By Benjamin Gohs
How the proposed $1.445 million Beaver Island multi-use garage facility will be paid for—and who will own it—remained unanswered following a Monday Nov. 25 special meeting.
No decisions on this issue were made during the Charlevoix County Board of Commissioners joint meeting with the Charlevoix County Road Commission to discuss the costs of building and maintaining the facility which would be used by the county sheriff, transit and road commission personnel on the island.
“Until we get a figure there, and us commissioners say ‘yes that’s enough’ or ‘that isn’t enough’ we can’t even talk about buying the property,” said Charlevoix County Board of Commissioners Chairman Joel Evans (R-District 4) after he asked if the road commission would be paying an additional amount on top of its rent and upkeep toward potential partial ownership of the building.
The road commission’s proposal to pay a relatively low lease-to-own payment over 20 years was met with some skepticism.
Charlevoix County Commissioner Christ Christensen (R-District 2) had concerns with the road commission’s proposal to pay $500 per month. At that rate, the county would recoup far less than half of what could be a $1.5 million project.
“The total cost to the county, of the estimated costs here, I’ve got figured out here—over 30 years—to be roughly $427,410.65 based on your estimates,” Christensen said…. “I’m just doing the best I can with the information provided to me 15 minutes ago.”
He added, “I find it ironic that you guys had this done—what’d you say, January? And we’re just getting it now … we’ve been asking how much this building was going to be used, for months.”
Christensen said the $427,410.65 is a “far cry” from the road commission’s proposal.
Christensen said the road commission’s rental payment should be closer to $1,187.25 per month.
Road commission officials, headed by Northwest Design Group engineer Howard Haselschwardt argued that their plan to purchase the land for the building at nearly $57,700, in addition to $157,000 in cash upfront drops the estimated build price at $1,346,000.
Christensen said he expected the road commission to fund $750,000 which, at the preliminary construction cost estimate, would be nearly half of the final price tag.
While the road commission would occupy 42.46 percent of the multi-use garage facility, the road commission had proposed that the county pay for the bulk of the construction costs, though the road commission would pay to heat the entire facility.
“If they were to build a building of their own we wouldn’t be paying for the heating costs, is that correct? Right? We’re not paying for their heating costs now, right?” said Christensen. “So my point is if that annual cost is $8,800, then 42.46 percent of it they’re going to have to pay anyway with or without us.”
Road commission officials said if the road commission is going to house two of the county’s agencies—the transit and the sheriff office—then the county should share the cost with the road commission.
“If this was all under one house and this bill was ours anyway then I would agree with you,” Christensen said. “But this is not under one house, this is not our bill, we’re not paying their bill, we’re not paying the transit’s bill—but we are paying all this money upfront.”
Christensen asked the road commission officials if their board had considered securing a bond to help pay for their share of the island garage facility.
“We can’t afford it. We’re barely keeping our head above water right now, Chris,” said Charlevoix County Road Commission Manager Pat Harmon…. “I made this known clean upfront when we started this, that we did not have money to go into debt. I made that clear.”
Harmon said he did investigate some options, including a USDA Rural Development loan but that it would have charged four percent interest.
Christensen said it would seem logical for the road commission to approach the voters concerning a possible millage to fund the construction and upkeep of the building.
Road commission officials said their discussions with members of the public revealed no support for such an endeavor.
“That’s one of the reasons the first road millage failed: I had a lot of feedback here that (that) word that we used said ‘maintenance’ in there; there was people out there that thought we were going to buy trucks with it, that it wasn’t going to go down on the roads,” Harmon said. “That was my feedback from a lot of folks after that first election why they voted no.”
Christensen asked how long before the road commission would need to update its facilities in Boyne City and in Ironton, and whether the road commission had a capital improvement plan in place to deal with such eventualities.
Harmon said there is a little over $106,000 in the road commission’s building and grounds fund.
Charlevoix County Board of Commissioners legal counsel Bryan Graham addressed the legalities of this type of an agreement.
“Generally speaking, a municipality cannot give away or donate its funds,” Graham said. “But you have great latitude in defining what constitutes fair market value.”
Graham said the county can subsidize the balance of the rent from the road commission, if it so chose.
Graham said, if you assumed a going rate of roughly $1-per-square-foot of commercial rental space, the road commission’s rent on its portion of the proposed garage facility—nearly 4,445-square-feet—would be $4,445 per month.
