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Robert Huth, attorney for the City of Mount Clemens, discusses the city’s liability protections if it were to enter a low-profit limited liability corporation contract for the Manchester Mount Clemens apartment complex at the Jan. 6 City Commission meeting.
Photo by Dean Vaglia
MOUNT CLEMENS — At their first meeting of the new year, Mount Clemens City Commissioners gave the city the go-ahead to enter into a new agreement regarding the Manchester Mount Clemens apartment complex.
Approved at the commission’s Jan. 6 meeting, the new agreement sees the city and developer Jim George, doing business as 1 N River Road, LLC, become partners in the Manchester Mount Clemens low-profit limited liability corporation company. The city will provide around $20.7 million via grants from the state of Michigan for 8% ownership in the L3C, while George’s LCC will provide $1.3 million for 92% ownership. The city’s shares can be sold for profit in the future.
“In order to reach (the L3C) designation, the company must meet the definition of ‘charitable purpose,’ which, as the recital indicates, moves to ‘better the community by improving public safety, revitalizing the neighborhood, providing affordable housing, and encouraging economic development,’” City Manager Gregg Shipman said.
Robert Huth, attorney for the city, told commissioners concerned about the city’s liability that the risk is minimal.
“The question that’s posed is what would happen if something goes wrong — what would happen if, during the construction of this, a vendor doesn’t get paid, do the taxpayers and this commission have a liability,” Huth said. “The answer is no.”
Under the agreement, 1 N River Road, LLC is responsible for construction-related work and payments to contractors. It is the city’s responsibility to supply up to $20.7 million by June 1, 2026. Huth said the city received assurances from Lansing that the grant funds will be delivered in time.
“The administration that was in place in Lansing before the end of the year (2024) rushed to make sure the allocations were made so that this project would be funded in whole and that there was something in place so there wouldn’t be the uncertainty of a new Legislature turning it upside down,” Huth said. “But the agreement does require us to contribute only money that we receive from the state, and we’ve been promised as of the end of the last session that all branches of government in Lansing took the steps necessary to get us those funds. I have to assume that’s true, and if it’s not, we don’t have further liability.”
According to Shipman, the idea of forming an L3C was first brought to city officials by George in December 2023. Official talks on forming the L3C began in November 2024.
Mayor Laura Kropp spoke favorably of the L3C plan in comparison to other funding schemes for housing projects, such as payment in lieu of taxes, as funds can be raised through the shares. Kropp’s support of the project goes beyond the direct financial benefits for the city government, as the Manchester Mount Clemens would increase the entire downtown area’s residential capacity by around 100 units.
“This could double — triple — the population of downtown,” Kropp said. “This is a huge opportunity even aside from all of this 8% stuff. Just the development alone is a huge opportunity.”
The brownfield agreement between the city and George, which would see some construction and demolition costs be reimbursed because the development will take place at the former Victory Inn site, remains in place. Shipman expects around $3.7 million in project expenses will be reimbursed through the brownfield agreement, which is separate from the L3C.
