IRONWOOD, MI - Tuesday, September 23, 2008 - At 5:20 PM last night there a Public Hearing was held to introduce Ordinance No. 468, Book 4, an Ordinance to entirely repeal existing Chapter 3 (entitled "Zoning"), including Section 34-1 through 34-495 of the Code of the City of Ironwood, and to amend said code by adopting in place thereof new sections which shall be designated as Chapter 34, Sections 34-1 through 34-506, together with table of contents and all subsections thereof, and to be Chapter 34 (entitled "Zoning"), of the City of Ironwood Code of Ordinances.

A copy of the REVISED CHAPTER 34 "ZONING" is available for review in the City Clerk's office.

REGULAR MEETING  - Following the Public Hearing, the regular City Commission meeting was called to order at 5:30 PM. After Mayor Bruce Noren called the meeting to order, Karen Gullan took roll. All City Commissioners were present: Bob Burchell; Tom Laabs; Mayor Bruce Noren; Gemma Lamb; and Suzanne Toth. The following City Staff were also present for the meeting: City Attorney A. Dennis Cossi; City Manager Scott Erickson; City Clerk Karen Gullan; Community Development Director Dan Petersen; City Assessor/Building Inspector Dennis Hewitt; City Treasurer Julie Frederickson; Projects Director Don Bertels; Ironwood Public Safety Officer Brandon Snyder. Representing the press were: Arvo Toolanen and Lou Bonagura from IronwoodInfo.com; Ralph Ansami from the Ironwood Daily Globe; Steve Frank from the Superior Chronicle; and yours truly.

The following actions were taken via the Consent Agenda:

• Approval of City Commission Minutes - Approval of Minutes of the September 8th Regular City Commission Meeting.
• Approval of Other Minutes - Review and Place on File:
  • Gogebic-Ontonagon Community Action Agency Meeting Minutes of August 21st.
  • Downtown Ironwood Development Authority Meeting Minutes of August 28th.
  • Parks and Recreation Committee Meeting Minutes of August 4th.
• Hazard Mitigation Assistance Grant - Authorize submission of Application for a 2009 Hazard Mitigation Assistance Grant to the Michigan State Police, Emergency Management and allow City Staff to work with WUPPDR to do so.

On the regular agenda, the following issues were discussed and considered:

• Financial Statements - The Commission receive and placed on file from Julie Frederickson, Finance Director:
• Statement of Revenue & Expenditures.
• Monthly Cash Reports.
• According to Frederickson there were nothing particularly notable to report. The Commission had no questions for Julie and unanimously approved to have the reports placed on file.
• Sutherland Street Home - Community Development Director Dan Petersen gave an update on proposed blighted property demolition at 712 Sutherland Street and consider other potential blighted tax sale properties within the City. He informed the Commission that the Blight Committee discussed the possibility of purchasing tax sale properties at the upcoming October auction. He pointed out to the Commission that purchasing the property made much more sense than razing buildings at City expenses that the City didn't own. He said that ownership would give the City options that it currently doesn't have, and it would also help to eliminate speculative purchasing of the properties, which generally only adds to the City's already overwhelming blight problem. The Commission agreed to purchase properties, but decided to hold a special meeting that would allow the Commission to set a "high limit" bid to be placed on the properties. In order to keep the bidding competitive, the Commission agreed that the "high limit" amount would have to be decided in closed session.
• Steve Frank addressed the Commission regarding blighted buildings, and he strongly urged the Commission to consider creating an ordinance that would prevent speculative buying of property in Ironwood. He pointed out that a strict ordinance that required properties to be brought up to code within a strict time-frame would help prevent those who purchase property sight-unseen only to let it go back for taxes three years down the line.
• Ayer Street Property - Petersen also updated the Commission on City-owned property along Ayer Street. He said the next logical step is to have the land re-zoned by the Planning Commission and then plotted out so it can be easily sub-divided. He pointed out that the Parks and Recreation Committee had plans for much of the property and that they would like to keep much of it as greenspace and areas for recreation.
• Downtown Murals - Petersen asked the Commission for permission to allow the Downtown Ironwood Development Authority to act as the entity that receives dollars for the purpose of putting a mural on the News Record Building. The Commission unanimously approved the action.
• Sale of Surplus DPW Equipment - Scott Erickson told the Commission that the Department of Public Works had several pieces of equipment that they wanted to sell. The City Commission unanimously approved the sale, suggesting that the starting bid was equal to the scrap value each piece of equipment.