Graham said it would be a policy choice to decide how much, if any, of a subsidy the county would give to the road commission to help offset its costs.
The road commission would be paying nearly $1,000 per month for heat, snow removal, and other maintenance costs.
Harmon said there are numerous tasks the road commission performs for other county agencies that he never submits a bill for.
Evans told Harmon that he wants to make this work but added, “If you guys cannot afford anything we don’t want to build a building and you come say ‘I don’t have any money. I can’t pay that rent.’ We can’t do that, either.”
Charlevoix County Commissioner Ron Reinhardt (R-District 3) said his whole point was that there seems to be a level of apathy from the center of the county when it comes time to fund improvements on Beaver Island or the far eastern portion of the county.
“Anytime you can build one building to house three entities, it’s cheaper,” Reinhardt said.
Christensen said he didn’t come to the meeting to talk anyone out of building the garage facility. He also recalculated the proposed costs for the road commission based on the expenses it would be funding for the entire building.
According to Christensen, a 30-year loan at one percent interest on $750,000 would come to $2,412.30 per month. If you deduct all the in-kind contributions the road commission would make toward monthly expenses, the road commission’s rent would be $1,225.05 per month.
“If the 27-years is the break even point anyway, I think we’re right in the same ballpark,” Christensen said.
Reinhardt asked Charlevoix County Clerk and Fiscal Officer Cherie Browe if the county had obligations for every cent in the general fund.
Browe said there was between $5 million and $6 million in funds that are not currently intended for specific projects.
“You’re asking the taxpayers to pay property taxes to build roads. Now you want them to take general fund money with no obligation on the road commission’s part?” she said. “You want to take more money out of the general fund and just say ‘No. You can pay the utilities but we’re not going to obligate you to make a rent payment on top of that.’ Is that what I’m hearing?”
Browe added, “Are you going to explain that to the taxpayers?”
Browe said she researched the issue and could not find any county that built a new facility of this scope without utilizing a millage or a bond.
Road commission officials balked at the $1,225.05 rental payment to which Christensen offered a 40-year plan which would make their rent $706 per month.
The meeting was adjourned without any decisions being made. The matter was further addressed the following day during the Charlevoix County Board’s Nov. 26 meeting.
• March 2012—The Charlevoix County Road Commission sought $720,000 in matching funds from Charlevoix County so that it could apply for a $1.8 million Transportation Investment Generating Economic Recovery (TIGER) grant to pay for a multi-use garage facility estimated to be 10,000-square-feet.
Commissioner Christensen then stated that he would not support paying for the full cost of the facility should the grant be denied.
• June 22, 2012—The U.S. Department of Transportation denied Charlevoix County’s application for a portion of the $500 million in nationwide TIGER grants.
• Between June 22 and July 24, 2012—Charlevoix County Road Commission Manager Pat Harmon had discussions with several Charlevoix County Commissioners wherein he was told to continue moving forward with the project.
• July 18, 2012—A letter from NDG to Harmon indicates that the proposed project of nearly 10,000-square-feet would cost approximately $1.4 million. NDG’s engineering fees were estimated to cost $50,437.
• June 27, 2012—Minutes from the Charlevoix County Board of Commissioner’s meeting reveal that Gillespie noted that the TIGER grant had been denied but that the county could build the facility using the $700,000 in matching funds.
• Oct. 24, 2012—During a county board meeting, Christensen asked NDG for an estimate of the cost of the proposed project.
NDG official Howard Haselschwardt told Christensen the project was not far enough along in the process for him to give a confident figure. Christensen protested the proposed size of the facility.
• Jan. 9, 2013—Board civil counsel Bryan Graham was concerned as to why the board was becoming involved with a project that was obligated by the road commission since they are separate entities.
Reinhardt and Gillespie supported the project and said it should be leased to the road commission.
Christensen asked where the funding was coming from and stated that he did not want the county to be the “sole bearer” of the proposed building’s costs.
Gillespie said he would look into potential grant money opportunities from the Grand Traverse Band of Ottawa and Chippewa Indians.
The board voted to support further investigation of the project.
• Feb. 6, 2013—The county board voted 4-2 to build a facility and to retain ownership of it; the board also voted 4-2 to use NDG’s engineering with the understanding that they may alter portions of it for cost or need.