Michael McGee

Michael McGee is a senior principal and managing director with the law firm of Miller, Canfield, Paddock and Stone, PLC, where he practices public finance law.  He is a former member of the Livonia City Council, having served from 1992 to 1998.  A three-time graduate of the University of Michigan, Mr. McGee earned a bachelor’s degree in economics and political science in 1979, a law degree in 1982, and a master’s degree in public policy studies in 1983.  He was bond counsel on the largest bond issue in Michigan history, the $1 billion bond issue for Detroit Metro Airport improvements, and is a frequent lecturer and contributor to the MML.

Monday

February 25, 2008

It’s EOA Frankenmuth Week

Hi, my name is Mike McGee.  I’m a bond lawyer in Miller Canfield’s bond department, where I’ve been for the past (gulp) 23 years.  Hardly seems possible.  I’ve been part of the local government community since 1974, when I took a job while in college with the then-mayor of Livonia, Ed McNamara.  That was my first exposure to the Michigan Municipal League because Mayor McNamara served on the Board, and later as president of MML.

Ed McNamara was a great believer in the MML because he understood the power of cooperative action.  He recognized that local governments have many more things in common than they have differences.  He believed that cooperation and teamwork created leverage—financial leverage, political leverage—and that leverage is a potent tool for getting things done.  That’s one of the lessons he taught me.  So my bias as a fan of local governments, and of the MML in particular, goes back a good long time.

Which brings me to what’s on tap for this week.  This Friday and Saturday (February 29-March 1), MML will be conducting classes in the Elected Officials Academy (EOA) in Frankenmuth.  The EOA is a set of intensive training programs created by local elected officials, geared especially for local elected officials.  I had the chance to be among the initial EOA Board members and have had the privilege of being a “faculty member” since the EOA’s inception in 1997.  If you’re an elected official, and you haven’t done the EOA yet, you should consider it.  I promise you, you won’t be bored!

The week before the Frankenmuth EOA session is busy (and, dare I say, even exciting?) because the classes will be full and the questions will be many.  It’s fun.  Not only is it fun, it’s a chance to meet new people, many of whom are “rookies,” recently elected, full of enthusiasm that tends to be catching.  Enthusiasm is a good thing.  It’s a building block for cooperation and the leverage we were talking about.

What to say this weekend to a group of newly elected council members with fresh ideas and ready to take on the world?  Always a challenge; more so in view of the headlines recently.  Mainly we want to reaffirm that enthusiasm and encourage the creative energy in the room.  Looking forward to it!

Check back tomorrow for Mike’s thoughts on cooperation.

You may contact Mike McGee at 313-496-7599 or email: mcgee@millercanfield.com

Tuesday

February 26, 2008

Cooperation, Anyone?

This weekend at EOA, we’ll talk about intergovernmental cooperation (IGC) and intergovernmental agreements (IGAs), the watchwords of the day.  The governor has appointed an efficiency commission; think tanks have produced papers on the benefits of collaboration (for some good ones, look here and here); and the media (oh, the media!) is filled with reports to the general effect that if Michigan local governments would cooperate more, surely our governmental fiscal problems would be solved.

Well…yes, but no.  One hates to say the emperor has no clothes, but let’s examine both the myths and realities of IGC.

First the myths.  If one made policy decisions based upon media reports, one would very quickly reach the following conclusions: 1) Michigan has more local units than most states, and far more than it needs.  2) Local governments don’t cooperate.  3) Lots of money can be saved immediately if only the locals would play better together.  Easy!  Problem solved, film at 11!

Nice sound bite.  Except each of these three conclusions is demonstrably wrong.  Sure, Michigan has many local units, but we’re a big state; per capita we’re about average.  Local governments cooperate all the time; in my law practice, I can think of no public entity that isn’t cooperating with someone on something.  And on immediate cost savings, Drs. Lynn Harvey and Eric Scorsone at MSU have pretty clearly demonstrated that greater cooperation can cost more money in the short run; the savings come a few years out (more here).  So, if policymakers make policy based upon mythical conclusions…well, what do you think will happen?  The phrase “garbage in, garbage out” comes to mind.  Let’s just say “unmet expectations.”

Now the reality.  IGC can work, and it can save money.  It takes effort, and it takes time.  As with all things, there is no free lunch.  Mainly it takes a lot of listening and putting yourself in the other person’s shoes.  And a willingness to move out of your zone of comfort.

If policymakers really want to help, they can start with changes in law that right now impose major costs on cooperative efforts:  permit different collective bargaining agreements to be harmonized; authorize more IGA lending of credit; limit recalls grounded upon IGC efforts; harmonize the boundary laws; even (gasp!) put real money incentives into revenue sharing.  (The MML has specific legislative proposals on each of these.)  So let’s talk about IGC.  Absolutely.  But let the talking be based on facts-on-the-ground, not on myth.

Check back tomorrow for Mike’s thoughts on campaign finance and regime change.

You may contact Mike McGee at 313-496-7599 or email: mcgee@millercanfield.com

Wednesday

February 27, 2008

Campaign Finance and “Regime Change”

Michigan newspapers, particularly up in the Grand Traverse area, have had a fun time recently writing about the campaign finance foibles surrounding an effort to rezone property for a large retail store.  For those of you who have not seen the stories, I won’t repeat them in full (for that, you can visit the Traverse City Record-Eagle).  But in summary: retailer seeks controversial rezoning, board turns down rezoning; retailer decides to fight back by “regime change,” pays consultants to coordinate recall campaign; recall is held, board members survive; zoning is still turned down, lawsuit follows; newspaper breaks story of recall “secret plan,” county prosecutor announces investigation; prosecutor exchanges words with Secretary of State; saga continues.  On sale at newsstands everywhere.

