Now on the Ann Arbor city council’s Feb. 3, 2014 agenda is a resolution to move ahead with the purchase of the 16.7-acre Edwards Brothers Malloy property on South State Street. The University of Michigan has made an offer to Edwards Brothers to purchase the property for $12.8 million, but the city has a right of first refusal.
The item was added to the agenda on Thursday, Jan. 30 and is grouped with staff-generated items. City administrator Steve Powers is indicated on the council’s agenda as the originator of the item. The resolution approves the exercise of the city’s right of first refusal, appropriates necessary funds, and directs the city administrator to notify Edward Brothers Malloy about the exercise of the city’s right. As of early afternoon on Friday, Jan. 31, the item contained no other background information.
Update: Reached by phone late Friday afternoon, city administrator Steve Powers told The Chronicle that he and other staff would be working over the weekend to finalize the information that the council would be provided before being asked to consider the possible purchase of the land. That includes the financing mechanism, source of funds, types of scenarios for the city eventually to shed ownership of the land, results of an environmental review, and possible zoning revisions to enhance property value. Powers allowed that the council might not be ready to vote at its Feb. 3 meeting, but confirmed that the council’s next regular meeting on Feb. 18 would still fall within the 60-day window of opportunity for action.
At its Jan. 6, 2014 meeting, the council had directed the city administrator and the city attorney to explore options and gather information about the Edwards Brothers land. The due date for that gathering of information was specified in the council’s resolution as Jan. 30 – the same day that the land-purchase item was added to the Feb. 3 agenda.
At its following meeting, on Jan. 21, 2014, the council approved without discussion a $25,550 contract with Atwell LLC for environmental site assessment services on the property. That assessment included a survey of asbestos-containing materials.
By way of background, the pending sale of the property to UM was announced in a Nov. 27, 2013 press release. The business – a fourth-generation Ann Arbor publishing and printing firm – had signaled its intent to put the property on the market in late July.
The city’s right of first refusal on the property was a condition of a tax abatement granted by the city council three years ago, on Jan. 18, 2011. Purchase by the university would remove the property from the tax rolls. Washtenaw County records show the taxable value of the property at just over $3 million. In 2013, Edwards Brothers paid a total of $182,213 in real property taxes, not all of which is the city’s levy. The total city levy of 16.45 mills on $3 million of taxable value works out to about $50,000.
According to the tax abatement agreement, the event triggering the city’s 60-day right-of-first-refusal window is a formal notification to the city by Edwards Brothers, which was made on Nov. 27, 2013. If the council were to delay voting on the item until its Feb. 18 meeting, it would appear to still be within that 60-day window.
The Feb. 3 agenda item requires an eight-vote majority on the 11-member council – because the resolution will change the city budget and involves a purchase of real estate. At least one councilmember will not be present for the Feb. 3 meeting. Stephen Kunselman (Ward 3) will be attending a professional conference of the Association of Physical Plant Administrators (APPA). He works in the University of Michigan’s energy office as Planet Blue energy conservation liaison.
Discussion at the city council’s Sunday night caucus on Jan. 19 indicated that talks are taking place between the city and developers who might have an interest in purchasing the property from the city. One obstacle in those conversations is the fact that the university could still eventually exercise its right of eminent domain to acquire the property from a developer, even after purchasing it from the city. But that would require convincing a court that the expansion of the university’s athletic campus at that location would be in the public interest.