In addition to these actions, there were two presentations before the Commission: They were:

Boy Scouts of America - Ron & Marlene Zaleski, Wah Da Bong District Boy Scouts of America regarding a Certificate of Appreciation to the City of Ironwood. Ron and Marleen Zaleski presented a Certificate of Appreciation to thank the City for everything they have done to help the Scouts in the past. Mayor Noren accepted the Certificate and made a special point to thank the Zaleski's and the Boy Scouts for all of the good things they do for area youth. 

Concerned Citizens of Ironwood - Roy Ahonen, Manitowish Waters, Wisconsin, was scheduled to address the Commission regarding the proposed Hovey Towering Pine Apartment Complex. Due to an illness, Dave Martin, Ahonen's apartment manager, delivered Mr. Ahonen's address. The following is a verbatim account of Mr. Ahonen's address:

Good evening and thank-you for giving us this time. My name is Roy Ahonen and I represent a group called the Concerned Citizens of Ironwood, many of whom are here this evening. We want to share with you our thoughts concerning the proposed Towering Pines apartment complex, and the reasons we oppose this project.

Is there really a need for 49 additional rental units in our area?

Despite what the alleged market survey states, we have evidence that a glut of vacant rental units, including low-income properties, exists in Gogebic and Iron Counties. All of the rental property owners we contacted report serious vacancy problems over the past two years. Most of these vacancies are MSHDA certified. Additionally, two of the apartment complexes that are regularly running block ads in the Daily Globe are low-income government projects: Mill Trace Apartments, a HUD development, and Wildwood Manor, a MSHDA project. If a market survey was done to determine the need for such a project, why were none of the rental property owners that we canvassed ever contacted, at any time, by anyone, regarding vacancy rates or market conditions?

While we believe that the lack of a proven need should be enough to stop this project, there are other issues that need to be examined. These include the suitability of the proposed site, the effect on real estate values, the costs to Ironwood taxpayers for needed infrastructure, the fairness of the proposed payment in lieu of taxes, and the potential impact on our downtown.

We believe that this project was initially supported by those who had inadequate information. Furthermore, insufficient publicity resulted in many citizens being unaware of "Towering Pines", "Hovey", or the details of this development. "Why not?" "What can it hurt?" "At least it's something!" were all given as justifications for this endeavor. These are not sufficient reasons to support a project of this scope.

Since the PILOT ordinance expired in January, we believe that now is the ideal time for you, the City Commission, to reexamine your support for this project.

Approximately twenty members of the Concerned Citizen's of Ironwood group attended last night's meeting to show support for Mr. Ahonen's efforts. Several of the members voiced their opinions and concerns regarding the project. Several issues concern the group:

Hovey's PILOT Ordinance - According to the PILOT (Payment In Lieu of Taxes) agreement, Hovey Companies, the developer of the proposed Towering Pines project would be tax exempt -- they would not be required to pay conventional real estate taxes on the project. Instead, they would be required to pay 2% of their adjusted gross income directly to the City. The PILOT agreement states that Hovey would be required to pay 2% of their total income AFTER deducting utility expenses. This means, if the apartments aren't rented -- the City collects nothing! Even if they are rented, the MOST Hovey would have to pay is $9,600/year. It would be very unlikely that Hovey would ever have to pay the full $9,600, considering the agreement allows them to first deduct the cost of their utilities.

Considering the Towering Pines project will cost approximately $5 million to construct, the taxes on the the project would be approximately $178,000/year.  The PILOT Ordinance that Hovey was originally given would short-change the City to the tune of over $70,000. Gogebic County would lose out on potential tax revenues of over $22,000. Our schools, which are currently struggling to make ends meet, would gain over $80,000/year if Hovey paid the same taxes as every other apartment complex in the City is required to pay. 

The PILOT ordinance essentially discounts Hovey's water bill, as well. The higher the utility rates are for the Towering Pines, the less Hovey needs to pay to the City in lieu of taxes.

Members of the Concerned Citizens of Ironwood group believe the PILOT agreement is inherently unfair to other landlords, businesses, and taxpayers throughout the City. The PILOT gives Hovey an unfair business advantage over other existing housing projects that are required to pay 100% of their property taxes. The Towering Pines project will require additional infrastructure and City maintenance -- the costs of which will ultimately be passed on to existing water customers and taxpayers throughout the City.

