CITY OF MANISTEE PLANNING COMMISSION WORKSESSION

NOTES OF SEPTEMBER 21, 2006

The City of Manistee Planning Commission met in a worksession on Thursday, September 21, 2006 at 6:00 p.m. in the Council Chambers, City Hall, 70 Maple Street, Manistee, Michigan.

Worksession began at 6:03 pm.

WORKSESSION ITEMS

Narconon Stone Hawk

The Public Hearing for this request has been notice for Thursday, October 5, 2006 at 7:00 p.m. The notice included that the Planning Commission was holding a worksession on September 21, 2006 at 6:00 p.m. and the public was welcome to attend but public comment was reserved for the Public Hearing.

Representatives from Narconon Stone Hawk spoke of their request for a Special Use Permit for a Drug Education and Rehabilitation Facility. They refer to the people who go for treatment as students because they are taught how to live without thugs and alcohol.

They have provided a Demographics Study and Wage Scale (attached).

They have also been conducting a survey of people in the community and around the site preliminary answers to questions were reviewed (copy attached).

They also spoke of meeting with the residents of Horizon Point the facility located across the street from the proposed Rehabilitation Center and will be compiling their remarks they said the response was 75% in favor with 25% opposed. The main concern that was noted was security. They provide 24 hour security staff at the facility. They lock the building at 11:00 p.m. for the night and have motion sensor lights, alarms and cameras on all of the exits.

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Discussion included the following:

• Medical Personnel
  • Registered nurse will be at the facility on staff 24/7
  • Two physicians will be on site 2 times a week and on call
  • One licensed Psychologist
• Adult facility must be 18 years or older (average age of student is 35 years of age, their youngest student has been 18 and their oldest student has been 71)
• Supervision - their clients always have a staff person with them if they are outside the facility and they are monitored by staff while inside the facility.
• Students are not allowed to have a vehicle.
• Visitation is on Sundays between 1:00 - 6:00 p.m. Proposed layout of facility
  • Basement - Course rooms
  • First Floor - Administration
  • Second Floor - Women
  • Third Floor - Men
• Capacity, do not like to exceed 100 clients (allows individual attention and provides a good staff/student ratio)
• Students come from all over the country
• 33% of their students at their two other facilities are from Michigan
  • They have had 15 students from Manistee County in their program
  • They market mostly in the five States around Michigan
• Private pay - they do not bill insurance company, individuals can bill themselves
• Cost is $27,000 for the program
• Will provide 12 scholarships annually to residents in Manistee County
• Work with local Mental Health Agencies
• Have a drug dog at the facility “Buster”
• Eight Step program

Review of Site Plan included:

• Parking lot (42 spaces will need resurfacing and striping)
• Lighting will meet requirements for night sky, parking lights will be turned off at 11:00 p.m. when facility is shut down for the night, will have motion lights outside of the facility for security purposes
• Building has 48,000 sq feet including the basement
• Plans are to restore the building using a Historical theme (refinish woodwork and marble floors)

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Zoning Issues:

The City of Manistee Zoning Ordinance does not define a Drug Education and Rehabilitation Facility. The proposed use is similar to an Education Facility and Nursing Home or Convalescent Home (previous use).

The Zoning Administrator is asking the Planning Commission to make a determination if this request falls under Section 1886 of the Zoning Ordinance which reads:

SECTION 1886        USES SIMILAR TO USES PERMITTED AS SPECIAL LAND USES

A. Definition. Uses that have characteristics similar to specifically cited Special Uses in terms of trip generation and type of traffic, parking and circulation, utility demands, environmental impacts, physical space needs, clientele and other off-site impacts.

B. Regulations and Conditions.

1. The Planning Commission upon the recommendation of the Zoning Administrator shall make a determination of whether a proposed use is similar to one or more uses permitted by Special Use permit. In preparing such a recommendation, the Zoning Administrator shall evaluate the proposed use in terms of the potential generation of traffic, congestion, noise, odors, dust litter and similar impacts. In addition, the proposed use shall be evaluated to determine the degree to which it may support or conflict with other uses in the vicinity.
2. The Planning Commission shall determine whether or not a proposed Special Use is similar to other permitted Special Uses, and may require of the applicant further information to demonstrate such similarity.
3. Upon a finding of such similarity, the Planning Commission may establish any regulations and conditions necessary to protect the health, well being, safety, and economy of the City and its residents.

Consensus of the Commissioners in attendance was that they felt the use was similar to both an Education Facility and Nursing Home or Convalescent Home (previous use). While the new Zoning Ordinance R-3 Residential Zoning District requires that both of these Special Uses front on a Key Street they Previous use of a Nursing Home could exempt the requirement as a continuation of a previous use.

