The City Council of Lansing decided during its Jan. 28 meeting to sell the eastern terminal of the Ottawa Street Power Station to the Accident Fund Insurance Company of America and the Christman Company.
The companies will renovate the building, then consolidate Accident Fund’s offices there, bringing an estimated 500 jobs into the city.
Mayor Virg Bernero opened the meeting by saying that the City Council was “poised to make history” that night.
Bernero said that because of new businesses moving into the City of Lansing, the economic future of the city is bright. He said new businesses are moving into buildings that have been vacant for some time, bringing jobs and tax money into the city.
“Just like the rising tide lifts the boat,” said Bernero, “the rising tide of investment will lift our city.”
The Ottawa Street Power Station has been unused for the past decade. After the Erickson Power Station was built, less efficient stations like Ottawa Street were decommissioned.
To help defray the cost of demolition, relocating machinery housed in the power plant building that currently air conditions city and state government buildings and bringing the building up to code, the council is offering to waive property taxes on the building for thirty years.
In addition to the renovation, the city plans to build a riverside park through the Ottawa Street project. The council also hopes that the development will lead to new jobs and new housing projects.
The Christman Company plans to buy the old power plant from the city. They will handle the redevelopment of the power plant, then lease the building out to Accident Fund. Christman will give Accident Fund the option to buy the building at the completion of the project.
According to First Ward Councilmember Eric Hewitt, the council rezoned the property as a renaissance zone, meaning that the property is tax-free for thirty years. The renaissance zone designation will help the Christman Company cover expenses that include bringing the property up to state and federal standards.
“There are many tax incentives that can be used by the different governmental bodies,” said Hewitt. “In this case, the incentives that will affect the city are the property tax abatements to the developer.”
Hewitt said that the tax abatements saves the companies about $187,000 dollars a year, which over a thirty-year period will add up to about $5.6 million.
The city council estimates that the project will average more than $300,000 in income taxes per year. Over the 30-year period, the city could gain over $9 million.
Council members also hope that opening up space in the office buildings that Accident Fund is leaving will help bring new businesses into Lansing and keep other businesses from leaving the city.
Residents of Lansing at the meeting passionately opposed the proposed tax incentive. Members of the community said it is unfair for the government to give companies a break from property taxes when residents have to pay and that the company should move outside of the city instead of getting incentives to occupy the Ottawa Street location. One person in attendance even declared that the incentives were “outrageous.”
John Pollard, a citizen of Lansing, feels that the city needs to reconsider the whole program because of the cost in public aid. Pollard said that on October 8, the city council said that $26 million in public aid was going to the $182 million project, but two days later the council said that $52 million from both state and local government was going to assist the project.
City council member Sandy Allen responded that, “when companies leave, jobs leave with them.”
Robert Trezise Jr., President and CEO of the Economic Development Corporation of the City of Lansing, has been working on the Ottawa Street project for about two years. Trezise said he wished members of the community would try to understand the reasoning behind the agreement.
He said that the City of Lansing’s property tax is three times more than any other township in the greater Lansing area. He also mentioned that without the incentives, Accident Fund would have passed on the offer, leaving the building vacant.
“This will bring new money into the city,” said Trezise, “Without the incentives, they would have lost the company. I’m fighting to keep these companies in the city. Are [the citizens] saying that we should have zero employees?”