City adds security, costs to hospital project

MARQUETTE — The Marquette City Commission this week followed through on a plan to create a special assessment district as an added security measure for repayment of the city’s hospital-related bonds.

The special assessment agreement was one of three actions the commission took Monday in three 6-1 votes related to the Duke LifePoint hospital replacement on Baraga Avenue.

For the transportation project, the commission approved $40,000 for a state mandate to monitor water levels on the Whetstone Brook and $6,500 to cover closing costs on a mortgage refinance associated with a previously approved property purchase.

Commissioner Sara Cambensy opposed the three actions — the special assessment agreement because it only protects $20 million of the approximately $30 million the city has or plans to bond.

The city bonded $18 million for the new Municipal Service Center and plans to bond $11-12 million in September for the transportation project.

The Brownfield agreement requires DLP to pay the full amount through tax-increment financing over the next 25 years, but the $20 million ceiling would apply if the hospital were to change ownership to a non-profit, non-taxable entity or if DLP were to go bankrupt, said CFO Gary Simpson.

“We were just putting as many hooks in these agreements as we could,” Simpson said. “Hopefully we never have to use it, but it’s there just in case.”

Cambensy asked if there was “any way this could be renegotiated to pay the full amount back to the city?”

City Attorney Ron Keefe said the $20 million was already established in earlier agreements.

“The negotiations were not last year but the year before, this $20 million limit was in many documents before this one. All this document does is add that extra security and basically says what the post closing development agreement provides and that’s for this special assessment district,” Keefe said.

The post-closing development agreement signed in December 2015 includes the special assessment district, which Simpson said was recommended by the city’s Miller Canfield attorneys.

According to the agreement, the special assessment applies irrevocably to any successors in interest, lessees or purchasers to the property, placing a lien on the property until all costs, interest and charges are paid up to $20 million. It also guards against any lawsuit or action to contest the special assessment, including through the Michigan Tax Tribunal. Special assessment installment payments will be 110 percent of the amount necessary for the city to make its principal and interest payments in that year.

“It does have the layer of security for us,” said Commissioner Mike Plourde, “To make sure we can recover for expenses that we’ve made, and I think it’s a level of security that we need.”

The planned facility, with completion targeted for fall 2018, includes a 265-bed, eight-story hospital, with a three-story medical office building and adjoining parking structure.

The flow gauge the commission approved to monitor water levels on the Whetstone Brook will provide an early warning system in case water crests into part of US-41 near Altamont Street.

City documents say that is not anticipated to happen, since it hasn’t in other large storm events, but it’s required for the construction permit from the state.

The total five-year cost of the project is $39,900, which is eligible for funding under the hospital Brownfield Plan.

Director of Planning and Community Development Dennis Stachewicz said it’s one of those “joys of working with Lansing.”

“It’s just one of those costs,” Stachewicz said. “On top of the $165,000 we spent on an addendum to our consulting contract with DLZ to address this very issue, you know you’re looking at $200,000 right there total, so, not very happy talking about it. I wish I could’ve brought you an alternative, but, sorry.”

Mayor Pro Tem Tom Baldini lamented bureaucratic unfunded mandates from the state.

“After all this construction stuff is done in two to three years, it’ll be interesting to add up all the new mandates that were put on us that we never anticipated coming into all the work projects,” Baldini said. “But it’s needed. We’ll do it.”

In addition to installation, monitoring and maintenance will be performed by the United States Geological Survey, according to meeting materials. The agreement will allow the USGS to acquire a used flow gauge at a greatly reduced cost and provide the maintenance and monitoring until 2022, with renewal every five years.

Cambensy asked if the city is tied to monitoring the stream after 2022.

Stachewicz said yes, because it is the city’s stormwater.

Cambensy said she couldn’t support it.

“It’s been a thorn in my side we chose to bond our full faith and credit for a highway system that has no city jurisdiction, you know, whether or not this would’ve still fallen on us,” Cambensy said.

The commission also approved $6,500, funded through the Brownfield plan, for closing costs on a mortgage refinance associated with a partial mortgage discharge for property the city is purchasing on Fisher Street.

“This is part of a reasonable deal that we’re making with this owner that has been reasonable with us,” said Commissioner Mike Conley.

Mary Wardell can be reached at 906-228-2500, ext. 248. Her email address is mwardell@miningjournal.net.