Fate of Blossom Heath docks in limbo

By: Kristyne E. Demske | St. Clair Shores Sentinel | Published February 1, 2017

 A few docks remain in place at Blossom Heath Harbor while the city debates how to pay for new decks and pilings that it was hoping would be financed through the Tax Increment Finance Authority.

A few docks remain in place at Blossom Heath Harbor while the city debates how to pay for new decks and pilings that it was hoping would be financed through the Tax Increment Finance Authority.

Photo by Kristyne E. Demske

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ST. CLAIR SHORES — The city of St. Clair Shores will have to decide whether it will pay to reconstruct the decks and pilings at Blossom Heath Harbor, as accounting rules have made it so that TIFA cannot help finance the project.

The Tax Increment Finance Authority, or TIFA, had been tapped to help replace the seawall that crumbled at the harbor, which cost more than $600,000. But the city had then also asked TIFA to help replace the docks at the harbor, which were taken down to replace the seawall. A tentative agreement had been reached that would have had TIFA borrowing money from the city’s utility fund to pay for the project, loaning it to the city for the project, and then getting reimbursed for most of the project from fees paid to the city by boaters renting wells at the harbor. 

But the city’s new accounting firm, Yeo & Yeo, told TIFA that the money could not be accounted for as income and disbursements in its books as it had in the past, according to generally accepted accounting principles.

“This money that we borrowed is not really borrowed from the view of government accounting standards, since we borrowed it from the city of St. Clair Shores,” said TIFA Chairman Richard Widgren at the Jan. 19 TIFA meeting. “When we borrow from that fund, then the treatment of that is to treat it as an interfund transfer.

“The problem with that is when we spend the money here, we never get any credit for having spent any money. We do have a liability to pay it back, though ... appearing as though we have actually paid for it twice.”

He said agreeing to such a method would wipe out TIFA’s fund. 

If the money was borrowed from an outside lender, instead, he said it would have been treated as income, allowing TIFA to pay it off over time, but it would have cost the city more in interest. 

According to the audit report for TIFA, the group has $1.1 million in total assets, but $636,000 in liabilities, leaving it approximately $466,000 in the fund. It collected $469,000 in taxes in 2016, more than in 2015, which Widgren attributed to higher property values. 

TIFA did vote to pay three bills for engineering services from Anderson, Eckstein and Westrick for the project, which totaled more than $4,000, to help the city. And it may consider paying to install docks for transient or charter boats, which could help bring customers to Nautical Mile businesses.

Now, City Manager Mike Smith said the city will have to debate the options — which solution it can afford and how to pay for it. Depending on the configuration, the total will run $300,000-$400,000, he said.

“There’s docks there that we used last year, so there’s some there,” he said. The city had about a dozen docks available for rent in 2016. “One of the options is reinstalling the old docks. It’s not a great option. (Or) installing some new ones and not putting in the pedestals for electric and water.”

He said there is not a good chance of having new docks installed by April, but possibly by the end of the 2017 boating season, something could be in place.

“Even if we don’t have it in for the whole season, getting it done is important,” he said.

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