TechSmith Tax Exemption Request Heard, While Parking System Is Bleeding Money

During a discussion-only meeting on Tuesday night, East Lansing City Council members talked about a potential tax break for a company considering relocating its headquarters to MSU’s campus in East Lansing, received a sobering presentation about the East Lansing parking system’s finances, and discussed approaching racism as a public health crisis. 

At the request of Mayor Aaron Stephens, Council also entered a closed session at the end of the meeting to discuss, according to the agenda, an unspecified “written confidential legal opinion” with City Attorney Mike Homier.

As TechSmith seeks a tax exemption, Council members appear eager to bring headquarters to MSU in East Lansing

TechSmith Corporation, a software company formerly located in East Lansing and now located in Alaiedon Township, wants to build a new headquarters in East Lansing. 

The location for the proposed new headquarters is a parcel of land previously owned by MSU, near the intersection of Harrison and Crescent Roads at the site of Spartan Village. According to a City Staff memo in the agenda item attachment, MSU has given control of that parcel to the MSU Foundation to “attempt to develop office space meant for high tech tenants with ties to the university in terms of talent development.”

TechSmith is requesting from East Lansing a personal property tax (PPT) exemption to “their purchase and installation of all eligible personal property from taxes for a period of 10 years,” the memo states, before saying this use aligns with how Council has previously said it would deploy PPT exemptions.

Materials shown to Council by Dillon Rush of the Lansing Economic Area Partnership (LEAP) — advocating for the tax exemption on TechSmith’s behalf — estimated that having the project with the tax exemption will bring more than $1.2M more in income and property taxes than if the land remains unused. 

During the public comment portion of the meeting, East Lansing resident Anne Hill called in to oppose granting the tax exemption to TechSmith. Her argument centered on the increased pressure development places on infrastructure, particularly water and sewer systems, and how those doing the development need to be paying enough taxes to keep that infrastructure working.

“What I am advocating for is that all users of our system pay their fair share,” Hill told the Council, “and exempting organizations from doing that only puts a higher burden on those that do, especially homeowners, small businesses and those large organizations who did not take advantage of tax-exempt options.”

Despite Hill’s opposition, members of City Council generally seemed to be enthusiastic about the idea of TechSmith coming to East Lansing.

Council member Lisa Babcock noted that TechSmith is a “great company” and the kind highly desired in East Lansing. Still, she asked how much in personal property taxes the development would deliver if it were not granted the tax exemption. Rush answered Babcock by saying “$150,000.”

Council members Jessy Gregg and Ron Bacon also shared their enthusiasm for the project. Bacon said the conversations need to have an edge and that tough questions need to be asked, but explained that would come at a later date. 

Council member Dana Watson asked about the company’s compensation for workers and was told that low-paid employees like cleaners are hired via contracted providers, not by TechSmith. TechSmith estimates that the average salary of their employees is around $100,000.

Council agreed to set two public hearings for this issue on Dec 15, 2020. The first will be on whether to establish a tax-exempt district on the proposed property for the headquarters, and the second will be on whether to grant TechSmith the exemption.

According to the staff memo to City Council, this exemption is something TechSmith has argued is necessary for the success of the project:

“They have posited that this local support is a vital component necessary to gain the overall support from various State agencies, including the Michigan Economic Development Corporation (MEDC) and Michigan Works, which is ultimately necessary to fill economic gaps that exist in order to make the project viable.”

What to do about the parking system losing money?

Tuesday night, Council also heard a presentation from Director of Planning, Building and Development Tom Fehrenbach about the ongoing financial stresses on the City’s parking system during the Covid-19 pandemic. The parking system’s finances were not great even before the pandemic hit, and things have not gotten rosier.

According to Fehrenbach, the City “remains solvent” in regards to parking, but it isn’t clear how long that will remain the case if things continue as is. The City is putting off over a million dollars in necessary maintenance to get the parking systems’ books balanced this year.

Both Fehrenbach and Parking Administrator Caleb Sharrow discussed potential interventions and innovations while highlighting some ideas and actions that have been effective.

Fehrenbach noted to Council that the 15-minute grace period that Council adopted in August had been effective, and that the number of those transactions were high. 

He also noted that transactions where businesses validated parking were down. Council member Jessy Gregg and Fehrenbach surmised that is because small businesses cannot shoulder the additional cost of validating customer parking right now.

“I empathize with that,” Gregg said, speaking from her experience as the owner of Seams, a small downtown fabric store.

Some fixes discussed for parking on Tuesday included reconfiguring the placement of permitted parking spaces around the City’s system, potentially moving more into especially underutilized garages, and using the parking garages as long-term storage over the winter for boats and R.V.’s.

With the pandemic worsening and the new orders from the State level further restricting indoor dining at restaurants and other activities, Council members and Fehrenbach expressed concern about the potential for even fewer people parking downtown.

Racism as a public health crisis

Council had Diversity, Equity and Inclusion Administrator Elaine Hardy join the meeting to discuss a proposed resolution that would declare racism a public health crisis in East Lansing.

Council members expressed their appreciation to Hardy for her work on the matter and agreed to vote through the resolution at their meeting next week. ELi’s Emily Joan Elliot will have a separate report on that resolution and discussion later this week.

Correction: A previous version of this article stated TechSmith is headquartered in Okemos, Michigan; TechSmith’s headquarters are in Alaiedon Township, Michigan.

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