Tensions over whether Traverse City Light & Power should receive a portion of the proceeds from the city’s recent $1 million coal dock sale could threaten utility funding for future city projects.

TCL&P board members will meet Tuesday at 5:15pm at the Governmental Center to discuss the sale. The utility owned the coal dock property on West Bay Shore Drive until last November, when it transferred the land to the city in order to facilitate a $1 million sale to Rotary Charities. Rotary purchased the property from the city and reopened it as a public park called Discovery Pier, part of the Discovery Center Great Lakes campus.

TCL&P officials contend the city verbally promised them $245,000 – roughly a quarter of the sale proceeds – as part of the deal. That amount is necessary to make the utility “whole” for its cost and improvements to the property, according to TCL&P Executive Director Tim Arends.

“We basically have to write that property off our books, and right now it would show it’s a loss,” says Arends. “The utility doesn’t feel it’s necessary or appropriate to show a loss on its financial records when it was owned by us, the rate payers paid for it, and the city got a million dollars for it.”

But city commissioners say they never committed to distributing any of the coal dock proceeds to TCL&P. Confusion over the issue appears to stem from separate conversations the utility had with city commissioners and city staff. At a joint meeting between TCL&P board members and city commissioners on September 28, 2015, TCL&P expressed its willingness to wash its hands of the property and allow the city to keep all proceeds from the sale, as long as it assumed the environmental risk for the property.

“They realized it was a political hot potato, and basically said, ‘You take it and do with it what you see fit,’” says Commissioner Tim Werner. Agrees Commissioner Amy Shamroe, who wasn't yet on the commission but attended the joint meeting: “They essentially said, ‘Take it, it’s your problem. Whatever comes along with it, including the environmental clean-up, is your responsibility.’” The meeting was the last official discussion city commissioners recall having with TCL&P about the coal dock transfer and sale.

One month later, however, at TCL&P’s October 27 board meeting, then-Chair John Taylor updated his fellow board members on the deal. “One thing that’s different from the last time we talked about this…is the proposal from the city manager is we would take a quarter million of that proceeds and send it back to Light and Power to cover the original costs of the coal dock. And that would just be done through an interagency transfer of funds, I believe.” City Manager Marty Colburn then confirmed: “Yes.”

When the final terms came to city commissioners for approval a week later, the motion didn’t mention distributing funds to TCL&P. Language stated only that “proceeds be distributed by official action of the city commission at a later date.” Potential recipients of the funds were neither identified nor voted on by commissioners.

Colburn couldn’t be reached for comment. But in a recent memo to TCL&P, Mayor Jim Carruthers said the city manager’s support of the $245,000 disbursement was only a “recommendation” and was “never acted upon by the city commission.” Werner also points out that city commissioners, not city staff, have final say on how to spend the coal dock proceeds. “Even if (Colburn) had said something to them, he certainly couldn’t promise it was going to happen,” Werner says. “If they felt strongly about it, they should have made it part of the deal.”

The miscommunication has reignited old tensions between TCL&P board members and city commissioners, who have struggled over jurisdiction and funding for projects in the past. TCL&P Chair Jan Geht says if the utility “can no longer trust communications from the city manager, we’ll get everything in writing going forward.” Geht also warned in a letter to Carruthers that TCL&P will be discussing its funding policy for future city projects at the same time as the coal dock proceeds Tuesday.

“I expect that your response and actions (on the coal dock) will help inform the board on its ultimate decisions” on the funding policy, wrote Geht.

Shamroe and Werner, who both also serve on the TCL&P board, say they are open to discussing a request from the utility about receiving a portion of the coal dock proceeds. However, they stress the city has no legal obligation or commitment to share the revenue, and that there are other projects in the city that could take higher priority. They also disapprove of tying TCL&P’s funding policy for city projects to the coal dock discussions.

“Putting that out there doesn’t seem like a collaborative or positive way to influence decision-making,” says Werner. “That doesn’t inspire me to write a check for a quarter-million dollars.”

Arends says he's hopeful city commissioners and TCL&P can work out an agreement. "With all the progress we've made in the last four years in reconnecting with the city commission and the city itself, I would hate to see one issue like this damage all that," he says. "I hope that doesn't happen."