Selling Dope at The Pointe, and Musings Therefrom

I noticed while reading the recent Eli story on the DDA and “marihuana” that Mark Meadows is extolling the virtues of The Pointe for selling dope. I’m not sure how many homeowners in Glencairn, which is not even separated by a major road from The Pointe, or Chesterfield Hills, which is already subject to traffic cutting through from Michigan to Grand River to avoid the light at Harrison and Grand River, are even aware where The Pointe is, let alone its history, which makes it one of the many, many exhibits for the prosecution in any campaign to repeal the Brownfield Redevelopment Act and eliminate the Michigan Economic Development Authority.

I personally don’t know why the DDA objects to selling dope downtown (the parking structures are notorious for dealing in all kinds of narcotics), since this is where the bars and party scene are to begin with, and medical marijuana shops are just getting their foot in the door for the recreational marijuana scene after the ballot initiative passes. It would certainly be an enticement for those hepcat seniors on the rooftop over the new $33,000 per space construction cost parking structure.

I won’t try to go through the full story of Strathmore Development Company’s The Pointe (a chapter in the book on East Lansing public-private development scandals)—I was told by a source I trust, but of course could not confirm, that former city manager, “Ted Almighty” Staton, referred to buying back (in effect) the sheriff’s deed for 1/3 of what was owed after foreclosure (actually about 40%) as “brilliant.”

Tangentially speaking, some might recall that one reason Meadows was defeated when he ran for judge a few years ago was that he had taken campaign contributions (for state representative election) from Strathmore people. (I assume everyone still knows Strathmore was the City Center II developer or, if new to the area, has heard about that legendary and costly boondoggle.) I don’t think I’ve talked about one of the more amusing bits from the Cuyahoga County trial, which I followed, tried to keep city hall informed about, was ignored, then the legacy City Center II MBT credits they were counting on for the Convexity Park District project predictably fell apart (also, predictably, city hall tried to blame someone else for its mistake). Anyway, a deposition for the trial included a statement that Strathmore gave (or intended to give) a donation to Pa Warner youth football, a favorite charity of MSU Trustee and former football coach, George Perles, in order to enlist his aid lobbying the state for tax incentives for CC II. Perfectly legal.

As another tangent, I have been advocating that candidates for Governor be given a litmus test for major reforms to MEDC and development authorities, and I suggest candidates for state representative to replace Sam Singh, who is so in love with diverting money to development authorities, he was one of the few to vote against exempting library millages, be given the same litmus test.

But I digress. What is important to know about The Pointe, in addition to its location and potential impact on neighborhoods of selling dope there, is it does not pay property taxes, because it is a brownfield. That means no money for cops, among other things. I know there is supposed to be excise tax on dope sales, but I really think Meadows should think twice before advocating for a dope shop in a brownfield that was supposed to be some great commercial space, especially a brownfield that has proven so undeserving of yet another bailout.

Part of being undeserving was persistent tax delinquencies. A few developers and commercial property owners (no, this is not SOP) use tax delinquencies as a cash flow strategy or cheap loan, because interest and penalties on unpaid taxes are so low, and unlike defaulting on a mortgage, it takes years for tax foreclosure. The tax foreclosure process is designed to protect homeowners and small businesses, but is exploited by tax deadbeats gaming the system. One of the reforms at the top of the list is no developer with a history of tax delinquencies should ever be awarded tax breaks, but of course, some of the worst offenders have close ties to politicians and government officials.

If the delinquencies are on a brownfield project like The Pointe, where the reimbursement goes to the property owner (property owner pays taxes, city sends the amount of the taxes back), it doesn’t matter much (just extra staff time that does not get paid for, since the county get interest and penalty).

Where unpaid taxes for a brownfield project does matter a great deal is when those taxes are needed to pay for city or development authority bond debt. For example, on a small scale, if an Avondale Square homeowner gets into trouble and can’t pay the mortgage (which includes taxes in escrow), those taxes would not be available as part of the tax increment financing for the Avondale Square debt service (for which TIF is already way short). I have no reason for thinking the University Place hotel and office building are in trouble (they did go belly up around 19991), but imagine what would happen if newer hotels put them under, and taxes went unpaid. There would be no TIF, at least until foreclosure or bankruptcy were worked through (which takes years) to pay for the new bonds for the renovation. I suppose they think a non-recourse bond will ameliorate this risk.

Eliot Singer