City Council

CITY OF STERLING HEIGHTS MINUTES OF SPECIAL MEETING OF CITY COUNCIL WEDNESDAY, APRIL 16, 2025 IN CITY HALL 1. Mayor Taylor called the meeting to order at 9:00 a.m. 2. Mayor Taylor led the Pledge of Allegiance to the Flag and Melanie D. Ryska, City Clerk, gave the Invocation. 3. Council Members present at roll call: Deanna Koski, Michael V. Radtke Jr., Maria G. Schmidt, Liz Sierawski, Michael C. Taylor, Henry Yanez, Barbara A. Ziarko. Also Present: Mark Vanderpool, City Manager; Donald P. DeNault, Jr., City Attorney; Melanie D. Ryska, City Clerk; Chelsea May, Recording Secretary. 4. APPROVAL OF AGENDA Moved by Koski, seconded by Ziarko, RESOLVED, to approve the agenda as presented. Yes: All. The motion carried (7/0). 5. CONSIDERATION A. Mayor Taylor stated this is to consider a Defense Initiative Interlocal Agreement between the cities of Sterling Heights and Warren and introduced Senior Economic Development Advisor, Luke Bonner, to present. Mr. Bonner introduced the “Arsenal Alliance” for consideration, a partnership between the City of Sterling Heights and the City of Warren to focus on economic development associated with the defense and military industry in Macomb County. He stated this partnership is possible because of the existence of TACOM and GVSC in Warren that combined have a significant impact on the local and state economy. Mr. Bonner explained Special City Council Meeting Wednesday, April 16, 2025 Page 2 that the defense industry in Macomb County is a $60 billion dollar plus industry with all defense contracts added up and over 60% of defense contracts in Michigan are in Macomb County. He also stated that 4,800 defense contracts were awarded in 2023, the defense industry represents a $6.2 billion gross regional product, and there have been $25 billion in defense contracts by 413 Macomb County businesses from 2010 to 2020. Mr. Bonner specified there have been $3.56 billion in defense contracts awarded in 2023 – a lot of those going to BAE Systems, General Dynamics, American Rheinmetall, Oshkosh Truck; filtering down to supplier companies as well. He explained the employment concentration and location quotient for military armored vehicles, tanks, and tank components is 4.26, a testament to the expertise in the county. Mr. Bonner gave an overview of the partnership agreement including an anticipated cost sharing between the two cities for consultants, which could be an individual or an organization, and a five-member Executive Committee that is formed between the two communities to handle the details of the contracting support. He explains further that the partnership provides a centralized go- to group of experts focused on the defense industry on behalf of both communities. He stated there will be a three-year term with options to renew based on performance of the operation. Mr. Bonner stated that having both communities’ involvement and engagement will provide oversight and transparency of the initiative, such as being able to continually report the effectiveness of both communities’ investments. Special City Council Meeting Wednesday, April 16, 2025 Page 3 Mr. Bonner explained the takeaways of the initiative are research and analysis including identifying potential industry clusters based on existing strengths, assets, and even threats; understanding the workforce and finding gaps in the workforce, for example, the defense industry is having trouble filling careers based on AI, a quickly growing market that has a major impact on the military. Mr. Bonner compares to other competitors such as Huntsville, that are growing and competing for defense investment and growth. He explains that it will be important through this effort to engage with stakeholders of the defense industry such as TACOM, GVSE, National Defense Industrial Association, and academic institutions, to make sure the initiative does not duplicate efforts and supports existing plans. He stated that establishing goals and measuring progress will help as well. Mr. Bonner listed defense-related organizations that are also involved with the industry that could be brought together with this partnership to collaborate including Macomb County and State of Michigan, National Advanced Mobility Consortium (NAMC) located at Velocity, Advanced Manufacturing and Commercialization Center which is located in Sterling Heights and has the largest 3D printing machine, Selfridge, and the Special City Council Meeting Wednesday, April 16, 2025 Page 4 American Center for Mobility located in Ann Arbor which specializes in defense R&D. Mr. Bonner explains that a goal of the initiative will be to bring awareness to opportunities in the defense workforce, such as previously mentioned AI careers but also engineering roles, and development training programs. He explains that advocacy will be important for the program and the military, similar to Macomb County working with federal legislatures telling the message about the defense industry in Michigan. He also stated that the defense industry cannot promote itself and this presents as an opportunity for the initiative. Mr. Bonner stated that the initiative will want to market and promote the activities of the program through federal and state