12-20-2021 City Commission Vote Explanations

Hemlock Park Housing Development Agreement: NO (Passed 4-3)

Site map of the Hemlock Park housing development which the City Commission voted to subsidize with $2 million in infrastructure funding on Monday night.

This was a vote on a Development Agreement between Hemlock LLC (a subsidiary of Veridea Group) and the City of Marquette, in which Hemlock LLC agreed to invest at least $5 million in a housing development on Parcel 12 of the Heartwood Property in south Marquette (a 29-acre parcel which they purchased from the City in 2018), and the City agreed to fund $2 million in infrastructure for the development, including streets, sidewalks, water and sewer pipes, and electrical service. Hemlock LLC plans to invest a total of $19 million and build 60-70 single-family, owner-occupied homes (a mix of detached houses, duplexes, and townhomes) by 2023.

I am not opposed to this development. This property has been designated for future sale and development since the City purchased the Heartwood Property in 2005, we need to grow our local tax base given the City’s budgetary issues, and I’m sure there is a market in Marquette for nice homes in the $280-$400,000 price range. I like the plans for the site – it seems like it will be a nice, walkable, family-friendly neighborhood with a playground and sledding hill, located near the NTN South Trails and the ski hill. And extending utilities to this property would also potentially make City utilities available to the NTN South Trailhead and the ski hill in the future.

However, on Monday night the City Commission was not really voting on whether this site was going to be developed. We were voting on whether the City should borrow up to $2 million to pay for the infrastructure necessary for it to be developed, a cost which developers generally pay. That is a very different question.

When the Commission was first informed of this development by email on Dec. 9, we were told that, based on “initial discussions with the developer … the houses [in this development] could be sold at the middle-income price point,” although we didn’t have official figures at that time. In fact, this language about “middle income housing” was still included in the description of this development in our agenda on Monday night. So it was a bit disappointing to learn at the work session on Dec. 13 that these houses would start at $279,000, and that only 6 of the 60-70 homes would be sold at that price point, with the rest going for $300-400,000.

I still remained open-minded and cautiously optimistic, but a week later, none of the requests that several my colleagues and I made regarding commitments on price points, deed restrictions limiting resale price and requiring principal residence occupancy, or expanding the number of sub-$300k units were included in the final Development Agreement. It also became clear that the playground and sledding hill will probably only be open to residents of the Hemlock Park development – residents of Granite Pointe, Shiras Hills, or the mobile home parks nearby probably won’t be allowed to bring their kids to the playground or go sledding there in the winter. In return, we were asked to set the cap on the City infrastructure contribution at $2 million, rather than the $1.8-1.9 million we had discussed previously.

I think it’s important for us to remember the context of the community that everyone on the City Commission was elected to serve. The City of Marquette’s poverty rate is 25%. Now, it’s unrealistic to expect that people in poverty would be able to buy a house, but even Marquette’s median household income is just $44,000 according to the 2020 U.S. Census. A home that would be affordable for a family earning 80-120% of that median income (the “workforce housing” income range) would cost about $200,000, give or take. And based on some calculations I did recently using several reputable online mortgage calculators, a family would need to earn about $100,000 per year to afford to buy any of the homes in this proposed development, which would put them in the top 15% of household incomes in the City of Marquette.

Of course, the City Commission represents all City residents, and higher-income families need homes that they can live in, too. But this infrastructure funding is essentially an indirect subsidy for this development, the cost of which is borne by ALL City taxpayers, not just Veridea/Hemlock LLC or the homeowners in this development. I just don’t feel comfortable voting to borrow $2 million to subsidize a market-rate development in which none of the units are going to be affordable for 85% of the people I was elected to represent, and in which at least 90% of the units are going to be sold for over $300,000, especially when we do not have any firm commitments on price points in the Development Agreement or any deed restrictions preventing someone from buying one of these homes and selling it for a large profit a year or two later. After all, those profits would essentially be paid for by City taxpayers. I was contacted by a couple dozen constituents about this project, all of them opposed to it, and one of them told me that, “It seems like this project is basically subsidized unaffordable housing.” I didn’t know what to say at the time, other than to admit that they had a point.

Now, I agree that market-rate housing could still help with the housing crisis that Marquette is facing, if we had units available at the bottom of the market in that $200,000, “workforce housing” price range. But we don’t – there are currently only 6 houses for sale right now in Marquette for less than $250,000. As a result, I worry that when people sell their current homes to move into these units, that could just end up being a recipe for further housing price inflation, especially with investors willing to pay in cash for well over asking price as soon as houses are hitting the market.

