By BOB OLIVER
DEARBORN — After months of discussion, the city has worked out an agreement to accept a one-time payment of $8.5 million from Severstal instead of collecting profit sharing revenue until 2023.
The City Council voted 5-1 to accept the money at its June 17 meeting with Councilman Michael Sareini absent.
The money will be used for improvements to the new city hall at the Dearborn Administrative Center, 16901 Michigan Ave., the Artspace renovations of the current City Hall, a Veteran’s Park at the Civic Campus and the Southeast environmental initiative.
Under the agreement, $345,000 of revenue will be put into the East Dearborn Downtown Development Authority Fund and $246,622 to be used for the Artspace project for the current fiscal year.
The city also accepts just over $3 million into its facility fund to reduce general fund contribution to the project for the same amount and $2 million in the general fund for the next fiscal year to reimburse for previous DAC costs.
A revenue budget for $1.45 million also will be created for the capital improvement fund for the Artspace project.
The last two items the money will go toward will be the creation of a veterans memorial park and for environmental planning and improvements for the southeast section of the city.
The revenue for these projects will be $1 million and $500,000 respectively.
The last $155,000 of the $8.5 million was previously used during a feasibility study.
Corporation Counsel Debra Walling said the money will be paid to the city in seven installments beginning this month and running through December 2015.
Council President Susan Dabaja said discussions on the money have been ongoing and that the city administration believes that “these projects will produce re-investment and bring in additional revenue for the city.”
Councilman Thomas Tafelski, the lone opponent of the item and a vocal critic of the City Hall sale, said he wasn’t opposed to accepting the money, just to its usage.
He said the donation money would not influence the naming of the future veteran park.
“I hope our veterans park can be named after someone like our former state representative and council colleague Gino Polidori, who did so many things for the veterans’ rights, as opposed to a Russian steel company,” Tafelski said.
Polidori, who also served as fire chief for the city, died in January.
The deal with Severstal began in 2005 when the Russian-based company was in negotiation to buy the former Rouge Steel Works at the Ford Rouge Complex.
The city worked with the corporation and a participation agreement was signed between the parties that linked annual profit sharing payments to the city based on the success of the revitalized mill.
The payments began in 2006 and were to go through 2023, but in 2009 Severstal approached the city with the idea of a one-time payment $8.5 million, which would go toward naming rights of a conference center at the then Hyatt Regency.
The city agreed to the proposal but the deal fell through when the hotel was sold by management.
Councilman David Bazzy said the city was faced with either trying to collect profit sharing from the steel industry for the next nine years or accept the one-time payment of guaranteed money.
“They are in a position where this offer makes sense to them for a few reasons, and I believe the offer also makes sense to us, as a body, for the same reasons,” Bazzy said. “I don’t believe that if we waited over this period of time it would garner the same amount of dollars coming back at the city.”
He said the residents and council could argue over the best use of the funds, but that the acceptance of them was in the best interests of the city.
(Bob Oliver can be reached at [email protected].)