Comments on: Packard Square Brownfield Project Debated

By: Vivienne Armentrout

Vivienne Armentrout — Wed, 18 May 2011 19:43:45 +0000

I don’t know the particulars in this case but such a letter was made available for the Broadway Village loan. The BOC did vote to guarantee that loan after requiring the letter, but I think that it was never made because the project never got off (into? on?) the ground.

According to a story I read on a different online publication, the loan amount would be paid only after the cleanup was actually done, to be repaid with TIF funds. I think this has been a fairly common procedure with brownfield projects. The purpose is to give the developer assurance that the cleanup costs can be paid for before the property begins to yield revenue. Note that the loan is from a state agency, not from the county. These monies probably come from a fund related to the Clean Michigan initiative passed years ago.

I am not an expert on this, but I’m guessing that the county’s guarantee is part of the process in part to show support for a project in its region. It seems to me that since the county is not advancing the money and has a backup letter of credit, its exposure is minimized.

By: Bob Martel

Bob Martel — Wed, 18 May 2011 19:13:32 +0000

@ Vivienne, I find it hard to believe that the “irrevocable letter of credit” would in effect indemnify the County’s proposed financial exposure. If that were true, then why ask for the County’s guarantee in the first place? I’m sure that this transaction is more complicated than we know even from one of the Chronicle’s typically thorough pieces. I think that it’s unwise to give a County guarantee to a project such as this. If they do, they might as well encumber the funds right now because, in my opinion, there is a very high likelihood that the guarantee will be called.

By: barbara

barbara — Tue, 17 May 2011 21:37:39 +0000

While I would love to see Georgetown Mall redeveloped*, I'm not certain I'd like it if public money was involved, and I sincerely doubt that The Harbor Companies is the entity to do it. Have you seen pictures of the failed-and-in-bankruptcy Bloomfield Park? I try usually try not to spread FUD, but this is incredibly disturbing. * I live 1 block from the accursèd space. I really want to be able to walk to the grocery store again, and I really really miss Anthony's Pizza.

By: Vivienne Armentrout

Vivienne Armentrout — Mon, 16 May 2011 23:15:48 +0000

I agree that full faith and credit loans are questionable, but as the article discusses, there is an irrevocable (I assume) letter of credit involved. In the greater scheme of things, a $1 million loan is not a very great amount. It would actually be used for cleanup. Yes, this is Vivienne Armentrout pushing a development. I hope that the city council representatives for the area give this development support at the county. It is not at all unusual for local government officials to speak at BOC meetings. It is important for that neighborhood to surmount the blight that this cratered-out area has brought. (I confess that I previously wrote a blog post supporting the development: link)

By: Bob Martel

Bob Martel — Mon, 16 May 2011 22:28:58 +0000

I don’t think it’s good for either the City or the County to be taking on this type of risk by guaranteeing a portion of this project’s debt. It’s bad enough that they (we) will be foregoing some of the incremental tax revenues in an effort to make this project economically feasible. Based on the track record of new construction projects in this community in the past twenty years, this project has a fairly high probability to going through at least one foreclosure which would mean that the guarantor (City and/or County) would be on hook for the amount guaranteed.