Suitability of the Land - Leroy Johnson has compiled an abundance of evidence that the Ayer Street property, where the proposed Hovey project is scheduled to be constructed, is subsiding land. The area was extensively mined during the range's iron mining boom. Abandoned mine shafts appear on numerous mining charts and maps that Johnson was able to find. Previously, the Gogebic-Ontonagon Action Agency attempted to build on the very same land where Hovey has proposed the Towering Pines, and they backed out of the deal due to the fact that the land was not suitable for building. Wetland issues are also a concern.

Market Survey - From the very first time Tim Hunnicutt, Hovey representative, first addressed the City Commission regarding the Towering Pines project, he has referred to a Market Survey his company had prepared. Several members of the Concerned Citizens of Ironwood group have made repeated requests, through the Freedom of Information Act, to see the Market Study. Neither the City of Ironwood or the Michigan State Housing Development Authority (MSHDA) have ever produced a copy of the Survey, as required by law. The Market Survey, according to Hunnicutt, shows a need for additional housing in Ironwood. According to census records, the City of Ironwood has over 600 vacant homes and a quick canvass of local apartment owners reveals there are over 50 vacant apartments throughout the City.

Sale of City-Owned Property - According to City Ordinance, it is illegal to sell any real property valued over $3,000 without first obtaining an appraisal to determine the market value of the property. When the Chronicle requested a copy of the appraisal on the Hovey property, through the Freedom of Information Act, the City produced a ten year old Market Survey that clearly states "This is not an appraisal!" Even if the document were an appraisal, it would no longer be valid today. Simply put, the Hovey property was NEVER appraised by the City as required by law.

There is also a City Ordinance that states that all surplus property is to be sold through competitive bids. No advertisement was ever made to allow others to bid on the Hovey property.

Hovey's Untruths - The Concerned Citizens of Ironwood group also questions several statements that have been made by Hovey and their representatives regarding the project.

• Market Rate vs. Subsidies - When Tim Hunnicutt, Hovey representative, first proposed the Towering Pines complex to the City Commission, he stated that all 49 apartments would be rented at "market rate" with "no subsidies."  The Commission Minutes, referring to Hunnicutt state, "He further noted he would be able to build a high end market rate development diversifying the rents with no subsidies." (December 20, 2006)
• Preliminary Profile - "Mr. Hunnicutt did a preliminary profile for this community from Hurley, Ironwood, Bessemer, and Wakefield and the Hovey Company would only be absorbing 3% of the market, well below what is targeted leaving more room for other developments." (December 20, 2006) - Oddly, not a single landlord that the Chronicle surveyed was ever contacted by Hovey, or anybody else for that matter, to inquire about vacancy rates.
• Brownfield Development - "The project is in a Brownfield Development Site, close to the high school, industrial park and downtown." (January 08, 2007) - Hovey filed paperwork with MSHDA to shows they would be applying for Brownfield money. At a Town Hall Meeting Pat Merrill denied the fact that Hovey was going after Brownfield funds.
• Demographic Study - "Mayor Noren asked Mr. Hunnicutt to share with the audience his market study of rental properties. Mr. Hunnicutt noted there was little in the City of Ironwood similar to the Towering Pines project and there was a strong market for this type of housing according to the demographic study." (January 08, 2007) - As previously mentioned, no market survey or demographic study was ever produced after repeated requests.
• Local Jobs / Local Contractors - "Commissioner Koivisto questioned if the project would generate any new jobs. Mr. Hunnicutt answered Commissioner Koivisto by stating that a manager and maintenance person are typically hired. Mr. Hunnicutt also indicated that plans would be available for local contractors to bid." (January 08, 2007) - A complete set of plans is available for review at the Memorial Building. There are no plans to hire local contractors for the Hovey project. Most Hovey projects hire ONE person to act as manager and to do maintenance.
• Utility Connections - "Commissioner Koivisto questioned if the City of Ironwood would be required to pay for any utility extension. Mr. Hunnicutt noted that the project will fund any necessary utility extensions. City Manager Erickson noted the utilities would be coming off of Washington and Ayer Street." (January 08, 2007) - Paperwork submitted to MSHDA by Hovey indicates that the City of Ironwood will pay for all utility extensions.
• 10% PILOT Is Typical - "Scott Sergelia (Sturzl), of 511 Bundy Street questioned payment in lieu of taxes of 2%. The City can receive more than 2%, but utilities need to be upgraded. He noted every dollar goes into that project and it really depends on the community."  (January 08, 2007) - According to MSHDA, a 10% PILOT is typical for most of the projects throughout the State.
• Absorbing the Market - "Mark Silver, from Silver Properties questioned who did the market analysis. Mr. Hunnicutt informed him they work with a market analyst by the name of Woods Consulting and the market data showed they would be capturing only 3% of the market divisions leaving 97% for others to build their apartment complexes. The Market Analyst shopped for properties in Wakefield, Bessemer, Ironwood, and Hurley." (January 08, 2007) - The Chronicle has unearthed evidence that shows that no survey was ever completed prior to January 08, 2007. Furthermore, notice the Market Analyst "shopped for properties" yet no landlords surveyed by the Chronicle were ever approached.
• Purchase of Adjacent Land - Shortly after Hovey announced their plans to build the Towering Pines Complex on Ayer Street, Bob Schonberg entered into an agreement to purchase the land that abuts the Hovey property to the east. According to City Commission Meeting minutes, "City Attorney Cossi requested paragraph 12 be removed and the words purchased in 'as is condition' and a revisionary clause be inserted. Bob Schonberg from FarmHaus, LLC addressed the City Commission noted their vision is to construct 8 to 12 family homes, townhouses or single family homes. He noted they would be helping the City with additional taxes and it is being done with private money." (May 14, 2007) - Schonberg originally requested that some kind of "protection clause" be added to his option to purchase the property in case it is contaminated. According to audio records of the May 14, 2007 meeting, Schonberg told the Commission that he had the land checked out, and there was no contamination. In other words, Hovey's 8 acres ARE contaminated and qualify for Brownfield funding, but Schonbergs adjacent 8 acres show no sign of contamination. Odd!