And while this $2 million investment would pay for itself within 10 years from new tax and utility revenue, I feel that the way that some people chose to frame this development was fundamentally wrong. Not only is not truly “middle-income housing,” but the idea that we either need to accept bad deals like this to grow our tax base OR cut City services due to our budget shortfall is the very definition of a false choice. There is an alternative – we could have chosen NOT to take on $2 million in additional debt, reserving that bonding capacity for a future project that would produce some affordable housing or yield other public benefits. Had we done that, this property would have certainly been developed anyway – the developer publicly stated as much in the meeting on Monday night – and the City tax base would have grown significantly without the need for any City subsidies. That’s not to mention the fact that growing our tax base doesn’t help very much with our current budgetary shortfall when that new tax revenue won’t offset the $2 million infrastructure investment until a decade from now, and when a large portion of our limited budget is already devoted to debt service.

For all these reasons, I voted No, along with Mayor Pro Tem Mayer and Commissioner Hanley. The rest of my colleagues voted Yes, and the Development Agreement passed 4-3.

Climate Action Resolution: YES (Passed 7-0)

Severe damage to the old Lakeshore Blvd. from “50-year” winter storms in 2017 and 2019.

This was a vote on a resolution which commits the City of Marquette to eliminating the City’s greenhouse gas emissions by 2050 and creating a Climate Action Work Plan to achieve this goal. This goal is in line with the State of Michigan’s goal of achieving statewide carbon neutrality by 2050, and the Paris Climate Accord’s goal of limiting global warming to 1.5 degrees Celsius (which will require the world to achieve net zero carbon emissions by 2050).

This was a campaign promise that I made when I was running for City Commission in 2019, and I was incredibly proud to see this resolution pass unanimously on Monday night. I was also humbled and inspired to see a surge of grassroots support for City action on climate change from City residents, with dozens of City residents of all ages and backgrounds showing up at multiple City Commission meetings to make their voices heard, and dozens more calling and emailing the Commission urging us to approve this resolution.

It’s also important to note that there are several years of history behind this resolution, and that climate change has real costs to the City of Marquette, and by extension, to all Marquette residents and taxpayers. In 2017, 584 City residents signed a petition urging the City Commission to pass a resolution like this one. The Commission declined to do so, although some Commissioners supported the idea. Since then, Lakeshore Blvd. and Shiras Park have both been destroyed by “50-year storms” which are no longer 50-year storms – if we do nothing, the “gales of November” will come earlier and earlier and be more powerful each year. Extreme winter weather, from heavy lake effect snow to the “polar vortex,” will also become more common. That means millions of additional taxpayer dollars spent on infrastructure repairs and snow removal. It means we may no longer be able to enjoy our lakeshore the way we do now. We have already had to spend millions of state and local tax dollars on relocating Lakeshore Blvd. to protect vital City infrastructure and reduce erosion of our public lakeshore. Millions more will surely have to be spent by the City in the future if we do not reduce emissions quickly enough to avoid the worst potential effects of climate change.

Major coastal flooding in Marquette due to historically high lake levels and a severe winter storm.

To me, that is an unacceptable outcome, and we must do our part to avoid it. To be fair, the City has already made a lot of progress on climate change adaptation (preparing for climate change) and mitigation (reducing emissions to limit climate change), but we don’t have the luxury of sitting on our laurels – we can and should be doing much more to reduce emissions and prepare for a changing climate.

Join National Opioids Settlement: YES (Passed 7-0)

This was a motion to join a national legal settlement in which 4 major Big Pharma companies are being required to pay $26 billion in damages to individuals and state and local governments for their role in the national opioid epidemic. Clearly the opioid crisis has severely impacted our community and our country. In 2016, there were 42,000 opioid overdose deaths nationwide – in 2021 there were over 75,000. Opioid overdoses have exceeded car accidents as a cause of death in the United States for the past 3 years. The reality is that this is largely a manufactured epidemic. These four companies are certainly not the only entities that are responsible for the opioid epidemic that is afflicting our country, the U.P., and Marquette, but they are responsible and need to be held accountable. $26 billion is certainly a large sum, but no amount of money can ever compensate for the damage that opioid drugs have done, and will continue to do, to our society. I felt that it was critically important that we join this settlement in the interest of justice and helping to repair some of the damage that opioids have done to Marquette and the people who call it home, and I voted Yes as a result.

12-13-2021 City Commission Work Session Summary & Vote Explanations

A site map of the Hemlock Park housing development proposed at Parcel 12 of the Heartwood Property by Veridea Group and their subsidiary, Hemlock LLC.

