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Published in Economic Development

Q&A: Mark Nettleton - Attorney and member, Mika Meyers PLC

BY Friday, August 31, 2018 09:20pm

As a veteran attorney representing Michigan cities, townships and villages, Mark Nettleton says his clients mostly find themselves on solid fiscal footing these days. The Mika Meyers PLC attorney believes the state’s municipalities have learned the lessons of the Great Recession and are now investing conservatively in large infrastructure projects and working to ensure they’re complying with increased state mandates around the proper funding of legacy benefits. He spoke with MiBiz about the fiscal health of the state’s many local units of government.

Are your municipal clients concerned about finances as they look to the future?
For the clients that I represent — small and medium townships, cities and villages — they’re all obviously concerned about their bottom line, concerned about providing the best possible services at the lowest cost. And they’re always concerned about what’s around the corner. In terms of what the state is going to require and how they are going to meet those new requirements, it’s an added, sometimes unfunded mandate (and it’s difficult) for them to continue to do all the things they need to do. I think it’s constantly on their mind, but at least most of the clients I deal with, they’re generally in good financial shape. Do some of them wish they had more money? Sure.

Mark Nettleton COURTESY PHOTO

Do you think municipalities learned some lessons coming out of the last recession?
Particularly when we’re dealing with big ticket infrastructure projects — water, sewer — there is a tendency now not to take into account prospective future growth. While we’re certainly in a period where that is occurring, there’s kind of a conservative approach to say, ‘We’re not going to forecast and project and assume that what’s happening today will continue two, three, five or 10 years down the road. We’re going to assume there will be a downturn, so let’s just plan on what we have right now in terms of revenues and forecast based on that.’

What else is on the mind of your clients?
Talking about infrastructure … the one thing that’s kind of scary is all the PFAS stuff. Reports (indicate) about 1.5 million customers are affected statewide with … PFAS in their municipal water supply.

How have municipal clients reacted to the threat of PFAS contamination?
There’s a lot more conversation about having their water tested. There’s a concern about what the acceptable limits are. Right now, it’s at 70 parts per trillion, but we know that’s too high. The collective wisdom is that’s too high; it has to be lower. And then the question becomes at what level and how do you get to that level. That’s pretty complex because you’ve got the federal government plus the state and the municipalities who have to really deal with it with boots on the ground.

Given many municipalities’ conservative mentality, are they in a better position to weather another downturn in the future?
Generally, for the clients I’m dealing with, I think yes. They are not spending wildly, they’re keeping an eye on their general fund and making sure they have enough in reserve. Again, if they’re doing any sort of capital improvement infrastructure investment, the financial basis and financial analysis supports it based on where things are today and not counting on speculative growth.

There’s certainly been a push in smaller, rural communities for more placemaking initiatives. Is that a space where municipalities are looking to invest funds?
I work with communities and their established tax increment entities like Downtown Development Authorities and Corridor Improvement Authorities. Those entities generally have done a nice job for municipalities across the state in placemaking and creating a sense of community and downtowns and connectedness. But there’s been suspicion on the parts of other taxing jurisdictions whose taxes get captured by these entities.

What do you mean by that?
They’re (wondering) when they get their cut. What’s the payoff, what’s the benefit? The legislature for many years has considered reining in on the ability of municipalities to establish or continue these tax increment entities. I think that results in a muted effect of those statutes and the ability for communities really to develop that placemaking. We haven’t seen legislation enacted that sunsets these entities. There has been some restriction in capture. Libraries are exempt now (as are) zoo millages. There has been some eroding and chipping away there. It can start a trend. There’s greater emphasis on, I think, the water and sewer infrastructure … than on trying to do streetscape beautification and things like that.

What are you hearing from clients about the ebbs and flows of state revenue sharing, which has largely been on a downward trajectory?
It depends on the municipality whether they get it. … I think they always keep an eye on it and have gotten wise to not really count on it. If it comes in, that’s great. Obviously, they’ve got a budget, but they try to be very cautious with respect to budgeting with those revenues. I have one client, a treasurer, who said, ‘When I get the check, I know it’s coming. Then I count it.’

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