Taxes will repay industrial park loan says IDC president

October 18, 2013

By Pat Maurer

The proposed development of a new Industrial Park on the north side of Clare has been questioned extensively by some residents, City Commissioner Tom Koch and former Mayor Allen Demarest over the past couple of months.

The property is part of 200 acres along Colonville Road and was owned by the Northern Group until 60 of the acres were deeded to the city this month. All of the property, which is in Grant Township, is in the process of being transferred to the jurisdiction of the city as requested by the Northern Group as part of an Urban Cooperation Agreement developed five years ago between the city and township.

Earlier this month, Demarest expressed his concerns over potential plans to develop an industrial park on 60 acres of the property with the help of an Economic Development Administration (EDA) grant just awarded to the city totaling $2,680,860 towards the estimated $4,468,100 cost of the developing infrastructure (sewer and water) on the property for a new industrial park.

Committing to borrowing the necessary money for the project has caused some concern. At the first meeting in September, Koch said, “My feeling is that we’ve not had much input about this. I’m not comfortable with this.”

The Economic Development Administration grant would fund 60 percent of the costs for a new water tower, a lift station and infrastructure for sewer and water on the north side of the city and allow for the development of the new industrial park.
The remainder of the costs, about $1.7 million, would have to be paid with city funds. Of that amount the city has about $700,000 available and would have to borrow the remaining $1 million through a bond issue.

At the last city meeting, Commissioner Tom Koch said to the other board members, “The four of you sitting here have a responsibility to the citizens. We have to figure out where this million dollars will come from.”

In a written statement this week, Demarest said, “There has been a proposal formulated by the Clare City Manager, which will, if approved by the Clare City Commission, result in a new 60 acre industrial park on East Colonville Road. Multiple thousands of dollars are needed, in addition to the EDA grant money, to complete this project and it can only be achieved by borrowing and pledging “full faith and credit of the City of Clare.”

He continued, “Such a borrowing could result in using City of Clare general fund tax dollars to assist in making the required payments in the bond issue if other revenues do not provide adequate funding. As a former member of the…commission for nine years, who served as mayor for six years, I feel very strongly that the City Commission should call for a referendum of the voters in our community to make the decision to borrow these required funds.”

Demarest wrote, “In my years in Clare I have never witnessed another major project of the this nature where such limited information has been provided to the City Commission as it has progressed…In my opinion, a proper final decision in this matter can only be achieved in a fully transparent environment.”

He noted that individuals attending a Chamber sponsored “Business After Hours” last week received a presentation on this industrial park project even before such a presentation was made collectively to the City Commission members. “I find this latest action to be consistent with everything else I have witnessed. Normal routine, but procedurally unbelievable.”
At the special Business After Hours October 10th, Clare Industrial Development Corporation Chair Jim Allen described the process used to develop the present Industrial Park on the south side of the city and how a new park could be developed.
He said, “Planning or the current Industrial Park began soon after the IDC was formed (1962). In 1975 construction began on the initial 40 acre site. The project turned farm land into a State Certified Industrial park with all roads and infrastructure improvements.”

“All projects of this nature take a ‘package’ of stakeholders to complete,” Allen explained. “In this case the players were the IDC, which donated the land and put $170K into the project with funds raised through loans from over 50 local Clare individuals; the City of Clare donated $50,000 to the project; and State and Federal grants added $675,000.” This completed the initial park project.

He continued, “Thirty more acres owned by the IDC remained undeveloped.” He said park lots began selling in the mid 1980s and were completely sold out in the mid 90s. Loans were repaid with the funds from the sale of the lots. “All the loans were repaid and all the shouting was over,” he said.

In the mid 1990s a three-year negotiation between the IDC, State Commerce Department and Pilot Industries resulted in the construction of a 110,000 square foot building and Pilot Industries establishing a plant in Clare with a development “package” put together for the Clare site – 15 acres of the IDC’s undeveloped 30 were given to the company. The agreement said the City would borrow $700,000, matched by a $750,000 grant to provide the site infrastructure improvement and construct the east-west Industrial Drive through the park and the north-south Pilot Drive roadway.

Allen said there was also local concern and discussion then about the City bond issue to support the project – questions about residents’ obligation and other concerns. A Tax Increment capture procedure was created where all taxes paid by the building owner would be dedicated to make the loan payments. “The loan was completely repaid two years ago,” Allen said. “That building is now owned by Alro Steel and employees more than 80.”

With no industrial lots left in the current park, and land locked city limits, the IDC began working on ideas for future development. “The UCA agreement between the City and Grant Township opened up the possibility of future development at a large acreage area” north of the city limits.

“There is a proposal to construct a 6o acre industrial city park. This 60 acres is owned by the city and will be managed by the IDC. Its development would insure a $2.6 million dollar federal grant to provide sewer, water and infrastructure improvements including a city owned water tower, which is necessary for the future development of our community,” Allen said.
He added that a potential tenant for the new park has already signed a purchase agreement. “Taxes paid by the occupants of the new 60 acre park will pay the principal and interest on the City borrowing.”

“We have done this similar development two times successfully in the past,” Allen said. “The current negative comments come without full knowledge of the complete ‘development package’ and seem to have monetary fears without regard to the known and potential taxes provided. No one seems to be talking about the number of new employees to be created and that we have one tenant already signed up.”

Allen concluded, “Look at our present completely occupied park on the south side of town – the taxes it generates and the families it feeds and wonder why wouldn’t we be able to do it all over again!”

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