Stories indexed with the term ‘right of first refusal’

Edwards Brothers Vote: Town-Gown Relations

Ann Arbor city council meeting (Feb. 24, 2014): Mayor John Hieftje welcomed high school students attending the meeting to satisfy course requirement by telling them they were probably getting off easy compared to other nights.

The Ann Arbor city council declined to exercise its right of first refusal on the Edwards Brothers Property at its special session on Feb. 24, 2014. Chuck Warpehoski (Ward 5) compared the process of reviewing the options over the last few weeks to riding a "see saw." (Art by The Chronicle.)

The Ann Arbor city council declined to exercise its right of first refusal on the Edwards Brothers Malloy property at its special session on Feb. 24, 2014. Chuck Warpehoski (Ward 5) compared the process of reviewing the options over the last few weeks to riding a “see saw.” (“Art” by The Chronicle.)

That’s because the meeting was a special session, dealing with just one substantive issue: a resolution to exercise the city’s right of first refusal to purchase the 16.7 acre Edwards Brothers Malloy property on South State Street, and a closed session to discuss that issue.

The council’s 5-6 vote on the land acquisition fell short of a simple majority, let alone the 8-vote majority it needed. That vote came after the closed session, which lasted an hour and 40 minutes. The council then deliberated for about an hour and 10 minutes.

The council’s decision came four days after the University of Michigan’s board of regents had authorized proceeding with a purchase of the property for $12.8 million. The site is located at 2500-2550 South State Street, immediately adjacent to existing UM athletic facilities. It’s assumed the university would use the land at least in part to support its athletic campus.

Voting to exercise the right of first refusal were: Sabra Briere (Ward 1), Sally Petersen (Ward 2), Jane Lumm (Ward 2), Margie Teall (Ward 4), and mayor John Hieftje.

Voting against exercising the right of first refusal were: Sumi Kailasapathy (Ward 1), Christopher Taylor (Ward 3), Stephen Kunselman (Ward 3), Jack Eaton (Ward 4), Chuck Warpehoski (Ward 5) and Mike Anglin (Ward 5).

Deliberations focused on two main issues: (1) the financial risks and benefits; and (2) the city’s relationship with the university.

The motivation for the city to exercise its right of first refusal on the property was based in large part on a desire to protect the city’s tax base. The property current generates roughly $50,000 in annual real property tax revenue to the city’s general fund. But the city’s total revenue from the parcel is just 28% of the total taxes levied by all jurisdictions. The net present value over the next 25 years of the levy from all jurisdictions is roughly $6 million. That was weighed by the council against a purchase price of $12.8 million that reflected a “premium” over the appraised value of around $8 million.

Also a factor weighed by the council was a $218,000 annual holding cost for the land, which reflected a 1.7% interest rate that Flagstar Bank had offered. That’s about half the rate the council was assuming in its earlier review of its options.

Another piece of the financial equation was that the some of the tax abatement previously granted by the city to Edwards Brothers would be coming back to the taxing jurisdictions. That’s because by selling the property, Edwards Brothers would not be meeting all the terms of the tax abatement. There’s a clawback provision in that case – which returns taxes to jurisdictions amounting to a total of $200,000. Of that total, the city’s portion is $90,000. It’s under the terms of that tax abatement that the city had obtained a right of first refusal on the sale of the property.

The deal would have been financed from the general fund. According to the city’s year-end audited statements for FY 2013, the general fund unassigned balance stood at $14,392,854 as of June 30, 2013.

Councilmembers like Eaton and Kailasapathy were clearly opposed to exercising the city’s right of first refusal, based on the substantial risk they thought the city would be taking. Everything would need to go right, in order for the city to come out ahead, they said. Kailasapathy indicated that the “premium” price to be paid by the city for the real estate was a significant reason to vote against it.

Kunselman, in voting against the resolution, relied on what’s become for him a familiar criticism of “speculative development.” He cited in part what he’d learned taking a course on real estate from local developer Peter Allen, a lecturer at UM.

Councilmembers like Warpehoski and Taylor were less adamant about their no votes. Warpehoski thought the odds were “better than even” that the city would come out ahead long-term. But because the city would be gambling with public funds, he wondered if “better than even” was good enough. “Right now, I’m thinking maybe not,” he concluded. Earlier in the meeting Taylor had offered similar sentiments, saying that he’d “regretfully” vote no. “We could have pulled it off; we had a reasonable shot at pulling it off. In light of our mission, I think a reasonable shot is not good enough,” Taylor said.