12-13-21 Work Session Notes

Below you can find my explanations of the two votes I took at Monday night’s City Commission meeting, but first I want to provide my notes on the public work session that preceded the meeting, during which we discussed a proposed housing development in south Marquette. This development, proposed by Hemlock LLC (a subsidiary of Veridea Group), would take place on former Parcel 12 of the Heartwood Property – this 29-acre parcel was designated for sale when the City first acquired the 2,200-acre Heartwood Property in 2005, and prior to my election in 2019, the City Commission sold it to Veridea Group for $209,000 (100% of its assessed value) in 2018. In early conversations with the City, the developers stated that they intended to build about 60 modular, owner-occupied single-family homes which would be affordable for middle-income families. To achieve this, they were asking that the City finance the infrastructure for the site, which would amount to an indirect subsidy of about $40,000 per unit (all of which they guaranteed would be passed on to homebuyers). This would also make City utilities available to the NTN South Trailhead and the campground and ski hill further south.

Here is some of the new information that we learned about this proposed development at the public work session on Monday. First I’ll list what I see as some of the positive aspects of this proposed development, followed by the negatives.

Positives

  1. The project would produce 60-70 owner-occupied homes (a range of single-family homes, duplexes, and townhomes) at a time when Marquette desperately needs more available housing of all types and at a wide range of price points. We certainly need more low-income and workforce housing, but there are also currently only four 3-bedroom homes for sale in Marquette at any price, and only seven homes for sale in Marquette for less than $300,000.
  2. This development would produce new tax and utility revenue for the City at a time when we are facing significant structural deficits. In fact, City staff project that the proposed $1.8 million City infrastructure investment for this project would pay for itself in less than 10 years.
  3. This development would not involve Brownfield Tax Increment Financing (TIF), meaning the taxes from the development would go straight to the City budget, rather than being captured for 15-20 years to pay off a Brownfield Plan.
  4. The site plan intentionally sets aside 10 acres (most of the eastern half of the property) for permanent conservation, including the old-growth hemlock stand from which the development takes its name, “Hemlock Park.”
  5. The NTN is fully supportive of the project, and the NTN “Mossy Connector” trail that runs through the property would be partially re-routed but would be preserved. Again, the NTN could also potentially get plumbing and running water at their South Trailhead as a result of this project.
  6. The developers plan to include a lot of human infrastructure in the proposed development – a playground, a sledding hill, trails through the woods, sidewalks, etc. They want it to be a walkable, family-friendly neighborhood.
  7. There would be a condo association for this development which would severely restrict and potentially prohibit short-term rentals in this new neighborhood.
  8. Even if most of these homes would not be affordable for the average Marquette resident, most homebuyers would probably be locals who currently own a “starter” home in Marquette, or empty-nesters looking to downsize. When they sell their current homes, that would theoretically open up those more affordable homes for sale, allowing families with more modest incomes to become homeowners. There is significant (if disputed) empirical evidence for this “musical chairs effect” in other housing markets, although this evidence is mostly limited to large metro areas.
  9. This project would not have any impact on utility rates for current ratepayers in the rest of the City – in fact, it would improve system-wide reliability and sustainability, paying for itself in 10 years and for its long-term maintenance and replacement costs in about another 10 years.
  10. This project would use high-quality modular construction, which allows housing to be built more quickly and less expensively at the same level of quality as a traditional stick-built home. This would be a great proof of concept for modular housing in Marquette, and modular construction has the potential to produce workforce housing that is genuinely affordable for working-class families earning 80-120% of the Area Median Income (AMI).

Negatives

  1. Shortly before the meeting, we learned that the “middle-income” affordability component of this project was essentially being eliminated due to financial constraints. The units in this project would all be in the $275-$400,000 range – certainly less expensive than a lot of the new construction on Lakeshore Blvd., but not truly affordable for most middle-income families.
  2. The homes in this development would start at $279,000. To be honest, I would still be quite excited about this project if all 60-70 units would be available at $279,000 – we desperately need housing, and as previously mentioned, there are only 7 houses for sale for less than $300,000 in Marquette right now. However, only about 6 of the 60-70 units will likely be sold at that lower price – the rest would most likely be over $300,000.
  3. In the draft Development Agreement for this project, there are currently no provisions guaranteeing that these homes will actually be sold at the price points listed above. There is also no mention of deed restrictions to limit resale value or to require primary residence occupancy for these homes, both of which are fairly standard practices for new developments in hot housing markets like Marquette’s. The developer stated that they would consider deed restrictions and making some kind of commitment about price points in the final Development Agreement, but they were very candid about their reluctance and reservations about doing so. Without these commitments, even after the City invests $1.8 million into infrastructure for this project, there would still be no guarantee that the homes would actually be sold at these price points, and nothing preventing the buyers from using them as investment properties or reselling them a year or two after purchase at a much higher price. This raises serious concerns for me about the long-term affordability of these homes (most of which will not be affordable for the vast majority of Marquette residents to begin with).
  4. Based on some calculations I did using https://www.mortgagecalculator.org/, these homes would be affordable for families earning about $100-$140,000 per year, and only about 6 of these homes (those priced at $279,000) could conceivably be affordable for families earning less than $100,000 per year. Now, these families certainly need homes, too, and I was elected to represent everyone in Marquette, regardless of their income. But am I comfortable essentially applying a $1.8 million, $40,000-per-unit subsidy to this project (using City taxpayer dollars) so households earning six-figure incomes can buy homes for slightly lower prices? I don’t know yet – it certainly makes me feel very uneasy.
The property in question is Parcel 12, top-center in the map of the Heartwood Forest Property above.