officials and also defense contractors across the country. He finishes by stating that by doing all of these things right, the program will have the opportunity to create jobs and attract defense companies that are doing business with TACOM and GVSE to come to this area. Mr. Bonner stated he is available for questions and introduces Jennfier Varney, Finance and Budget Director, to provide a budget overview. Mrs. Varney stated she was going to go over a quick financial projection for the LDFA for questions regarding if the city can afford the partnership and how it will be paid for. She explained that fifty percent of this defense partnership will be paid out of the Local Development Financial Authority, and she displayed a chart showing a five-year projection of the revenue expenses for the LDFA including the projection of revenues from tax capture Special City Council Meeting Wednesday, April 16, 2025 Page 5 in the district. She further explained that there is a tax capture and a base value set at the beginning of the LDFA and any increase in taxable value is captured, because there is a Smart Zone within the LDFA, school taxes can be captured as well as local taxes. Mrs. Varney stated that about $2 million is captured annually plus other revenue, primarily rent, from renting out Velocity. She stated the chart also shows Smart Zone expenditures and explained that this projection assumes some building improvements that have been discussed prior. She pointed out the defense partnership is highlighted and lists $250,000 in the first year, assuming an inflationary increase each year. Mrs. Varney stated that the bottom of the chart shows the fund balance, which is what will still be available for other improvements in the district over the five-year period, a projected $5 million. She summarized that after paying for the Arsenal Alliance and running Velocity, there will still be about $2 million to be invested in the district over the five- year period. Maylor Taylor thanked Mr. Bonner and Mrs. Varney and asked the audience if anyone would like to speak, no one spoke. Moved by Ziarko, seconded by Sierawski, RESOLVED , to approve the Defense Initiative Interlocal Agreement between the cities of Sterling Heights and Warren and authorize the Mayor and City Clerk to sign the Agreement on behalf of the City. Special City Council Meeting Wednesday, April 16, 2025 Page 6 Councilwoman Ziarko commented that this agreement makes sense and is long overdue to bring the cities together. She explained that the defense corridor goes from TACOM to 18 1/2 Mile, running through both cities, and is a way to bring the cities together for future issues. She stated that by bringing the cities together, it will create a powerhouse that can make a difference across the state, Councilwoman Ziarko stated that this is a good move that benefits both communities. She asked through the chair to Mr. Bonner to explain the five-member executive committee and how it will be set up. Mr. Bonner deferred to Mr. Vanderpool. Mr. Vanderpool explained that the respective City Councils will appoint two members, presumably with defense experience. He stated that in Sterling Heights, the City Administration will provide a short list for City Council’s consideration but the Council may have other recommendations. He stated that the executive committee will appoint a neutral third party creating the five-member executive board which will be the first order of business. He stated the only exclusion to the executive board would be that there could not be any city- elected officials on the committee, from either City. Councilwoman Ziarko stated that the City of Warren was also meeting at the same time about the same thing with a press conference to follow at 1:00 p.m., she mentioned a possible partnership with Warren in the future to help with manufacturing. Councilman Radtke requested clarification on the appointments within the Agreement. Mr. Vanderpool deferred to the City Attorney, Donald DeNault. Special City Council Meeting Wednesday, April 16, 2025 Page 7 Mr. DeNault explained that the agreement has a clause stating that the two Councils will jointly approve the at-large member but in practice, the four members may put forth a candidate. He stated the agreement does not read that the committee will appoint but both Councils together will have a final say on the fifth candidate. Councilman Radtke stated that this a tremendous opportunity and he is glad to work with the City of Warren on the first partnership between two communities to further own goals, the goals of the County which is to expand manufacturing and the defense industry and share in joint prosperity. He credited the Warren City Council and the Warren Mayor for being willing to work with Sterling Heights and he stated he thinks this will create a standard across the state with other municipalities. Mayor Pro Tem Sierawski commented that she is glad to strengthen the defense partnership and promote the communities, county, state, and federal government. She stated that there are partnerships already with big influencers including election officials and that they understand how important this is to the region. She stated with any