentives, but they barely level the playing field,” he said.

Glen Freeman III, president of the Greater Lansing Labor Council branch of the AFL-CIO, was the first to speak on behalf of the unions.

“The capital city is a labor town,” he said. “I don’t understand why people don’t think we should have an opportunity to benefit this community. This city has gotten a lot of miles out of the dignity it has shown those workers.”

Joseph Davis, a representative with the unionized International Brotherhood of Electrical Workers, said we shouldn’t even be talking about PLAs. He simply asked that a fair, prevailing wage for all workers be considered.

“If we just sit here and say ‘union’ and ‘non-union,’ we’re missing the point,” he said.

And this is the stance most of the comments supporting the armory and Market Place took. Everyone agreed that the work should be done locally and at a fair wage, though supporters of the project stressed how important it was that they at least move forward.

Lynne Martinez, a former state representative from Lansing and the former director of the Greater Lansing Housing Coalition, said that if labor contracts got in the way of the armory project moving forward, the only other alternative is “another vacant building we don’t know what to do with.”

Marty Wheeler, also an eastside resident, has two sons who are both union and non-union members. “When it comes to private development we have to stay within the free enterprise system,” she said.

It was probably a bit of foreshadowing when Development and Planning sent the armory resolution before the public, despite Jeffries’ concerns. For starters, he said the 18-year brownfield incentive was already in place. The two-year extension came with a caveat that separated the property into two project areas, the building and adjacent parking. Each would have been included in the brownfield plan, but there were no remediation plans scheduled for the parking area as of Tuesday night.

Jeffries said it would have been unheard of for the city to grant brownfield incentives for a piece of land when there were no plans to clean it up.

Trezise agreed, but added that Gillespie would have to come back to the Council and receive approval for whatever future plans he had for the parking area. Trezise offered this information to Jeffries in Development and Planning and once again after the 4-4 vote.

Market Place

And then there was the Market Place incentive that died on the floor, also by a 4-4 vote. This one was even more bothersome to Trezise. The armory’s incentive would not be tweaked — the Market Place was shot down all together, for now.

“This was a terrible night for the city,” Trezise said. “I don’t understand the next step of economic development.”

Market Place, Trezise said, was supposed to be the beacon of Lansing. “That was supposed to be our urban village. Now we just said never mind?”

Gillespie said he was “frustrated” and “disappointed” after the vote, though his spirits were not completely wrecked.

“We now have a beautiful parking lot along the river,” he said with a smile, referring to the space that’s been cleared for Market Place where the old City Market stood along Cedar Street between Shiawassee Street and the Lansing Center.

Labor supporters say Gillespie is not offering fair wages in either of the developments. Gillespie claims union representatives demanded a PLA all along with 100 percent of the work.

This sparring is what led Jeffries to his no vote on the Market Place project as well.

“We were told two years ago that we could be assured labor and the developer would come together on an (wage) agreement,” Jeffries said. “The goal of fair wages has not been met.”

Jeffries said he has asked Gillespie numerous times for a cost-benefit analysis between hiring union and non-union labor. “All I get from Pat is, ‘I don’t know.’”

Jeffries added that he doesn’t think the Market Place project is “dead in the water,” and expects Gillespie to find some sort of labor agreement.

In other business, the Council unanimously approved a tax incentive for Jet Engineering that gives a 50 percent abatement on new construction and 100 percent on new equipment purchased at their south Lansing location. Jet expects to spend $5.5 million on the expansion, and the incentives last 12 years.

The Council also unanimously approved 17 other resolutions and two ordinances at Monday’s meeting:

-    Five resolutions pay tribute to local residents;
-    A plan to reduce the amount of units at East Village in the east side neighborhood from 177 to 125;
-    Setting public hearings for the Knapp’s building redevelopment and on using 2706 W. Jolly Road as a church;
-    Revoking two tax incentive plans for local residents who failed to pay property taxes in the 2009 tax year;
-    Recognition of Southside Community Kitchen as a nonprofit;
-    Giving $500 to the Averill Woods Neighborhood Association for their Annual Fall Jamboree;
-    Correcting a resolution on a liquor license transfer;
-    Denying a personal property tax special assessment against a local resident who collected more than $1,500 in nuisance fees for not cleaning her pool;
-    An amended resolution granting a special land use permit to Abundant Grace Faith Church that includes agreed-upon conditions between the city and the church;
-    An introduced ordinance that sets a public hearing for Nov. 8 on an eastside neighborhood development; and
-    An ordinance that rezones a former Eyesore of the Week in Old Town at 127 W. Grand River Ave. from residential to commercial. (This passed 7-0, Wood had to recuse herself after a possible conflict of interest.)