The sixth vote against the resolution came from Anglin. He responded to one of the arguments made by those who supported the resolution – that by exercising its right of first refusal, the city could leverage some collaboration with the university on the future of the parcel. For Anglin, the price was too high just to sit at the same table with the university.

Petersen, Briere and Lumm specifically mentioned the ability to leverage some cooperation from the university on the future of the land as one argument for exercising the city’s right of first refusal. Kunselman called that trying to take the parcel hostage and holding a gun to the university’s head. But some who supported the resolution saw the possibility that exercising the right of first refusal could lead to improved city-university relations.

Hieftje ventured that the city-university relationship is as good now as it has ever been, adding: It’s a good relationship as long as things happen the way the university wants them to.

Those voting yes generally felt that the risk to the city posed by exercising the right of first refusal justified the potential benefit to the city’s tax base. They also cited the opportunity to control the future of the parcel, and to influence development in that part of the city. Responding to a remark from Warpehoski earlier in the meeting – that the South State Street corridor did not give him “warm fuzzies” – Teall said: “I like it. It’s my neighborhood.”

Some background information on the possible acquisition of the property by the city was released last week, on Feb. 18, the day of a regular council meeting. [Edwards Brothers chart] [Additional offer for Edwards Brothers] [Feb. 18, 2014 memo to council]

This article provides more background on the council’s handling of the issue, a sketch of the deliberations, and a more detailed presentation of the deliberations. [Full Story]

Ann Arbor Won’t Buy Edwards Bros. Land

At a special session on Monday night, Feb. 24, 2014, the Ann Arbor city council declined to exercise Ann Arbor’s right of first refusal on the purchase of a 16.7-acre property owned by Edwards Brothers Malloy. The council’s decision came four days after the University of Michigan’s board of regents had authorized proceeding with a purchase of the property for $12.8 million.

[Full Story]

Council Delays Edwards Brothers Decision

The Ann Arbor city council has again postponed a vote on its right of first refusal to purchase a 16.7-acre piece of property from Edwards Brothers Malloy, located at 2500-2550 South State Street. The University of Michigan has offered $12.8 million for the land.

The council will next take up the question at a special session on Feb. 24, 2014, which will also possibly feature a closed session.

The council voted to postpone the question at its Feb. 18, 2014 meeting after a closed session that lasted about 25 minutes. The resolution delayed by the council would approve the exercise of the city’s right of first refusal, appropriate necessary funds, and direct the city administrator to notify Edward Brothers Malloy about the exercise … [Full Story]

Vote Postponed on Edwards Brothers Land

The Ann Arbor city council has delayed a vote on the purchase of the 16.7-acre Edwards Brothers Malloy property on South State Street. The University of Michigan made an offer to Edwards Brothers to purchase the property for $12.8 million, but the city council considered a resolution on Feb. 3, 2014 to exercise the city’s right of first refusal.

The vote was postponed until the council’s next regular meeting on Feb. 18. The vote to postpone was unanimous, and came after a roughly hour-and-forty-minute closed session. The council did not discuss the item before voting to postpone.

The resolution would approve the exercise of the city’s right of first refusal, appropriate necessary funds, and direct the city administrator to notify Edward Brothers Malloy about … [Full Story]

Council Gathers Data on Edwards Brothers Land

The Ann Arbor city council is moving ahead with its exploration of the possibility of purchasing the 16.7-acre Edwards Brothers Malloy property on South State Street.

In action taken at the council’s Jan. 21, 2014 meeting, councilmembers approved a $25,550 contract with Atwell LLC for environmental site assessment services to evaluate the property. 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.

At its Jan. 6, 2014 meeting, the council directed the city administrator and the city attorney to explore options and gather information. So the site assessment by Atwell is part of that effort. The council is working within a 60-business-day window that … [Full Story]

Ann Arbor Eyes Edwards Brothers Land

Ann Arbor city administrator Steve Powers and city attorney Stephen Postema have been directed to gather information to help the city council determine whether to purchase the 16.7-acre Edwards Brothers Malloy property on South State Street.

