Star Line Pushes City For Fee Cut
Star Line ferry representatives asked the Mackinac Island City Council Tuesday, March 20, to reduce the 7% ferry franchise fee, insisting that the high rate charged last year will threaten all three companies providing ferry service between the Island and the mainland. The council initially rejected the idea of a fee cut, but Mayor Margaret Doud later said the council would look into it in two weeks, after it reviews its 2012 fiscal year budget.
The council also accepted the resignation of City Recreation Director Leanne Brodeur, opted out of the state hard cap medical insurance program, and sent a request from Mackinaw City to be included in discussions on a transportation authority to its Transportation Committee for a recommendation on the request.
Star Line representatives Linda and Tom Pfeiffelmann and Vince Rogala said at the meeting that, without adjusting the ferry franchise fees, Star Line would be “in serious trouble.” Mr. Pfeiffelmann asked that the city return to the franchise fee of two years ago, 2.5% for companies providing seasonal service and 2% for companies providing summer and winter service.
The city raised the rate to 7% last year and required all boat lines to provide winter service, prompting Star Line and Arnold Transit to operate as Northern Ferry to use the Arnold boat, Huron, in the winter, and Shepler’s to use its freight boat Sacre Bleu for winter service. The franchise signed last year is for two years.
March 20, the city council said it would revisit the franchise fee, but did not intend to make any changes to the rate during the term of the lease.
Council members said they are reluctant to change the franchise fee because the city can’t anticipate its expenses. Mayor Doud said that the city holds the right to charge the ferry franchise fee to provide public services like water and sewer capacity. Without the fees, the tax base is too small to support the large number of visitors.
“The residents of the Island cannot pay for the additional fire, police, ambulance, medical center, and cleaning of the streets,” Mayor Doud said. “We’re trying to take care of the visitors who come to the Island.”
Council member Armin Porter said there is no way the city could make changes this year.
“We’ve just set a final budget based off the 7%. There’s no wiggle room in the budget,” Mr. Porter said. “It will be an ongoing discussion, but we can’t do anything right now.”
The draft budget allocates $550,000 from ferryboat franchise fees, council member Anneka Myers pointed out, while the city collected over $906,000 from the ferryboats last year. She told the Pfeiffelmanns she would be willing to make a suggestion of lowering the percentage, but there would be no support from other council members at this time.
Instead of allocating all the funds immediately, council member Sam Barnwell said the city should wait until the city renegotiates the ferry franchise contracts later this year. He added that the city should plan to allocate only a part of the franchise fees in the general fund, and then use any surplus to work on other capital projects.
Mr. Rogala asked if the city could collect franchise fees up until the $550,000 allocated in the city’s budget, and then allow the ferryboats to stop paying the fees.
“Absolutely not,” council member Frank Bloswick said. “It’s at 7% now, and it’s going to stay at 7%.”
The 7% fee, Mrs. Pfeiffelmann noted, was based on a suggestion from Arnold Transit owner Jim Wynn that the fee be 9%. A promised financial audit, or any other financial facts, was not used to set the rate, she contended, and she asked if the Michigan Public Service Commission could help analyze the financial picture.
City attorney Tom Evashevski said the city is working toward a financial audit of the boat lines. The city council, he said, had asked attorney Michael Cavanaugh to contract for one, and that Mr. Cavanaugh has been recruiting specialists toward that end.
At one point, Mr. Evashevski said the city recognizes Northern Ferry as a franchisee, but not Star Line. Northern Ferry promoted the higher rate last winter, and Star Line is a partner in Northern Ferry, and Mr. Wynn said Mr. Pfeiffelmann’s position is not that of Northern Ferry.
Mr. Pfeiffelmann said he was speaking as a citizen, a representative of Star Line, and as the majority stockholder of Star Line. He said in response to a question from Mrs. Myers that he couldn’t divulge the reason he supported a lower rate this year, but not last year.
No representative from Shepler’s Mackinac Island Ferry was present at the meeting.
