Following revelation of a letter from City Council member Mark Meadows indicating that their decision had been based on erroneous information, East Lansing’s Brownfield Redevelopment Authority will hold a special virtual meeting at noon tomorrow to consider rescinding their resolution from last week to authorize new bonds for the Center City District project.
The BRA will also consider a new amended bond resolution. The discussion is bound to be intense, as a memo just released from the City’s bond counsel, Miller Canfield, suggests that Meadows is wrong in his reading.
Their disagreement is not with interpretation of specific provisions that Meadows quoted. Rather, they quote other provisions that appear to contradict or at least differ with those that Meadows pointed to.
Meanwhile, lead developer Mark Bell of Harbor Bay Real Estate is pleading with members of the BRA to help him out.
Bell told a member of the BRA by email today, “I am particularly disheartened that there is a narrative being pushed by some, that suggests the developer is ‘taking advantage’ of the EL community. This couldn’t be further from the truth.”
Bell insisted in his communication that he has only the best intentions: “Our team is utterly bewildered that such an honest, good-intentioned attempt, is met with harsh criticism (by some) whereby we’re being demonized.”
Mark Bell’s father, Peter Paul Bell, is the holder of the bond that was taken out to do construction of the public infrastructure, because no other investor could be found to take that $25M risk. The bonds had no security other than promised tax revenues from the project – making it a “no recourse” bond that is fairly unattractive to investors.
Now Bell Sr. wants to get his money back on the bond. To achieve that, the BRA would have to write, market, and sell new bonds – called refinancing or “refund” bonds.
The BRA is only under the obligation to attempt to refinance the bond held by Bell. It does not have to find a buyer for the offering of the refinance bonds. If no new investor is found, Bell Sr. is stuck.
Last week, Mark Bell and his team came forward to talk with the BRA about refund bonds that would pay off his father. Bell made clear his team wants the refinancing bonds to include over a million dollars for cost overruns (for which they are, in fact, legally responsible) and to pay themselves for the work on the public refinance bond.
The BRA voted in favor of all of the developers’ requests, with Mayor Pro Tem Stephens the lone “no” vote on that.
But ELi reported yesterday that, according to Meadows – who as mayor helped shape the deal – last week’s bond resolution was based on a figure that was off by about $6 million in terms of how much tax money is available to repay principal and interest on the bond.
ELi reported yesterday that Meadows had written a three-page letter to say the true cap on the Tax Increment Financing (TIF) deal was $50 million, not $56 million as assumed in the BRA’s actions. This is because of a special cost-control measure put in a key resolution by Council member (now Mayor) Ruth Beier, supported by all of Council.
But now Miller Canfield, the City’s and BRA’s bond lawyer, says other parts of the paperwork indicate that the $56 million sum is operative, and that what Bell is asking for in terms of extra payouts can happen if the BRA wants to make those happen.
Meadows’ message last week was sent only to three people – Stephens, City Attorney Tom Yeadon, and City Manager George Lahanas – and none of them brought up the issue of the $50M cap at the meeting. Stephens tells ELi the letter was sent days in advance of the meeting.
The central problem now is that the paperwork in the deal contains what appear to be contradictory messages about what was allowable.
BRA members have told ELi they are not happy with how last week’s meeting went. They say they wish they had had the clearer information from staff and the attorneys working for the BRA.
One of those attorneys is City Attorney Tom Yeadon, whose contract is up for discussion tonight at City Council. There may be a majority now on Council to terminate that contract, with Stephens and Council members Lisa Babcock and Jessy Gregg having indicated in the past dissatisfaction with Yeadon holding the position under a contract currently worth about $650,000 a year.
The DDA, which has the same membership as the BRA, has already moved to hire specialist counsel for these big redevelopment deals for the future. In the past, they just used Yeadon.