Preamble

A few weeks ago, I asked (by memo) that council consider seeking guidance from our city attorney regarding the Michigan OPRA law in view of a likely request by the Diesel Plant developer (GPW) that the city create an OPRA District on the Diesel Plant parcel, so the developer can then seek a tax abatement from the Michigan State Tax Commission.  In summary, the OPRA District (created by the city) is step one of a two-step process resulting in the developer’s goal to obtain a tax abatement certificate (issued by the state tax commission).  The city has a role to play.  The state tax commission has a role to play.  The developer navigates those two steps, first at the city; then at the state.

The anticipated tax abatement issue now sits at council’s doorstep.  The developer made an August 22, 2023, request to the city for a Diesel Plant OPRA District, together with the requisite public hearings.  The city must now do its part – to either create or not create the OPRA District.  If the city creates the OPRA District, the developer can then ask the state tax commission for a tax abatement certificate.  If the city does not create the OPRA District, the developer is essentially blocked from the state tax commission step.  The process is not chess, but neither is it checkers.  The process calls for due diligence and focused attention from all parties.

Regardless of which side of the tax abatement issue you favor, the process is the same, the issues are the same, the due diligence is the same, and the laser focus is the same.  I again respectfully urge council, as part of it’s due diligence in deliberating and deciding the developer’s request for a Diesel Plant OPRA District, to seek guidance from our city attorney and other resources so the public interest is best served.

Council Must Be Sure

As part of council’s due diligence, please wrestle with these questions.

  1. Is Council sure OPRA applies to the Diesel Plant?
  • Is Council sure the Diesel Plant is “functionally obsolete” under OPRA?
  • Is Council sure what our local tax assessor meant when he declared the Diesel Plant “functionally obsolete”?
  • Does Council know if Grand Haven has ever used OPRA on a municipally owned commercial or industrial property before?
  • Has Council checked with the Michigan Municipal League for examples where other Michigan cities have used OPRA on a municipal-owned commercial or industrial property?

These questions are expanded below.

  1. Is Council sure OPRA applies to the Diesel Plant?  OPRA applies to commercial, commercial housing, and industrial properties.

OPRA specifically states that commercial property does not include “property of a public utility”.  The Diesel Plant was a public utility.

Similarly, “industrial” can include facilities for providing electricity if they are nongovernmental, but not if they are governmental.  The Diesel plant was governmental.

Nowhere in OPRA is the word “municipal” found or used.  The Diesel Plant was municipal.

In summary, is council sure it is barking up the right tree to apply OPRA to the Diesel Plant?  Council needs to be sure so the public also can be sure.

  • Is Council sure the Diesel Plant is “functionally obsolete” under OPRA?  Interestingly, OPRA does not define “functionally obsolete” within the four corners of the law.  Instead, it borrows the definition from Michigan’s Brownfield Redevelopment Financing Act.  The Brownfield Act defines functionally obsolete as:

(u) “Functionally obsolete” means that the property is unable to be used to adequately perform the function for which it was intended due to a substantial loss in value resulting from factors such as overcapacity, changes in technology, deficiencies or super adequacies in design, or other similar factors that affect the property itself or the property’s relationship with other surrounding property.  (MCL 125.2652, in pertinent part; emphasis added.)

The Diesel Plant was intended (and used) to generate electricity.  Clearly, it is functionally obsolete for that purpose.   However, it was never intended to be an event center or retail space.  That’s a new use, not its old use.  OPRA’s “functionally obsolete” definition looks at the old use, not the new one.

To illustrate, if you have an old, privately-owned warehouse in town that a developer buys and wants to convert into high-end condos; OPRA fits perfectly.

However, if you have an old, city-owned electric power plant in town that a developer buys and wants to convert into a retail space and event center; OPRA fits …. oops …. maybe not so fast.

In summary, is council sure the Diesel Plant fits within OPRA’s narrow “functionally obsolete” definition to even apply the law?  Council needs to be sure so the public also can be sure.

  • Is Council sure what our local tax assessor meant when he declared the Diesel Plant “functionally obsolete”?  At a prior council meeting it mentioned the assessor declared the property functionally obsolete, but has anybody actually talked with the assessor and asked him for sure what he meant?

Certainly, the assessor meant the Diesel Plant was functionally obsolete to any longer produce electricity.  Nobody doubts that.

But is council sure the assessor also meant the Diesel Plant is functionally obsolete for use as a retail space or event center?  That’s a big assumption to make without being sure.

The assessor knows the Brownfield Act definition of “functionally obsolete” better than anybody.  He knows it is the basis of his decision.  Assessors by nature, and by law, stick to the facts.

The assessor must consider the infrastructure, technology, and design of the Diesel Plant for the intended use of generating power, but not for a future use as retail space.  He leaves it to the developer whether the investment is worth it.

In summary, is council sure what the tax assessor meant when he declared that the Diesel Plant was “functionally obsolete”?  Council needs to be sure so the public also can be sure.

  • Does Council know if Grand Haven has ever used the OPRA law on a municipally owned commercial or industrial property before?  If yes, then council has precedent to consider and weigh in its deliberations and decision.  If not, what does that tell council?

Council needs to be sure so the public also can be sure.

  • Has Council checked with the Michigan Municipal League for examples where other Michigan cities have used OPRA on a municipally-owned commercial or industrial property?  Grand Haven is a member of MML.  It is a rich resource of talent and experience geared to help solve local government issues.  MML is a free phone call away.  If we have not made the call, we should.

Council needs to be sure so the public also can be sure.

A possible Diesel Plant OPRA District is important to all parties.  Please give it a full and fair airing so the community’s best interests are served.