If You Want To Know More About One of Monday’s “Secret” Closed Sessions, Read On

I think the words “secret” and “government” do not belong in the same sentence. It’s anathema to our founding principles. Government officials are rarely required to keep secrets from the public, though it’s a good idea where national security is concerned. And I think we can all agree the identity of undercover law enforcement officials should be protected for safety reasons. But when local governments like Clarkston keep things away from the public, it’s not because of any weighty safety or security concerns. More often than not, it’s because they are exercising an option to keep things secret, not because they are required to keep things secret.

And that’s what’s happening at the upcoming June 10^th city council meeting. At the May 28, 2024, city council meeting, city manager Jonathan Smith asked the city attorney Tom Ryan if he wanted to talk about having a closed session to discuss the city’s Depot Park user fee giveaways, and Ryan said he was preparing a privileged memorandum for discussion that would authorize a closed session at the June 10^th city council meeting. And with the publication of the June 10th agenda late last week, we’ve learned the city council has decided to have two closed sessions at Monday’s city council meeting – one involving Depot Park user fees and one involving the massive overpayments our city employees have made over the years to Independence Township for police and fire services.

I’m not suggesting that the city council’s, Smith’s, or Ryan’s desire to meet in a secret closed session is unlawful. It’s not. The Open Meetings Act allows the city council the option to go into closed session to discuss a written opinion from its attorney. But exercising this option is a voluntary act, not a requirement. Whenever closed sessions occur, the city council is expressly approving a discussion that excludes the people they serve. But since I have information regarding what the closed session for Depot Park user fees is about, I’ll share it with you because, as you know, I hate Clarkston secrets.

One might ask – what exactly is so secret about Depot Park fee giveaways? After all, the city council and city manager have been handing this benefit out like candy to a privileged few for years, and it almost always happens right in front of your face during public meetings. They’ve claimed they only do it for 501(c)(3) tax-exempt organizations, but that’s not true. In case you don’t know, the 501(c)(3) designation refers to a section of federal law (the full citation is 26 USC 501(c)(3). Section 501 is titled “Exemption from tax on corporations, certain trusts, etc.”). This section of the tax code allows certain types of organizations to avoid paying the taxes that everyone else has to pay, and in many cases, these same organizations can parlay their federal 501(c)(3) designation to avoid state taxes. Michigan excuses 501(c)(3) organizations from paying sales and use taxes. Nonprofits are also exempt from Michigan property taxes. Granting tax favors to certain organizations is a public policy decision that significantly benefits these organizations, and I’m not going to debate the wisdom of that. I’m simply pointing out that for better or worse, every tax dollar a 501(c)(3) tax-exempt organization doesn’t pay, you and I are required to make up for it.

City officials apparently perceive all 501(c)(3) tax-exempt organizations as inherently good. (I think that’s mostly true, though I would point out The Satanic Temple applied for and received a 501(c)(3) tax-exempt status designation – and I think we can all agree they are probably the opposite of good.) City officials also apparently believe these “good” 501(c)(3) tax-exempt organizations are so special that taxpayers should give them an extra gift in the form of Depot Park user fee waivers. However, the city has been inconsistent in its generosity, because there are examples of the city giving away the taxpayers’ right to receive a Depot Park user fee to an organization that doesn’t have a 501(c)(3) designation (The Milo Project) as well as providing a fee waiver on many occasions for a private company that isn’t even located in the City of the Village of Clarkston (Mueva Fitness).

Depot Park rentals are handled in a sloppy way, and as explained by our previous clerk, reserving any part of Depot Park for a two-hour period is done by filling out the form for “gazebo rental” on the city’s website (even if you don’t want to rent the gazebo). The city distinguishes between residents and non-residents by charging $200 and $250 for two hours of use, respectively, unless the organization is the Clarkston Community Historical Society (CCHS), since the city waived a $200 user fee for them – even though they are located in Independence Township and are given free rein to use the whole park for an entire weekend (part of Friday, all of Saturday and Sunday, and possibly part of Monday when set up and tear down time is considered) for its annual private Art in the Village fundraiser.