Mrs. Pfeiffelmann argued that reducing the fee would be good for everyone. Shepler’s has testified they lost $1 million, and Star Line $900,000, she said. It is evident, she contended, that all the boat lines are in financial trouble, and rumors on the street abound that bills are not being paid by the companies.
“Right now,” she said, “if the city were to give the boat lines a little break for this year, number one, the headlines would be great, it would be great PR out there, it would make the world think everything is good up here. I think that’s so important because what is known and what happened over the past year has hurt every community and every person that sits either here or behind that desk,” she said to the council. “And I’m just really concerned about what situation the boat lines are going to be in in July and August. And I just think that just the good PR that the Island itself, the City of Mackinac Island, would receive by saying to the boat lines, ‘We understand. We’re going to give you a little bit back.’ I think we all benefit from that.”
The discussion was tabled until after a budget workshop Tuesday, March 27, at 3 p.m. and the budget public hearing Wednesday, March 28, starting at 2:30 p.m. and subsequent adoption at 3 p.m.
A letter from Mackinaw City Village President Jeff Hingston, asking to be included in transportation authority discussions, was directed by Mayor Doud to the city’s Transportation Committee for review and recommendation. Mr. Hingston asked the city to consider the needs of all communities affected by the ferry franchise, including Mackinaw City and St. Ignace, and invite them to participate in the discussion of a potential transportation authority to regulate transportation to and from Mackinac Island.
“The village would look forward to a beginning dialogue with the City of Mackinac Island and the City of St. Ignace on how the proposed Transportation Authority may impact all our communities,” he wrote.
The city will proceed with the purchase of a used power-lift gurney for the ambulance at a cost of $9,830, and will seek $4,677 of the price from the Mackinac Island Community Foundation. The city has $5,153 on hand toward the purchase, $1,800 from a donation and the rest from money budgeted for ambulance operations but not needed.
Leanne Brodeur resigned from her position as recreation director for the city. In a letter of resignation, Ms. Brodeur said she would be looking after the health of her father, Dennis, but would be able to assist in training a new recreation director. The city will post a job opening for the position in the post office.
Grand Hotel will negotiate with the Detroit Institute of Arts to set up art replicas at various spots on Mackinac Island. The city gave the hotel permission to negotiate with the art institute to determine where the replicas will be placed.
At the recommendation of the Finance Committee, the city council voted to opt out of the state’s new policy to limit public employer contributions for medical benefits. The one-year exclusion from the program is one of three options given to municipalities and will not incur any penalty from the state, said Kelly Bean, assistant to Mayor Doud. One option is to adhere to a hard cap on the premiums paid for single, spouse, and family coverage. The second option is to opt out of the hard cap requirement and assess employees a minimum 20% of the premium cost. The third option, which the city took, is to opt out altogether, which, Ms. Bean said, would allow the city to continue to pay 100% of the premiums for its employees at the present time. Opting out must be revisited annually under the law, adopted as PA 152 of 2011.
Municipalities that take no action will be subject to the hard cap rule and face state penalties if they don’t adhere to it, she said.
The city will also consider amending the business license ordinance, removing the requirement for a special meeting on the third Monday of April. Instead, the council could approve business licenses as they come in. The ordinance committee will revisit the amendment at a future meeting.
Twenty-eight temporary motor vehicle permits were approved by the city council: three for Jason St. Onge for painting and maintenance at Grand Hotel, two for the Mackinac Island Fire Department for hose testing and truck maintenance, four for Belonga Plumbing for landscaping at the new Mackinac Cycle bicycle rental kiosk, four for Larry Belonga to install a new septic system at the Carriage Tours barn, five for Larry Belonga for re-landscaping the Bicycle Street bicycle rental shop, two for Belonga Plumbing for landscaping Norm Schultz property, six for Belonga Plumbing to dig and fill a new foundation for Randy Stuck, and three permits for Davis Construction to begin work at the wastewater treatment plant.