Michigan City council hears proposal to repurpose revolving loan fund; motion to accelerate vote fails

Council members debated an ordinance to amend city code section 38-33 that would expand allowable uses of Michigan City's revolving loan fund to include grants, contract payments to the Michigan City Economic Development Corporation (EDCMC) and a matching grant for park projects.

The measure, introduced by Council President Perez Belinski, would change the fund's scope so some money could be paid as non-loan support rather than only as loans. The council heard presentations from Clarence Halls, who described recent committee recommendations, and from revolving-loan board members and council members who asked for procedural and policy clarifications.

Halls told the council the fund currently holds roughly $1,030,000 and described a proposed distribution recommended by the revolving-loan committee: $200,000 a year for two years ($400,000) to the Economic Development Corporation of Michigan City (EDCMC), $300,000 earmarked as a matching grant pool to leverage park funding (the presentation named a destination/all-inclusive playground among eligible projects), and roughly $330,000 to remain available for smaller loans. "We would fund the Economic Development Corporation of Michigan City $200,000 a year for two years, a total of $400,000," Halls said. He added the committee aimed to refocus the fund on smaller business loans and to make part of the balance available for the matching grant pool.

Several council members said they supported the committee's goal of making funds useful to local small businesses and community projects, but others raised legal and policy concerns. Councilwoman Moldenhauer reviewed the ordinance's existing eligible uses and said the original purpose targeted industrial and commercial retention and expansion; she objected to repurposing the fund to pay the EDCMC or to finance playgrounds without formally rescinding or replacing the existing ordinance language. "This would not include an all-inclusive playground, even if it's given as a matching grant," Moldenhauer said, reading from the current ordinance language.

Council members also debated whether the city should make grants or loans from a fund created as a revolving loan fund. Councilman Przybylinski argued that a loan fund should remain a loan source because grants are not repaid. Councilman Dabney and others suggested hybrid approaches and urged making grant payments upfront to help small businesses that need payment before work is completed rather than requiring reimbursement.

After more than an hour of discussion the council considered a motion to suspend rules and advance the ordinance to third reading for action tonight. The motion to move the ordinance to third reading was made by Councilman Przybylinski and supported on the floor; the roll call vote was a 4'4 tie, which failed to reach the required threshold and left the ordinance held for a later third reading. The clerk recorded the tally as four in favor and four opposed; the presiding officer announced the motion failed and the ordinance will return for third reading.

Council members requested additional legal and budget clarifications before taking a final vote, including whether the fund's statute or prior city commitments require that money be used only as loans, and whether transfers to EDCMC or park matching grants would require separate council action. Several council members suggested a work session or additional committee review before a final vote.

If approved at a later date as proposed, Halls's breakdown would shift up to $700,000 of the fund toward the EDCMC and the park matching pool, leaving roughly $330,000 for small loans pending repayment of outstanding loans. No funds were transferred as part of this meeting.