The city manager has told us these “special” organizations also benefit from the cost of city employees cleaning up after them at taxpayer expense, likely at an overtime rate (but without any express city council approval). On the other hand, the common folk are required to clean up after themselves at their own expense (Rule #7). The “special” organizations have been permitted to “donate” money toward the partial cost of city employee wages to clean up, but for some inexplicable reason, aren’t required to reimburse taxpayers for all of it. I’m pretty sure the “special” organizations also get to use the city’s restroom for “free” (with supplies and cleanup paid for by taxpayers), while the common folk have to pay a $25 deposit for the privilege of using the restroom key (Rule #6). The common folk also have to pay their Depot Park user fees in advance to secure the two-hour time block, but that’s not necessarily the case for the “special” organizations.

A foundational question is whether the city has the legal right to charge anyone a fee to use Depot Park. As city attorney Ryan should know, Michigan law requires that user fees have a reasonable relationship to the cost of providing the service. More specifically, all user fees must serve a regulatory purpose rather than a revenue-raising purpose; be proportionate to the necessary cost of the service and correspond to any benefit provided by the service; and reflect the actual cost of the service provided. (That language is taken from Bolt v Lansing, a Michigan Supreme Court case.) In other words, the city can’t reach into its backside and pull out some amount that it thinks would be a “good” or “fair” user fee. Instead, it’s supposed to try to approximate the actual cost of the service and charge a rate that reasonably reflects that. This means that the $200 (or $250) Depot Park user fee needs to reflect what the actual cost of two hours of Depot Park use reasonably is – which could include the pro rata cost of two hours of lawn care, gazebo repair, and electricity use, for example.

Despite this legal requirement, Clarkston was unable to provide me with any fee studies for fees it charges, including Depot Park user fees. Zoning Board of Appeals (ZBA) fees were established by the city council (I was provided with a copy of the August 8, 2011, minutes to support this). A $25 event administration fee and a $25/hour charge for Department of Public Works (DPW) employee labor was also established by council (I was provided with May 11, 2015, minutes to support this). Please note the proposed straight-time rates for our two DPW workers – that will undoubtedly be approved on June 10, 2024, at the 2024-2025 budget adoption – are $26.50 and $18.02, which means their time-and-one-half overtime rate for work over 40 hours per week would exceed $25.00 per hour at $39.75 and $27.03, respectively. Carlisle/Wortman charged us $500 for an August 26, 2023, “fee study” to support the city’s permit charges, but this fee study apparently consisted of calling around to find out what other public bodies charge (which is similar to the way the city established the ZBA fees). The city was unable to give me any record supporting the $200 resident and $250 nonresident Depot Park user fees (not even a set of city council minutes). In other words, the city was unable to produce any document to prove that any of its user fees meet the Bolt v Lansing requirements that all fees serve a regulatory purpose rather than a revenue-raising purpose; are proportionate to the necessary cost of the service and correspond to any benefit provided by the service; and reflect the actual cost of the service provided.

As an initial matter, the city council members don’t own the effing park; we do, and we have to pay to maintain it. Even assuming the city had a legal basis for charging a Depot Park user fee – and they clearly don’t because they lack the supporting fee studies – the city council isn’t authorized to make what is in effect a charitable donation any organization, whether they are 501(c)(3) tax-exempt organization or a private business, no matter what these organizations do for the community. Clarkston voters could have authorized a charter provision that would allow the city council to make limited charitable donations to organizations providing “civic, artistic, and cultural activities, including but not limited to music, theater, dance, visual arts, literature and letters, architecture, architectural landscaping, and allied arts and crafts, to the general public” – but we did not do so. Even if our charter contained this provision, the city council would not be permitted shirk its responsibilities and make a blanket determination that certain organizations are entitled to taxpayer resources based on their status. An evaluation of each individual request would be required.

So where does the city council find the authority to give away the use of our public property to private organizations? The same place they found the authority to establish any of the city’s user fees – by reaching into their proverbial backsides and deciding they can.

