CADILLAC —More money, more problems.
Cadillac's residents have grown wealthier in recent years, which created a snag in funding the city's part of the Cadillac Lofts project.
Wealthier residents mean the city needs to take an extra step in applying for a Community Development Block Grant.
The snag forced city leaders to come up with a controversial but creative solution.
City council approved the framework for that solution during Monday's city council meeting, but some questions have remained.
The Cadillac Lofts project is a public-private partnership. The city won't own the building but does (or will soon) own the streets around it.
The Cadillac Lofts project will need some public infrastructure work, like on-street parking, sidewalks, and road improvements for the project as a whole to work (the building is the responsibility of Michigan Community Capital, a non-profit organization, and will provide housing and retail space).
The city pays for public infrastructure generally. But to pay for these improvements specifically, all at once instead of during routine maintenance, the city planned to apply for and win a Community Development Block Grant (CDBG).
The grants are a federal program administered by the state.
The city received one CDBG for the start of the Cadillac Lofts project. Those funds paid for demolition work.
When it came time to apply for the CDBG funds to re-work street parking, the city was told it is not on a list of communities where "at least 51% of the residents are low-to-moderate income persons."
But there's a work-around. Communities that think they should qualify as low-to-moderate income can pay for a survey that proves it. The surveys have to be done by qualifying institutions (universities, usually).
The city was in the process of doing that when COVID-19 shut down the universities and made door-to-door surveys impossible.
To keep the Lofts project on track, city leaders proposed changing the Cadillac Lofts Brownfield Plan.
The change means that the city will have the option of using the Streets Fund to pay for the public infrastructure improvements but will get reimbursed for those improvements using a tax capture mechanism.
On Monday, city council agreed to amend the Cadillac Lofts brownfield plan. However, two council members voted no; Bryan Elenbaas didn't want the city's taxpayers to be "landlords" while Steve King objected to spending this kind of money during a time of economic uncertainty.
However, the amendment passed by city council does not mean the city has committed to spending money on the Cadillac Lofts project.
The amendment is a tool that would enable the city to recoup costs for public infrastructure around the Cadillac Lofts—if the city decides to spend the money.
City council would first have to send the project out for bid and then award a bid before spending money.
City council members and Cadillac residents have questioned why the city got one CDBG grant but not another.
City Manager Marcus Peccia said that Cadillac used to be on the list of low-to-moderate income communities but it's been a number of years since the city was on the list.
The city did not have to be on the list to get the first CDB grant related to the Cadillac Lofts project.
That's because those funds—nearly $ 1 million—were used to address blight, the Michigan Economic Development Corporation told the Cadillac News on Wednesday.
"Blight" is one of three national priorities of the federal CDBG program. Low-income communities and urgent need are the other national priorities.
The Cadillac Lofts project qualified under the "blight" standard for demolition funding but would need to be re-certified as a low-income community to qualify for a CDBG grant for the public infrastructure piece.
City officials told city council that the city is still hoping to apply for and receive CDBG funds for public infrastructure around the Cadillac Lofts.
The brownfield plan amendment that city council approve this week, however, provides for a faster source of funding that could allow for the first Lofts building to open this fall.
Council member King asked why the city was doing this for one developer when other business owners who would like to see streets improved in front of their businesses have to wait for the project to come up through the city's capital improvement plan.
In an interview with the Cadillac News, the city manager says there's no one-size-fits all approach to the intersection of private development and public infrastructure.
Factors such as location, purpose and site history can impact what kinds of state and federal funds are available.
Peccia urged developers and business owners to reach out to the city.
"This type of project is different from the perspective that it's the largest that we've seen of its type," he noted about the Cadillac Lofts. "However, the approach being made, is no different than the type of approach that we would make for any other similar kind of development. We were looking at every available resource possible to help the developer, should they need the help."