MANAGER'S REPORT - City Manager Scott Erickson gave his manager's report to the City Commission. His report included the following items:

• Alfred Wright Boulevard - The Alfred Wright Boulevard reconstruction project is nearly completed. According to Erickson, "there's just a little bit of 'punchlist' work out there!" 
• Greenbush Project - According to Erickson, the Greenbush Project is making good progress. The underground work is coming along nicely. He told the Commission the contractor was working on the sanitary sewer, the storm sewer and the water lines. He indicated that the underground work should be completed this week. He also stated that the reconstruction work has also begun, and he believes the project will be completed by the mid-October goal set by the contractor. The contractor for the Greenbush project is Ross Peterson Construction.
• Fire Hydrant Project - Twenty of the twenty-five fire hydrants scheduled to be replaced are completed, according to Erickson. Erickson indicated that the street cuts and finish work on the hydrants will be completed within the next two weeks.
• Comprehensive Deer Hunt - The Comprehensive Deer Hunt is in its third season. A special meeting will be held at 6:00 PM, on Wednesday, September 24, 2008, in the City Commission Chambers. The purpose of the meeting to go over the rules and regulations of the hunt with those who are participating in the event. Erickson noted that DNR and City officials will be on-hand Wednesday to answer any questions and to address any concerns. Erickson told the Commission that three hunters will be selected this year for a buck tag. For every doe a hunter gets, he gets to put his name in a hat and gets one chance to draw a buck tag.
• Joint Meeting of City Boards, Authorities, Committees & Commissions (BACC)- Community Development Director Dan Petersen has been working to organize a special meeting of all the City boards, authorities, committees and commissons so that they can share notes and avoid duplication of services and efforts. A 5:30 PM, Tuesday, October 21, 2008 meeting is scheduled. The meeting will be held in the Womens' Club Room. 
• MDOT's US-2 Repairs - MDOT, with the help of Angelo Lupino Construction, is finishing up the catch basin repairs along Cloverland Drive. Erickson told the Commission that pavement work, in addition to the catch basin repairs, was going to be done at the corner of Cloverland Drive and Business Route Highway 2 (Douglas Boulevard). The work will be done at night, according to Erickson, to prevent traffic problems during the day.
• Lowell Street Drainage Issues - Erickson told the Commission that changes have been made to the curbs in the area to prevent flooding. He said the City will keep a close eye on the area to make sure the problem has been alleviated.
• Skateboard Park - Bids for skate park equipment will be going out. The set bid date, according to Erickson, is October 16, 2008. The bids will then be reviewed and Erickson explained that he would be gathering the area youth to get their input on the equipment proposed. Erickson indicated that the concrete slab work has been delayed due to family issues for both Moyle and Ruotsala. Both contractors have indicated that they would like to have the project completed by the end of October, however.

Prior to the adjournment of the meeting, Tom Laabs expressed concern about the traffic on Cloverland Drive near Lake Road. He said congested traffic is suddenly becoming a problem along that intersection. City Manager Erickson said he would check into the situation and see if it is a result of construction in the area, or if it is something that can be easily corrected.

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