The direction came after the city council met in a closed session for about half an hour during its Jan. 6, 2014 meeting, and then emerged to pass the resolution. [amended Edwards Brothers resolution on Jan. 6, 2014]

The resolution provides direction to explore options to make the purchase financially feasible. That means finding a way to finance a $12.8 million deal. The sale of the Edwards Brothers property on South State Street is currently pending to the University of Michigan for $12.8 million, in a deal that was … [Full Story]

Dec. 2, 2013 Ann Arbor Council: Live

Editor’s note: This “Live Updates” coverage of the Ann Arbor city council’s Dec. 2, 2013 meeting includes all the material from an earlier preview article. We think that will facilitate easier navigation from live-update material to background material already in the file.

The Ann Arbor city council’s Dec. 2, 2013 agenda is comparatively light, but might not lead to an especially short meeting.

New sign on door to Ann Arbor city council chamber

The sign on the door to the Ann Arbor city council chamber, installed in the summer of 2013, includes Braille.

Items that could result in considerable council discussion include final approval of a repeal of the city’s crosswalk ordinance. A scheduled public hearing on that issue could also draw a number of speakers. The council gave initial approval to the repeal at its Nov. 18, 2013 meeting – on a 9-2 vote.

The tally could be closer for the final vote, as mayor John Hieftje, Sabra Briere (Ward 1) and Chuck Warpehoski (Ward 5) could join Christopher Taylor (Ward 3) and Margie Teall (Ward 4), who had dissented on the initial approval. Also a possibility is that a compromise approach could be worked out. The possible compromise would leave intact the language about motorists stopping, but still limit the right-of-way to just pedestrians within a crosswalk – that is, it would not afford the right-of-way to those standing at the curb.

Some of the public’s perspective and council discussion on the crosswalk issue was aired out during the council’s Sunday caucus, held in council chambers at city hall. This week the caucus was rescheduled for 1 p.m. instead of its usual evening start time, to accommodate more discussion of the local crosswalk law. The caucus drew six councilmembers and a dozen members of the public, and lasted three hours.

Another topic that could extend the Dec. 2 meeting is related to the pending sale of the Edwards Brothers property on South State Street to the University of Michigan for $12.8 million, which was announced in a press release last week. A right of first refusal on the property is held by the city of Ann Arbor as a condition of a tax abatement granted by the city council almost three years ago, on Jan. 18, 2011.

There’s some interest on the council in holding a closed session on Dec. 2 to review the options and the impact of those options. Any interest on the council in acquiring the land, which seems somewhat scant, would be based on a desire eventually to put the land back on the tax rolls. The topic of land acquisition is one of the legal exceptions to the Michigan Open Meetings Act, which requires all deliberations of a public body to be open to the public. If the council holds a closed session on that topic, it could extend the Dec. 2 meeting.

One reason the council may have little appetite for acquiring the Edwards Brothers property is that the city has just now managed to sell a downtown property the city acquired 10 years ago – the old Y lot on William Street, between Fourth and Fifth avenues. Approval of the $5.25 million sale to Dennis Dahlmann came at the council’s Nov. 18 meeting. But it’s possible that not all the due diligence will be completed before Dec. 16, when the city owes the $3.5 million principal it used to purchase the property. As a hedge against that possibility, the council will be asked on Dec. 2 to approve a six-month extension on the installment purchase agreement with Bank of Ann Arbor for the $3.5 million.

In the meantime, the minutes of the Ann Arbor Downtown Development Authority’s most recent operations committee meeting reflect the DDA’s expectation that all of the equipment used to operate the public surface parking facility at the old Y lot will need to be removed by Dec. 31, 2013.

The city’s right of first refusal on the Edwards Brothers property is linked to a tax abatement. And on the council’s Dec. 2 agenda is an item that would establish an industrial development district (IDD) for a different property, at 1901 E. Ellsworth, where Extang Corp. and GSG Fasteners are located. Creating an IDD is a step in the process for granting a tax abatement.

Land control and use is a predominant theme among other Dec. 2 agenda items as well.

