Does Harbor Springs have a revenue or expenditure problem?

## **The Brief ** The city has provided numerous reasons for the necessity of changing the zoning plan. Over the past few months, the reasons have changed, making it more difficult to figure out exactly why now. Reasons given to date include:

- The zoning needed to be updated to match the master plan. (Yet, it doesn’t seem to match the plan nor follow the survey data from residents that was gathered to develop the master plan.)

- The city needs more affordable housing. (Yet, according to Planning Commision Chairman Bill Mulder, “The train left the station.”)

- The changes in zoning were the final steps to become a Redevelopment Ready Community (RRC) and promote development within Harbor Springs. (Stay tuned for the next substack).

- The main change, the city says, is the layout and the format.

One reason that was never mentioned was the city has a budget problem. However, it appears this may be another reason for such a drastic change.

Share

## **Background ** In the fall of 2021, the city put a Headlee Amendment on the ballot. A Headlee Amendment is a rule in Michigan's state constitution that controls how much local governments can increase taxes. It stops local governments from raising taxes beyond a certain limit without voter approval.

At a May 2021 City Council meeting, City Manager (CM) Victor Sinadinoski explained, “The Headlee Amendment drives down the City’s taxing capacity when property values go up…We have gotten to a point where our tax rate continues to decrease and we cannot raise even 0.1 mills if we needed or wanted to; this is leading to decreased revenue for the City, while basic operating costs are increasing.” He went on to say that the amendment limits the City’s ability to pay for major improvements or renovations to parks, buildings, and grounds.

The voters rejected the amendment at the ballot and the Headlee failed 67% to 33%. Since the city was unable to raise property taxes, the concern was that they may have to cut operating expenses. As a result, the city was faced with finding alternative sources of revenue.

At the next City Council meeting on November 15, 2021, City Manager Sinandowski gave a presentation entitled, “Revenue Options for the City of Harbor Springs.” In the presentation, the CM concludes that the city has a revenue problem, not an expenditure problem. As a result, several options to increase revenue were discussed, such as doing another Headlee, collecting city income tax, expanding the tax base, developing a rental license program, selling public land, instituting paid parking in Downtown, and pursuing grants and donations. City Council ultimately decided to pursue paid parking while researching additional millage opportunities.

The city faced considerable opposition from the community regarding the implementation of paid parking, leading to the plan being scrapped. However, City Councilwoman Nancy Rondel indicated that the proposal could be revisited in the future.

According to the minutes from the January 17, 2022, City Council meeting, where revenue issues were discussed again, it was noted, "The City needs to find a way to raise and diversify revenues in the General Fund or face serious cuts in the future."

During a follow-up meeting on February 7, 2022, then Councilman John Lio emphasized that without identifying another revenue stream, there "WILL be budget cuts."

The city then pursued another Headlee in 2022, which was again rejected by the voters. That left Plan B - overhauling zoning to increase the tax base.

## **What does this have to do with the zoning changes? ** To increase revenue, one proposed strategy was to expand the tax base. By incorporating more people or properties within the city limits, the city aimed to increase the number of taxable entities. This approach is akin to gaining new customers, thereby boosting overall revenue.

They could only do this by either adding land or increasing density. The city proposed annexing surrounding township land to city limits. According to the presentation, Harbor Point and Wequetonsing made the most sense given their proximity to the city. Additionally, given the high values of these properties, the city could significantly increase the amount of taxes they brought in. Ultimately, due to the complex process of annexation, this was not pursued.

That left increasing density and the number of people living within the city by relaxing the zoning regulations. Specifically, as mentioned in the 2022 presentation, by creating smaller lots, reducing setbacks, and increasing building structures (ie taller and wider buildings). All these ideas were subsequently included in the current zoning changes:

- Minimum lot width reduced from 65 feet to 52 feet.

- Setbacks:

- Front: 25ft to 15ft

- Side: 15ft to 8ft

- Rear: 50ft to 30ft

- Three story buildings are allowed in the Central Business District.

## **Why a referendum? ** As the slide concludes, “The big question to ask: Will allowing more density and more buildable area/volume fit with the Master Plan and the residents’ vision for Harbor Springs?” The answer is no.

The summer crowd has arrived, and Harbor Springs is experiencing its peak density for the year. The congestion is noticeable. The influx of people has led to increased traffic and longer lines. There are certainly more than 2.6 residents per acre as Planning Commission Chairman Bill Mulder previously suggested. During the February 2022 meeting noted above, former City Council member John Lio even indicated the city is entirely too congested during the summer. While this isn't inherently negative, it raises the question: Is this the year-round reality we want?

Our vision for Harbor Springs mirrors the Master Plan - preserve the charm and character of the city. This has drawn generations of families and visitors for centuries, seeking respite by Lake Michigan. Part of the charm is drawn from open green spaces, views of the lake, and historical homes and buildings. This is worth preserving and many residents agree with this sentiment (as documented in many surveys completed by the city).

Yet, the city has deliberately decided to ignore hundreds of residents and property owners who are invested in the well-being of Harbor Springs. The administration feels as though 5 members of City Council know better than the rest of the community. We disagree.

Such a momentous change should be decided by the voters, ensuring that the decision reflects the will of the entire community rather than a select few on the City Council or Planning Commission. By holding a referendum, the City can guarantee transparency and fairness in the process, allowing everyone to have a voice in determining the city's future direction. This approach upholds the democratic principles that the City Council and City Manager professes to support. However, could the City Council's hesitance stem from their previous defeats with two Headlee Amendments? If the plan genuinely has the strong community support that the City Council claims, then what is there to worry about?

## **Final Thoughts** If the city is facing budget issues and this motivated the zoning changes, they need to be honest with the voters. Additionally, the presentation cited above states that the city has a revenue problem, not an expenditure problem. However, questions arise: Why spend an extra $50,000 on the Boardwalk to award the contract to sitting City Council member John Cupps? Why spend an extra $100,000 on a new substation? Why solicit donations for an $800,000 bike path? Perhaps it is an expenditure problem as well.

Does the city have a revenue or expenditure problem?

## **Take Action ** **If you care about Harbor Springs, then you need to take the following action this week:**

- **If you are a Harbor Springs voter, sign the referendum so you have the right to vote on zoning in the fall election. **

- **Volunteers will be at the west end of the Farmers Market every Wednesday and Saturday morning this week. **

- **Have the petition come to you at your convenience. Send on your request to: signthereferendum@gmail.com **

- **Donate to We Love Harbor Springs to fund the fall campaign to win the open Mayor and two City council seats. **

- **If you are interested, attend the city meetings.**

- **Attend the kickoff party at Colonial Inn on July 10th at 5 PM-7 PM. Hors d'oeuvres, drinks and entertainment.**

## For more information, join us at

### WeLoveHarborSprings.org

## Or

### FaceBook.com/WLHS.org

Clarification: We were not referring to the Bluff Gardens Business or the land it sits on in the last edition. Rather, the property surrounding it. Readers can alert WLHS to any errors by emailing weloveharborsprings@gmail.com.