Even worse, the city manager’s involvement with the CCHS presents an unwaivable conflict the city council and city attorney have chosen to ignore. In addition to asking for a Depot Park user fee waiver the city can’t show it is authorized to charge to anyone, the city manager is the president and treasurer of the CCHS and sits on both sides of a financial transaction with the city, as follows:

1. 1. The city manager budgets DPW wages for the CCHS’s private Art in the Village event, and the city council always rubber stamps the budget request.
   2. At the time the city manager establishes the budget, he knows he plans to “donate” only the amount of the actual DPW wages that exceed the budgeted amount.
   3. Since the DPW reports to the city manager, this means he supervises the DPW employees’ labor before, during, and after the CCHS event and therefore has a hand in how much DPW labor is used. This has a direct effect on the amount of the CCHS’s eventual “donation,” that is, if he remembers to write a check from the CCHS’s treasury without worrying about a FOIA request.
   4. In his role as treasurer for the CCHS, the city manager signs a check made payable to the city for only the amount that exceeds his original budget request to the city.
   5. On the other side of the transaction, the city manager’s direct reports accept his check in partial payment for DPW wages and logs the payment in.

This is insane. And while I’m sure the city manager isn’t happy that I’ve made his obvious conflict of interest a public issue, he should be appreciative of the fact that, so far, I’ve limited my comments to this website and to the city council. My preference is that he simply stop engaging in this activity and completely extricate himself from anything to do with his conflicted roles as city manager and president/treasurer of the CCHS. Unless he resigns from one role or the other, I cannot think of any way he can avoid the conflict since the responsibilities that create the conflict are assigned to the city manager by charter.

So, what prompted the city attorney to write a memo and the request for a closed session on June 10, 2024? It began with the city council’s April 8, 2024, agenda item that would have established a blanket policy of waiving Depot Park user fees for all 501(c)(3) tax-exempt organizations on request and allow the city manager unsupervised authority to handle these requests without city council oversight (which would include waiving fees for his own organization, the CCHS). (The council packet is linked here and the proposed policy can be found at page 33.)

This policy proposal was so outrageous that it prompted me to write a letter to the city council (linked here) explaining why they needed to stop doing this. In response, the city council wisely tabled the proposal from the agenda where it’s been held in abeyance until the June 10, 2024, city council meeting where city attorney Ryan can “advise” them in a secret closed session. I’m not sure what amount Ryan will be billing us to prepare his learned legal opinion. You’ll note from reading my letter that I’ve done all or most of his work for him and explained things he damned well should have already known as an attorney practicing municipal law for decades.

I hope that the city council reaches the right result after their secret meeting, which would be:

1. 1. Follow the law and perform the required fee studies for all user fees the city council decides it wants to charge.
   2. If the city council decides to continue charging Depot Park user fees after conducting a fee study, then it must stop waiving them for a select few, no matter who they are, because the city council has no authority to make charitable donations.
   3. Every organization availing itself of DPW employee labor must pay the full cost of DPW wages.
   4. Prohibit the city manager from any involvement in any aspect of the CCHS annual event as long as he maintains his role as CCHS president and treasurer (and I question whether he could avoid a conflict as long as his wife continues to be the CCHS’s sole paid employee).

I suspect the reason for the secret closed session is because I have advised the city that if they don’t fix these issues, I will ask a court to stop them from continuing their unlawful practices. Because I don’t intend to ask for damages, the city council will have to decide in their closed session if continuing to charge unauthorized fees, playing favorites, and ignoring the city manager’s conflict of interest is important enough to them to waste taxpayer dollars on all the legal fees that would be necessary to defend these insane practices rather than fix them. You’d think the correct course of action would be obvious, but I guess it remains to be seen what will happen after the June 10, 2024, closed city council session.

One could ask why this public policy issue shouldn’t be discussed in public and why the taxpayers shouldn’t know why the city decided whatever it decides. Just because the city can discuss this in secret doesn’t mean that it should. But, given past conduct, the city will avail itself of every opportunity to have secret behind-closed-doors discussions about city policy and expenditures.

And now you know what all the secrecy is about, at least for one of the closed sessions. (I also know quite about the second closed session regarding the city’s overpayments for police and fire, but I’ll save my comments on that for a future post.)