I have steadily reported for East Lansing Info on the Center City District project from the day it was introduced, on many occasions with my colleague Chris Root. We have spent a lot of time using FOIA to document what has happened (and not happened) with regard to the public financing of this project. Today I sent the attached letter (below) to the Brownfield Redevelopment Authority about their meeting which happens tomorrow (Thursday, July 9) at noon. I share it with readers of Public Response in part so you can see what’s happened so far:
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Dear members of the East Lansing Brownfield Redevelopment Authority,
Your responsibility on this board is to represent the public interest.
On the matter of the refinance of the Center City District bond, you should instruct your attorneys and City staff to save the people of East Lansing the most amount of money.
The Center City District project is done. There is no reason at this point to entice the developer with more giveaways or compromises. It’s finished. Stop paying extra and unnecessary taxpayer funds for it.
Specifically instruct your bond counsel and staff to:
- Issue a bond for the lowest possible amount necessary to meet the minimum legal obligations of the BRA;
- Not pay the developers’ or investors lawyers or financial advisors or the like; pay only our side’s representation and pay only the lowest amount necessary;
- Obtain the lowest possible interest rate and undertake all necessary measures to obtain the lowest possible interest rate;
- Open the bonds up to public offering so that all have an equal chance.
- Most importantly, do not pay out of the new bond any additional eligible expenses under the TIF plan.
This is very important: Section 406 of the bond indenture affirms that you are only obligated to pay additional eligible expenses AFTER the principal and interest on the bonds are fully paid. DO NOT PAY MORE NOW.
The reason not to pay more now is that, if you do, the people will be obligated to redirect taxes to pay interest on those additional expenses for up to 30 years. You can potentially save us millions of dollars by not doing the developers the favor of paying more up front when you absolutely no legal obligation to do so.
The TIF plan does not obligate us to pay the full $56M. That is the most we are obligated to pay. The TIF plan also does not require us to pay more sooner and thus pay more interest overall.
As it is, we have paid for private development expenses on the Grand River Ave. properties from the first bond, which goes against the spirit of what the Council has repeatedly indicated they want from Brownfield TIF.
From the first bond, we have also paid the developers’ attorneys Dykema Gossett $353,250. (Why did Mr. Danhof and City staff let this happen?)
From the first bond, we have paid Baird acting specifically as the “developer’s financial advisor” $115,000. (Why did Mr. Danhof and City staff let this happen?)
From the first bond, we paid Scottsdale Capital, a company owned by Mark Bell’s father Peter Paul Bell, $243,895 as an origination fee – in other words, we paid the developers $243,895 to lend themselves money. (Why did Mr. Danhof and City staff let this happen?)
Undertake your fiduciary responsibility: Stop allowing Mr. Danhof (whose firm he admits also works for the Bells) and the City staff to do the other side favors. Defend the people in your actions. Indicate to them in no uncertain terms you want every dollar saved for the people of East Lansing, who already face crushing debt, high taxes, and a City of furloughed workers.
I attach materials that support the claims in this letter. I am giving you the most recent materials obtained via FOIA. These are materials I wish your staff and attorney showed you so you understood from them what has been going on.
– closing statement of first bond showing payouts
– signed bond trust indenture showing sec. 406
– bond receipts for TIF reimbursement showing private development expenses paid with TIF
The City staff and the BRA’s counsel also have a fiduciary responsibility. Hold Mr. Lahanas, hold Mr. Fehrenbach, and hold Mr. Danhof to that. Be the people’s representatives.
Sincerely,
Alice Dreger
621 Sunset Lane
East Lansing, MI 48823