Staff was directed to take the Regulations for both Section 1837 Educational Facility and Section 1862 Nursing Home or Convalescent Home and combine them into one list that excluded the requirement of fronting on and being accessed from a key street segment from the list.

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Signage:

Staff asked the Planning Commission to establish a requirement for signage if they were to approve the request. This request was made because of the following Sign Standards

Type 2, Residential and Recreational Commercial (Nursing and Convalescent Home)
        In the R-3 Zoning District is allowed 4 sq. ft. of Cumulative Sign Area
        Wall or Ground Sign - External Lighting

Type 4, Institutional (Education Facility)
        In the R-3 Zoning District is allowed 32 sq. ft. of Cumulative Sign Area
        Wall, Window, Ground, or Marquee Sign - External or Internal Lighting

Planning Commissioners were asked if they considered a conflict for Tony Slawinski who prepared a survey that was included in the first site plan (but has since been removed). Mr. Slawinski has been retired for several years and no longer works as a surveyor. The Planning Commission did not see where there was any issue of compensation and did not feel that there was a conflict.

Harlo Haines was excused from the worksession at 7:30 p.m.

D,D.A. Presentation -Vertical Zoning Discussion

Lee Trucks, D.D.A. Representative spoke to the Planning Commission about Vertical Zoning for the Central Business District. Discussion included:

• Certain business are not conducive to retail areas.
• Possible change to ordinance to encourage retail on first floor
• Discussed vacancies on River Street

Mr. Trucks and Mi. Carlson will work with the Ordinance Re-Write Committee to review the concerns of the D.D.A. and make a report to the Planning Commission.

Other

Correspondence to Planning Commissioners

Denise Blakeslee asked how the Planning Commission wanted correspondence that was addressed to them and mailed to City Hall handled. Commissioners in attendance Tamara Buswinka, Dave Crockett, Ray Fortier, Tony Slawinski and Roger Yoder gave Denise Blakeslee permission to open and distribute all correspondence that is received in their name at City Hall.

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Planning Commissioners not in attendance, Maureen Barry, Ben Bifoss, Greg Ferguson, and Harlo Haines will be asked for permission to open correspondence.

Joint Planning Finding Common Ground Workshop

Commissioners were reminded of the Workshop next Thursday, September 28thi, Copies of the Agenda will be mailed on Friday also.

ADJOURN

The Worksession adjourned at approximately 7:58 p.m.

Respectfully Submitted

[signed]
Denise J. Blakeslee, Recording Secretary

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THE IMPACT OF NARCONON STONE HAWK'S
CURRENT OPERATIONS AND PLANNED EXPANSION

Introduction and Background:

In January of 2006, a study was conducted (as of year ending 2005) of the economic impact of Narconon Stone Hawk's, the largest drug rehabilitation operation in the State of Michigan. An overwhelming demand for its highly successful residential drug rehabilitation program and Narconon's desire to provide its clients with world class facilities, led to its expansion. The founders and operators of Stone Hawk. believe that the quality of service provided is of priority. Therefore, staff to student ratio is kept to a comfortable level vs overcrowding and lack of individual needs being met.

The purpose of the study was to quantify the economic impact on the regions surrounding the Stone Hawk operations. The regional impact analysis was predicated on an initial operating level of a staff of 100 employees serving a base of 105 students (average daily count) as of year end, as Stone Hawk's clients are known, at the Baffle Creek facility.

This study was prepared, analyzing the impact of the current level of operation in Baffle Creek, as well as ambitious expansion plans that were slated to be put in place over the next several years. The specific plans included a special medical detoxification facility, training center to train health care professionals on bow to deliver and administer the Narconon program, Drug Education and a total of five (5) capacity facilities (one of which would be used for the First Step program and one for ethnic groups with focus on their cultural beliefs and customs) throughout the state.

Since that time, a detailed financial analysis has been conducted with the conclusion that the most efficient way to provide these facilities would be to acquire already existing facilities located throughout the State (such as hotels, nursing homes, hospitals) that have sat vacant due to economical hardship and/or being “closed out” by larger corporations and/or more modem facilities. The current owners of these facilities have concluded that it is uneconomical to operate their existing facilities. The acquisition and renovation of these facilities would be the most cost-effective solution to Stone Hawk's expansion.

These plans will require an ambitious construction program stretching out through 2008. During that time, over $3,000,000.00 will be spent on renovating the current facility and future facilities, to bring them up to the high standards required by the professional nature of its mission.