partnership, there may be obstacles but there is a good plan in place to create the committee. She asked Mr. Bonner if the state government had made contact about this initiative. Mr. Bonner stated that as the initiative was being formulated, it was important to meet with the key stakeholders, including the MEDC’s Office of Defense, Aerospace and Innovation and Macomb County, Planning and Economic Development in the Executive’s office. He stated Special City Council Meeting Wednesday, April 16, 2025 Page 8 that they wanted to make sure it was articulated that this initiative could support the efforts of those groups and the reason for the partnership is the major assets that exist in the area. He stated that they also wanted to make sure the initiative was welcomed by both entities. Mr. Bonner recalled that the largest defense conference, Michigan Defense Expo, took place in the week prior at Macomb Community College and that the partnership was the talk of the expo. Mayor Pro Tem Sierawski confirmed she is very much in favor. Councilwoman Schmidt expressed her support for the manufacturing and defense communities within Warren and Sterling Heights. She stated that Warren may have a different form of government and other differences, but it is great to see the two communities come together. She reiterated that Sterling Heights is not relinquishing any city power to Warren and vice versa, that it is an even split collaboration, and she is very excited for the things to come. Councilwoman Koski questioned Mrs. Varney about the LDFA and the Smart Zone’s boundaries and where the taxes are being captured. Mrs. Varney deferred to Mr. Bonner. Mr. Bonner explained that the Local Development Finance Authority district and the Smart Zone are essentially the same, the district boundaries are Van Dyke to Mound, 14 Mile to roughly 18 ½ Mile; within this district there are only three parcels that contribute to the tax and financing, which is the BAE Systems, Sterling Enterprise Park, and SHAP Paint Facility. Councilwoman Koski inquired about what the Special City Council Meeting Wednesday, April 16, 2025 Page 9 taxes capture. Mrs. Varney explained that there is a base value that was set in 2014 and that any increase in taxable value over the base year is captured. She stated that because it is a Smart Zone, the city can capture basically all taxes. Councilwoman Koski asked about tax increases for PPP and Safe Streets and if those are captured. Mrs. Varney explained that those taxes are captured as well, on the increased taxable value since the base year. Councilwoman Koski questioned the five-member committee appointments’ term limits. Mr. Vanderpool explained that the initial term is three years and can be renewed if the parties wish to do so and the respective Councils and Mayor can choose to update or replace their appointees. Councilman Yanez stated that this partnership is a long time coming and that the cities have a lot of economic power and defense is a good place to start. He expressed his interest as the initiative takes off and companies show interest in coming here, if this will spur things that are lacking in the county like an airport, mass transportation, and four-year universities like Grand Rapids has. He stated that these amenities can benefit the economic growth of the area, and the city can emulate some of the work Grand Rapids has done. He mentioned that he looks forward to cooperation with Warren and anticipates some growing pains but thinks they can be worked through. He stated he thinks this will benefit not only the area and County, but the State and the Midwest region. Special City Council Meeting Wednesday, April 16, 2025 Page 10 Mr. Bonner thanked City Council and Mr. Vanderpool for the investment in economic development and is very excited to get these projects launched. Mayor Taylor explained that there is uncertainty in the global and national economies and the city should do what they can for the local economy which he stated the city is doing through the budget and this interlocal agreement. He is proud to have worked with the City of Warren over the past couple of months to make this partnership a reality. He gave kudos to Mr. Vanderpool, Mrs. Varney, Mr. Bonner, the Assistant City Managers, and the full team at the city to help to spark this initiative. He also thanked Mayor Stone. He stated that he and Mayor Stone and their teams met with the MEDC representative and County representative and heard a lot of positive feedback. He announced the press conference taking place the same day at 1:00 p.m. Yes: All. The motion carried (7/0). 6. COMMUNICATIONS FROM CITIZENS There were no public comments. 7. REPORTS FROM CITY ADMINISTRATION AND CITY COUNCIL Mayor Taylor opened the floor to City Administration and City Council for any further reports but there were none. 8. UNFINISHED BUSINESS There was no unfinished business. 9. NEW BUSINESS There was no new business. 10. CLOSED SESSION Special City Council Meeting Wednesday, April 16, 2025 Page 11 There was no closed session. 11. ADJOURN Moved by Ziarko, seconded by Schmidt, RESOLVED , to adjourn the meeting. The motion carried (7/0). The meeting adjourned at 9:30 a.m. MELANIE D. RYSKA, City Clerk