Lengthy discussion leads to a 5 to 1 vote to seek new investors
By Barb Pert Templeton
After a lengthy discussion at a March 17 city council meeting a majority of the Algonac City Council voted to cancel a $15 million purchase agreement for a housing development at the former Algonac Elementary School, now recognized as the Algonac Activity Center.
The motion also directed the city manager to seek other investors/developers for the school property. Council members Jake Skarbek, Cathy Harris, Ed Carter, Wendy Meldrum and Mayor Rocky Gillis voted in favor of the motion while Councilman Michael Bembas opposed the plan. Mayor Pro Tem Dawn Davey was absent from the recent meeting.
The developer, Algonac Shores Limited Divided Housing Association, entered a purchase agreement with the city in 2024 stating if they were awarded tax credits from the state the $15 million housing project would take hold. Now, after their applications have continued to be turned down by the state, city officials wanted to move on and seek new investors. The project would have brought $40,000 in tax revenues to the city every year going forward.
A ribbon cutting ceremony for the new Algonac Activity Center was recently hosted in the city.
“Just because the State of Michigan works slow and because there’s a chance (there’s another opportunity to file for tax credits in October) they won’t get it, we’re willing to say you know what let’s cut $40,000 out of our city budget because we’re frustrated?” Bembas asked.
“I personally think if they (the state) were going to fund it, they would have, it’s already been four rounds,” Skarbek replied.
In a detailed memo in the March 17 meeting packet City Manager Artie Bryson summarized the project – providing background information, an overview of the project and the developers quest for tax credits from the Michigan State Housing Development Authority (MSHDA).
Here are some highlights from those documents:
Summary:
· In Sept. 2024 the city council approved a purchase agreement between the city and the Algonac Shores Limited Dividend Housing Association. The limited partnership was proposed for the Gar Woods development and included 25 senior apartments and 18 family townhouses on the property of the former Algonac Elementary School. A $15 million plus investment for the City of Algonac.
· The plan called for the developer to demolish the administrative and classroom wings of the school and city would retain ownership of the gymnasium for the Algonac Activity Center.
Councilman Michael Bembas spoke at length against ending the agreement for a housing development on the grounds of the old Algonac Elementary School. Councilwoman Wendy Meldrum is pictured here on the far left.
· The developer sought tax credits via applications to the MSHDA – filed April 1, 2024, Oct. 1, 2024, and April 1, 2025, but were not awarded. An additional round of funding was limited to specific locations and Algonac wasn’t included so no application was completed for the Oct. 1, 2025, deadline.
· The original purchase agreement with Algonac Shores was contingent on the developer getting the tax credits so when none were forthcoming a new purchase agreement was approved by members of the city council, extending the funding quest, on March 18, 2025.
More changes:
· The funding criteria for the tax credits has changed for 2026 and MSHDA now requires projects for Community Support Initiatives be awarded through a Request for Proposal (RFP) program via the local units of government. The RFP must demonstrate that the municipality has an ownership interest in the site and must clearly identify the specific project site in order to qualify for points. Projects simply by the developer with no community RFP are not eligible for the points that can prompt the tax credits.
Two choices:
· City administration can prepare a Request for Proposal (RFP) for development of the site and applications for tax credit from the state will be submitted by Oct. 1, 2026.
· The city can decline creating an RFP which will mean the developer will not be eligible for points and will mostly likely not receive enough points for tax credits.
Council weighs-in on issue
Skarbek motioned and Harris supported his motion to decline creating an RFP for 1216 St. Clair Boulevard and direct the city manager to seek other funding or development at the former Algonac Elementary School.
“Are we going to turn down a $15 million investment?” Bembas asked. “Fifteen million dollars is a heck of a lot of money but the whole idea of them purchasing that school – right now we have grants and we’re swimming in money from the state – the whole idea was to keep that community center going so that when our grandkids and great grandkids are grown, we still have one because it would self-fund the community center forever.”
Bembas went on to state that the city just hired somebody to run that community center and the money they would take in every year from the new property tax would more than pay for that employee and all the cost of running the center. He said it would also get rid of the vacant part of the school that will just sit there.
“What was it seven years that school was vacant?” Bembas asked. “I would hate to see that part of that school be vacant for another seven years, we give up $15 million in investment and then we don’t get money every year from property tax.”
Skarbek replied that at the current way MISDA is going this developer is not going to get the loan and MISDA is cracking down very drastically on things. He said it’s been a dead horse every time they’ve applied and now it’s going to cost the city money when they can see that MISDA’s not going to give the developer any funding.
“Why would we continue on with a purchase agreement that has no merit to stand on?” Skarbek said.
“Because if we don’t it stays vacant for another seven years,” Bembas replied.
He said he feels the city would be chasing away a developer which is what’s happened to them in the past. He said he knows the state government works slow and it’s frustrating.
“Read in the tea leaves, I think after November the government in Lansing would be more acceptable to spending money compared to the one, we have now, right or wrong no matter what side of the aisle you’re on,” Bembas said.
“Is there proof of that,” Skarbek asked.
“That’s my opinion about the government, but the truth is we will lose a potential $15 million investment, and we will lose the perpetual funding of that community center,” Bembas said.
See Part Two of this story on this website.