• Over $800,000.00 was spent in 2002 on the Battle Creek facility in construction and renovation alone, excluding the actual purchase price, and annually, disburse an additional $300,000.00 on maintenance and upgrading. These monies were spent locally providing a boost to the economy and the production of jobs. Once the construction was completed, there was and remains to be, an additional boost to the regional economy from the increased local spending on goods and services by Stone Hawk, the additional staff that are required by each facility, and the increased number of visitors to name a few.
• The purchase of the former Trillium Hospital in Albion, Michigan (purchased in September 2005) includes similar renovation and construction, with an approximate $800,000.00 disbursed locally, excluding the actual purchase price, with annual maintenance and upgrading estimated at around $300,000.00 This facility is scheduled to open April 1, 2006.

At the time of this study, there were 140 students at the center in Baffle Creek, surpassing it's comfort level and approaching potential affects on the quality of services, yet overflowing due to the high demand for services. The expansion of the Albion facility will represent an essential part of Stone Hawk's expansion plans, in order to meet the growing popularity of its programs.

Before turning to the analysis of the current Stone Hawk operations and expansion plans, it is worth while to briefly review some of the projections and compare them with actual results.

As can be seen, the projections contained in the study have turned out to be very accurate in terms of the number of students and too low in the number of employees, as well as the most important items that determine the impact of Stone Hawk on the region's economy – the direct regional spending by Stone Hawk and the salaries received by Stone Hawk employees.

Summary of Narconon Stone Hawk's Current Operations and Planned Facility Expansion through 2008:

A total of 311 students entering the program in 2005 were cared for by the 120 staff. The analysis of the Baffle Creek facility's economic impact assumes that the capacity level of 120 students had bee reached by year end. Thus, the only increase in spending at the facility was through general inflation.

A second facility in Albion represents the major avenue for the expansion of Stone Hawk's highly successful residential drug rehabilitation program. Current plans are for a student population of 100 beds (at each center) maximum and that will be reached by early next year (2007). The facility would employee a staff of 70 people in Albion, including those who would attend to the students needs, as well as administrative staff and technical staff. It should be noted that the spending of the students, staff; visitors and others would be concentrated in the Baffle Creek and Albion areas, as well as any other geographical area of the state other facilities are placed, maximizing both the city's sales tax receipts and the economic impact on local business.

There are two major conduits through which the economic impact of Stone Hawk's operations make itself felt. The first is through the organization's direct spending for local goods and services. At current operation levels for 2005, this spending amounted to over $4.9 million in the regional area. With the addition of the Albion facility, this figure is expected to total over $8.0 million by 2008. This is all new money that is injected into the regional areas, coming primarily from student fees originating outside the areas.

The second major conduit for the economic impact is the spending of the students and permanent staff members who work at both sites, along with visitors to the facilities. At the present level of operations, student, staff and visitors spending will result in additional annual estimated amount of almost $1.2 million in the regional area in 2005. By 2008, the aggregate spending is expected to grow to over $2.5 million, with the addition of Albion.

However, the aggregate economic impact of an organization such has Stone Hawk is much more that just the total amount that it and its employees, students, visitors, and other guests spend in the area. It also encompasses the impact of this money as it gets spent and re-spent in the local area, in effect rippling out through the community. In order to capture this ripple effect, it is necessary to use a technique such as regional multiplier analysis.

Impact of Stone Hawk's Operation on Area Spending for Goods and Services:

The estimated impact of Stone Hawk's own spending and that of its staff; students and visitors over the 3 year planning horizon is of extreme benefit to the region.

Note that the direct spending of over $5.0 million by Stone Hawk and its staff, students and visitors in 2005 is not the full measure of the organizations impact As this spending gets re-spent by its recipients, producing the “ripple” effect described earlier, its regional impact is multiplied. The specific multiplier used to produce the induced additional spending above was generated by the regional multiplier system described in the Appendix. The $4.9 million in direct spending in 2005 generates additional millions of dollars in the region, bring the total area spending to over $8 million this year. As direct spending grows over the three year period, the induced spending increases at the same rate, resulting in a total boost to area sales of over $12 million by 2008.

Narconon Stone Hawk's Impact on Area Employment in the 2006 – 2008 Period

As was the case with the impact on Stone Hawk's spending on area sales, the actual number of employees on the organizations payroll is only part of the regional employment history. The increased area sales caused by Stone Hawk's spending and the induced ripple effect result in increased area employment.