To be honest, when I first heard about this project and was told that some portion of these homes were going to be affordable for “middle-income” households, I was very excited. 60-70 genuinely affordable homes within the 80-120% AMI workforce housing price range (i.e., anywhere from about $170-$210,000), or even slightly above that price range – say, $250,000 – would genuinely make a huge difference in Marquette. This is achievable with the right developer and combination of public supports and policies – it has been done in many other communities, in Michigan and across the country, that are facing similar housing crises. However, after the work session on Monday night, I was frankly disappointed.

Now, there is a strong “lesser of two evils” argument to be made here. We do genuinely need more housing in Marquette just to maintain our current population and retain the young families we already have. And without City financing for the infrastructure for this project, Veridea could just build the same development, but likely with fewer community benefits and charging at least $40,000 more per unit, so that even those handful of $279,000 homes would instead go for over $300,000. After all, Veridea already owns the property, and they can do anything with the property that is compliant with its Mixed-Use zoning. The City’s leverage here is limited – we can’t dictate what happens with this property like we could if we still owned it and were putting out a Request for Proposals (RFP) to prospective housing developers. And although these homes would not truly be affordable for most middle-income families in Marquette, they would free up dozens of less expensive homes for purchase – that “musical chairs effect” I mentioned earlier.

That being said, without a solid inventory of at least a few dozen genuinely affordable workforce housing units for sale at the bottom end of the owner-occupied housing market, I worry that this process of “musical chairs” will not actually help very much, as current homeowners looking to “move up” into a nicer, more expensive house will still want to take full advantage of the hot housing market and sell their houses for as much as possible (i.e., a lot more than most Marquette residents can afford). It’s also unclear how many of these vacated homes will be bought by locals and actual families moving to the area, and how many will be snapped up as soon as they hit the market by wealthy out-of-town investors willing to pay well over asking price and in cash. I agree that new market-rate housing development can have a real positive impact on housing availability and affordability, but only in combination with new affordable workforce housing development.

I still don’t know how I’m going to vote on this proposal – it will likely be brought back to the City Commission for a vote next Monday, Dec. 20 – but I hope you found this summary to be informative. I’d appreciate hearing your thoughts – you can reach me at (906) 236-0247, ebonsall@marquettemi.gov, or on Facebook.

12-13-21 Vote Explanations

Resolution to Protect Democracy & Promote Ballot Access: YES (Passed 7-0)

This resolution was brought to the City Commission by the nonpartisan League of Women Voters, and was similar to resolutions that were recently passed by the elected councils in Munising, Ishpeming, and Negaunee Twp. This nonpartisan resolution affirms the City Commission’s support for the voting rights reforms approved by 67% of Michigan voters (and 76% of City of Marquette voters) through Proposition 3 in 2018, and for state-level efforts to expand access to absentee voting, early voting, and in-person voting on Election Day. It also expresses the City Commission’s strong opposition to legislation which is being considered by the State Legislature in Lansing which would restrict ballot access and voting rights in Michigan. I happily voted Yes. Here is a link to the video of the statement I made on this resolution at Monday’s meeting: https://youtu.be/ejbjEqStv0Y?t=3452

Public Works & Utilities Labor Agreement: YES (Passed 7-0)

This was a vote on a new 3-year contract for the City’s DPW and utilities employees – there are 54 unionized City employees in this bargaining unit, AFSCME Local #1852. The contract includes a 2% raise in the first year, with wage reopeners in the second and third years, and some other minor adjustments to compensation. The total net cost of approving this contract was $68,000, which the City Commission had already budgeted for in the FY2022 City budget. Our hardworking DPW employees are certainly worth more – they do a thankless and difficult job extremely well – but overall I felt that this was a fair and fiscally responsible contract given the City’s current budgetary constraints, and I voted Yes.