The story elements are irresistible for a muckracking reporter:  Big v. small.  Right v. wrong.  Monied interests v. the “little guy.”  A zealous prosecutor.  Alleged cover-up.  It reads like an episode of “CSI: Up North.”

And it’s easy for readers, especially those of us in government in one way or another, to chortle, and point, and profess shock and outrage at an alleged private sector breach of campaign finance law.  Ah, yes.  Schadenfreude.

Shock and outrage might be appropriate responses, depending upon how the facts play out.  But let me play the contrarian:  let’s not forget that campaign finance breaches can happen on the public side too.

The important issue here is that the Michigan Campaign Finance Act both requires disclosure and appropriate funding of private money spent to influence elections, and generally prohibits expenditure of public money to influence elections.  And the penalties for violations can be equally severe and embarrassing in both cases.

Let’s face it, the temptation to spend public money to influence an election is relentless.  Renewing the millage is critical.  The school desperately needs a new boiler.  The sewer bond proposal is necessary to meet Clean Water Act requirements.  You know the list, and the objectives are virtuous.  But that does not mean you can spend public money to campaign for the virtuous objective.  You’ve got to raise that money privately, file your reports, and disclose your spending.

Otherwise you might end up in the paper.  Not good.  Better to be the chortle-er than the chortle-ee.

Check back tomorrow for Mike’s thoughts on the market, the credit crunch, and the “public-private partnership” game.

You may contact Mike McGee at 313-496-7599 or email: mcgee@millercanfield.com

Thursday

February 28, 2008

The Market, the Credit Crunch, and the “Public-Private Partnership” Game

The market been crazy enough for you lately?  Up 300, down 300.  Muni bond insurers downgraded and at risk of failure; recession fears.  The Federal Reserve Board calls a special meeting to cut interest rates ¾ of a point.  The Fed?  A special meeting?  (Do they have to post an OMA notice for that?)

What’s going on here?

I know enough economics to know that no one knows for sure.  But one thing can be reliably forecast: with the “credit crunch” meaning that it’s harder to get bank loans for development projects, developers are going to look elsewhere for seed money for their projects.  Guess where they go when the banks say no?  They will go next door to city hall, and ask for you.  Depend on it.

Developers like to, well, develop, which takes money.  To the extent possible, the developer will look to someone else to front the initial capital—money that frequently goes into site improvements, water and sewer infrastructure, parking, street realignment, etc.  Well, since much of that ends up in public ownership, why not have the city or village finance it to begin with?  We already are seeing a number of these projects around the state, almost always couched as a “partnership” in which TIF (tax increment financing) is used to pay for the public infrastructure, with the private investment covering the commercial or residential component.

Nothing wrong with this, and there are many examples of success, going all the way back to railroad expansion in the 19th Century.  But whoever said “timing is everything” might well have been talking TIFs.  For the city or village, timing in TIF projects is of critical importance.  The key assumption in TIF development projects is: if you build it, they will come.  But what happens if they don’t come?  The city or village can get stuck with the tab for all that preliminary infrastructure.

One thing I will remind the EOA attendees is that economic development is good.  Jobs are good.  Investment is essential.  But a city (or village) is not a bank.  Encouraging and supporting private investment is appropriate.  Assuming the development risk of a project is not.  Development risk is supposed to stay with the developer.

Check back tomorrow for Mike’s thoughts on protecting your good name.

You may contact Mike McGee at 313-496-7599 or email: mcgee@millercanfield.com

Friday

February 29, 2008

Protect Your Good Name

I’ll be driving up to Frankenmuth is a few hours, so here is my last post.  One thing I always remind the newly elected is:  at the end of the day, the one thing you really have is your reputation.  So be careful with it.  Hold on to your ethical compass.

That can be hard.  You’re trying to do the best job you can while juggling all the competing demands.  Answering calls from residents.  Asking questions of your manager and finance director to keep up with what’s going on.  And all of a sudden, an angry resident jumps up at a meeting, charges you with having “a conflict of interest” on a zoning matter, and says you are violating the state ethics law.  Your friendly local newspaper reporter corners you after the meeting and asks, “Well, what of it?  Why are you in violation of the law?”

Who said serving on the council or commission would be easy?

Like it or not, we live in a time of enormous cynicism toward government at all levels.  Fair or not, critics are quick to point to alleged ethical improprieties as further proof of the untrustworthiness of government officials.  In this environment, even the suggestion of improper action can trigger unhappy consequences.  I recommend that you read the main state laws under which you can be held accountable.

There are two primary state laws on ethics, each addresses conflicts of interest.  A “conflict of interest” is any interest competing with our primary duty of loyalty to the public interest.  It may be our personal interest, or it may be a duty or loyalty we owe to a third party.  In either case, there is a “conflict” if the competing interest influences our ability to decide a public question objectively.

The two laws, Act 196 (the State Ethics Act) and Act 317 (Ethics in Contracting), have slightly different requirements, but both in essence mandate a “disclose-and-abstain” approach.  “Disclose and abstain” means that when a matter comes up which presents a potential conflict, the affected council member publicly (at the meeting) announces the existence of the conflict, does not participate in the decision, and abstains from voting.  The remaining members act on the matter.  In many cases a supermajority vote may be required for approval.

Of course, you can’t use the existence of a “conflict” for the purpose of avoiding a tough vote either.

It can be a tough line to walk.  My advice is, if you wonder about whether it’s a conflict, it probably is.  Err on the safe side, and by all means consult your city or village attorney about how to proceed.

Well, off to Frankenmuth.  Thanks for reading these posts and allowing me to share my thoughts this week.  I welcome your thoughts and comments.  Best regards.

You may contact Mike McGee at 313-496-7599 or email: mcgee@millercanfield.com

Check back on Monday to hear from Kate Lawrence, Mayor, Brighton.