Jarred by Surprise Plan to Reshape the City, DDA Moves to Get Its Own Director

East Lansing’s Downtown Development Authority (DDA) has been moving for months toward redirecting funds to hire its own director – a person whose full-time job would be attending to what the DDA board wants to see happen. For about three decades, since its inception, the DDA has been relying on the staff the city chooses to provide.

But Wednesday’s revelation by ELi of a previously-unreleased eight-page plan to reorganize substantial parts of the city government – including through the use of DDA resources, an idea never discussed with the DDA – pushed the conversation to the boiling point at Thursday’s regular monthly DDA meeting (April 27).

“The DDA wasn’t brought in on any of that planning,” DDA Chair Mike Krueger told Interim City Manager Randy Talifarro at Thursday’s meeting. “So, there’s just a level of trust that has been eroded,” he said, referring to what he called “the eight-page elephant in the room.”

The authors of the eight-page plan, the existence of which became known via an anonymous complaint to City Council, continue to be unknown at this time. (ELi has an active Freedom of Information Act request to the City Clerk seeking that information.) But the complaint suggests the plan’s behind-the-scenes advocates included Mayor Ron Bacon. 

The plan envisioned a new Department of Culture, Equity, & Placemaking that would – if created as described – fall under the DEI Department, whose director is Elaine Hardy. It would have involved realigning staff positions, shifting the use of DDA funds, and changing who has power over projects now under the purview of the DDA and the Downtown Management Board (DMB).

Hardy, Bacon and former city manager George Lahanas have not responded to questions from ELi about who authored the document. Bacon is a member of the DDA and was the only member absent Thursday.

Responding to Krueger’s blunt remarks about trust erosion, Talifarro told the DDA he didn’t know the origins of the document and that he only “came into possession of it two weeks ago.” He said he got the sense whoever constructed the plan put a lot of energy into it, “but that wasn’t the tack that should have been taken. I don’t think anyone disagrees with that.”

“Look,” Talifarro said, “I don’t believe that it came from the DEI office. I don’t believe that it came from the mayor himself. There’s a lot of detail in there that makes me think there were others conversing about it. But candidly, it should have been done transparently, it should have been brought to all stakeholders,” including the DDA.

At the meeting, Krueger along with DDA members Jeff Smith, Luke Hackney and Greg Ballein repeatedly pushed, as they have before, to have the DDA take a vote to hire its own full-time director. 

Smith, who is the director of the University Corporate Research Park at the MSU Foundation, said Michigan State University is being hampered from recruiting talented students and faculty because East Lansing is not as attractive a city as places like Atlanta, Austin and Palo Alto.

Smith, who is the DDA’s treasurer, argued that a smarter approach to the DDA, including tapping into available grant opportunities, is needed, “to take the city into the twenty-second century.” He said the DDA had waited too long and is “probably now behind the eight-ball to get someone on board” to take actions needed “to have an incredible city….We are two years behind where we should be today.”

But Smith made clear his desire to see the DDA get its own director was also motivated by his frustration with the unshared draft plan to radically reorganize the government and the steady loss of top city employees, which the anonymous complaint said were directly related.

“We are very fortunate as residents and as DDA members that all six of you [staff members in the room] haven’t quit already,” Smith said.

Talifarro said he understood the “turnover concerns,” to which Hackney sharply replied, “It’s not ‘concerns,’ it’s a reality.” 

Of the six city employees in the room, three were there as recent replacements. Talifarro recently replaced Lahanas. Associate Planner Taylor Van Winkle replaced Darcy Schmitt. And Interim Director of Planning Tim Dempsey was in the room because he replaced Peter Menser, who quit in March after replacing Tom Fehrenbach, who quit in January.

Hackney, the DDA’s vice chair, said it “looks like certain things are happening” in the city, and “maybe our best course of action would be to separate and essentially take this [the DDA’s staffing] off [city staff’s] hands.”

But Talifarro pushed for a slower approach to the question of the DDA hiring its own director. 

“We recognize you as a stakeholder,” he said, but said he didn’t see the choice to hire a DDA director as urgent.

Drawing on his decades of professional experience working with municipalities and DDAs, Dempsey pushed the DDA to consider a strategic plan that would articulate what it’s trying to achieve. He suggested DDA members may not understand the complexity of DDA management. 