The total jobs that are currently generated by Stone Hawk's operations amount to 1.8 percent of total area employment in Calhoun County as of July 2005, the last period for which actual data are available. With the Albion facility, that is expected to increase as Albion is also in Calhoun County. In order to get a better idea of the total impact of Stone Hawk's operations, the July unemployment rate for Calhoun County is 6.3 percent. Had Stone Hawk not been in operation, the unemployment rate for the county would have been over 2 percentage points higher. Even if all the current Stone Hawk employees moved out of the area, so that they would not be counted in the unemployment totals, the county unemployment rate would be almost a full percentage rate higher.

Narconon Stone Hawk's Impact on Area Income:

Increased area employment obviously leads to increased area income.

As can be seen, Stone Hawk's total operations in 2006 will add over $6.0 million to the Calhoun County are income. By 2008, the added amount is expected to total over $10.0 million.

The Impact of the Battle Creek Facility on City and County Tax Revenues:

Some concern has been expressed at the potential negative impact of Narconon Stone Hawk's acquisition of the Baffle Creek and Albion facility on both city and county tax revenues. This concern stems from the loss of two revenue streams that the city had previously received when these operations were in place. When the Baffle Creek and Albion facilities were purchased, prior tax years had been brought current and paid by seller. The TIA Corporation, a for profit corporation and owner of the facility, currently pays running at an annual rate estimated at $53,000.00 in property tax. Our analysis indicates that there will be no net loss in tax revenues to the area governments due to the acquisition of these facilities.

The City of Battle Creek and Albion will gain a considerable amount of revenue from retail sales generated by the spending of the students, staff and visitors. We estimate that these extra tax revenues would amount to $54,000 in 2006, growing to over $70,000 in 2008, easily exceed the amount of property tax currently paid to the county. Admittedly, there would be a diversion of the revenue stream from the county to the city, but the overall region would be much better off with the economic activity generated by the facilities.

Summary:

The significance of Narconon Stone Hawk's total operations to the economy of Calhoun County is imperative. It shows the percentage of the county's economic activity that is accounted for by Narconon Stone Hawk. The area sales and income numbers used in this calculation are from the Census Bureau County Business Pattern Data for 2002, the last year for which data axe available. The employment numbers arc the latest US Bureau of Labor Statistics for July 2005.

Stone Hawk's operations in 2005 accounted for between 1.8 and 2.2 percent of the county's economic activity, depending on the measure used.

The importance of the Albion facility to the continued growth of Stone Hawk's beneficial impact on the areas economy, which shows the growth in the economic impact of Stone Hawk's current operations, versus the growth.

Note that, without the acquisition of the Albion facility, the impact of Stone Hawk's operation on the area economy would show only slight growth over the next three years. However, with the acquisition, the economic impact of Stone Hawk's operations and its importance to the region will continue to grow, adding much needed economic diversification and stability to the region.

APPENDIX

Methodology Used in the Narconon Stone Hawk Study

Narconon Stone Hawk's economic impact on the surrounding area is twofold – the direct impact of the spending on goods and services in the local economy by the organization, its employees, the client students, visitors and trainees; and the indirect or induced effect of this spending rippling through the economy, producing new jobs and aiding local merchants. Regional multiplier analysis is the most widely accepted way to measure this impact

The regional analysis methodology used in this study is that of the IMPLAN (Impact analysis for PLANning) system developed by the US Department of Agriculture Forest Service. The IMPLAN system has been commercialized by the Minnesota Implan Group (MIG, Inc. a Stillwater, Minnesota Consulting company. By using Implan, an analyst can develop a set of multipliers for local area spending, income and employment. These multipliers can then be used to translate the spending of an organization, its employees, and its clients into the total regional economic activity that is generated by this spending.

One significant advantage of the MIG version of the IMPLAN system is that it can be applied to areas as small as a single county, or even a postal Zip Code area within a county. The current study analyzes the impact of Stone Hawk's operations on Calhoun County, with specific attention to the City of Battle Creek, since that is the site of the firs center.

Regional multiplier analysis focuses on the short-term economic impact of changes due to organizations' activities in a local area – as such, it can be criticized for ignoring the long-term adjustments that can and usually do take place. For instance, the economic activity created by a large organization increasing its local area spending might tend to crowd out other alternative activities in the long run, activities which might have benefited the area's economy just as much. However, history does not reveal its alternatives, and there are many more cases in which a high level of economic activity attracts even more activity, rather than crowding. In the case of rehabilitation centers, it is unlikely a region would experience any activity that crowd out alternative activities. The next result is regional growth and expansion, rather than the zero sum game of crowding out.