Dempsey also repeatedly referred positively to East Lansing DDA’s in the past that focused on big redevelopment projects and got them done. He cited as examples University Place (the Marriott complex) and the City Center project, which spans the block of MAC Avenue from CVS to Raising Cain’s and includes the City Center condo apartments and the Charles Street parking garage. 

“It is your role to create that vision and develop it,” Dempsey said. “What’s the plan? What’s the strategy? That should come first.”

But Smith told Dempsey, “We’ve been casually forming a strategic plan verbally.” 

Smith said the DDA director could be someone housed in City Hall and, regardless of how the details of the hire worked, it would be someone fully dedicated just to the interests of the DDA. 

“We want a dedicated person who has the resources of the city at their disposal,” Smith said.

The DDA draws its income from multiple sources, including a special millage (property tax) levied on properties in the DDA district. Funds also come from a special tax capture scheme known as “DDA TIF #2,” the income from which is about to rocket up by over a million dollars a year. 

The DDA has some degree of control over spending, but it is ultimately the Council that empowers the DDA and approves its budget.

In a discussion of the DDA’s finances in December 2022, three Councilmembers – Lisa Babcock, Dana Watson and George Brookover – indicated they wanted to take a much closer look at the DDA’s finances, while Jessy Gregg said she wanted to avoid “completely eviscerating” the DDA’s budget. (Bacon was absent from that Council meeting.) 

That Council conversation occurred because of the need for Council to approve a plan to refinance the DDA’s $5 million debt related to the purchase of the Evergreen Properties, a debt the DDA has failed to substantially reduce since it was first accrued in 2009. 

The city’s municipal adviser told the Council it had to refinance the debt to avoid “a catastrophic situation where the DDA could no longer make the debt service payment,” because of how the last refinance was structured.

One question still open is whether Council might try to force the DDA to make specific budgetary choices, like favoring paying down the debt instead of funding special projects like Albert EL Fresco.

DDA members have been frustrated in part because they feel that, under Lahanas as city manager, the city was constantly using the DDA’s budget to pay for what they think the city should. Smith has been particularly vocal about this. 

But, as Lahanas used to point out, the DDA’s budget comes in part from property taxes diverted away from the city’s general fund to the DDA. In effect, homeowners around the city subsidize municipal services to downtown as the DDA’s tax capture plan diverts property taxes from downtown for its own purposes.

Dempsey and Talifarro both urged the DDA to try to work toward a carefully considered, written strategic plan.

The reason to do this, Dempsey said, is it could help the DDA broaden its support among stakeholders – moral as much as financial. The stakeholders, Dempsey suggested, include remaining city employees, some of whom had worked on creating the next year’s budget, which the DDA had on its agenda Thursday. The budget included city staff, not a dedicated DDA director.

“If the DDA says ‘no’ to that [budget] today,” Dempsey asked, “what message does that send to current staff whose positions are funded in part with your money? So keep that in mind. That’s a real issue.”

But Ballein said there are just so many points of uncertainty in the city now. 

“We want to know our future,” he said. “And I’m not sure you can tell us that.”

Talifarro replied by again trying to offer reassurance. He said the eight-page plan for reorganization of the city was never presented to him by the mayor as something he wanted Talifarro to implement, while Bacon did convey to Talifarro that the DDA is an important component of the city.

At that point, Heather Pope, the Operations Manager for the Department of Planning, Building & Development, made unusually impassioned remarks. 

Pope noted she has worked with the DDA since 1995 – practically since its inception – and she has “been involved in almost every project at some capacity.” She told the DDA, “I’m not going anywhere at this point. I’m here to help. I’m here to help you with this process.” 

Referring to the departure of staff member Adam Cummins, who had been tasked largely with working for the DDA, Pope said she understood “you feel like you’ve lost a position.” But, she said, “I’ve stepped in. I’m on the scene.”

“That sounds like a DDA director,” Smith joked, and the tension in the room was cut by laughter.

After nearly an hour of conversation, the DDA voted unanimously to “start the exploration of the process” of hiring a DDA director, setting aside $10,000 to hire a consultant to help the DDA through that process. A request for proposals (RFP) will now be issued to find that consultant.

Correction, April, 30, 2023: When originally published, this article identified Jeff Smith as director of MSU’s Innovation Center. His title and affiliation have been corrected to “director of the University Corporate Research Park at the MSU Foundation.”