The council will be asked to give initial approval to a rezoning request for the Traverwood Apartments project – from ORL (office, research and light industrial district) to R4D (multiple-family district). The First Martin Corp. project would include 16 two-story buildings for a total of 216 one- and two-bedroom units – or 280 total bedrooms. The site plan and final rezoning approval would come before the city council at a future meeting. The Dec. 2 meeting will also include council’s consideration of a donation of 2.2 acres to the city from Bill Martin just north of the Traverwood Apartments project site. The acreage to be donated is next to the city’s Stapp Nature Area and the Leslie Park golf course.

At its Dec. 2 meeting, the council will also be asked to approve the site plan for a three-story addition to the Running Fit store at the northwest corner of Fourth Avenue and Liberty Street in downtown Ann Arbor. The first floor will be retained as retail space, but six residential units would be built on the upper three floors – one two-bedroom and five one-bedroom units.

The city council will also be asked to place a value on land currently used as on-street parking spaces – $45,000 per space. By formally adopting that figure, any future development that causes the removal of on-street parking could be charged that amount. It would be paid to the Ann Arbor DDA, which manages the city’s public parking system. In this matter, the council would be acting on a four-year-old recommendation, approved by the Ann Arbor DDA in 2009.

In non-land issues, the council will be introduced to newly hired firefighters at its Dec. 2 meeting. The budgeted staffing level for the fire department is 85. However, the statistical section from the city’s most recent comprehensive annual financial report (CAFR) shows 82 AAFD staff in fiscal year 2013. That’s because the council approved the hiring of additional firefighters after the fiscal year began, bringing the total to 85.

The CAFR itself is indirectly included in the council’s agenda – as part of a presentation that will be given by chief financial officer Tom Crawford on the result of this year’s audit. It was a clean audit that showed the general fund doing about $2.4 million better than budgeted.

Among the other myriad statistics in the CAFR are the number of parking violations recorded by the city – which are again down in the range of 90,000, as they’ve been for the last three years. That’s about half what they were in 2006 and 2007. Those numbers in the CAFR don’t include University of Michigan parking tickets – although the city and the UM have an agreement under which the city processes tickets and hears appeals for the university. A renewal of that agreement is on the council’s agenda for Dec. 2.

On Dec. 2 the council also has a fair amount of its own internal business to wrap up, associated with the seating of the new council, which took place on Nov. 18. That includes adoption of the council rules. Based on a less than 10-minute meeting of the council’s rules committee on Nov. 29, no changes to the rules would be put forward at this time. Based on that meeting, it appears that Sally Petersen (Ward 2) will replace Stephen Kunselman (Ward 3) on that council committee. The rest of the new council committee assignments are also supposed to be made at the Dec. 2 meeting.

The council’s calendar of regular meetings and work sessions will also be adopted at the Dec. 2 meeting. The basic pattern is first and third Mondays for regular meetings, except when there’s a holiday or an election during the week of the meeting.

This article includes a more detailed look of many of these agenda items. More details on other meeting agenda items are available on the city’s online Legistar system. Readers can also follow the live meeting proceedings Monday evening on Channel 16, streamed online by Community Television Network.

The Chronicle will be filing live updates from city council chambers during the Dec. 2 meeting, published in this article below the preview material. Click here to skip the preview section and go directly to the live updates. The meeting is scheduled to start at 7 p.m. Updates might begin somewhat sooner. [Full Story]

Dec. 2, 2013 Ann Arbor City Council: Preview

The Ann Arbor city council’s Dec. 2, 2013 agenda is comparatively light, but might not lead to an especially short meeting.

Screenshot of Legistar – the city of Ann Arbor online agenda management system. Image links to the next meeting agenda.

Screenshot of Legistar – the city of Ann Arbor’s online agenda management system. Image links to the Dec. 2 meeting agenda.

Items that could result in considerable council discussion include final approval of a repeal of the city’s crosswalk ordinance. A scheduled public hearing on that issue could also draw a number of speakers. The council gave initial approval to the repeal at its Nov. 18, 2013 meeting – on a 9-2 vote.

The tally could be closer for the final vote, as mayor John Hieftje, Sabra Briere (Ward 1) and Chuck Warpehoski (Ward 5) could join Christopher Taylor (Ward 3) and Margie Teall (Ward 4), who had dissented on the initial approval. Also a possibility is that a compromise approach could be worked out. The possible compromise would leave intact the language about motorists stopping, but still limit the right-of-way to just pedestrians within a crosswalk – that is, it would not afford the right-of-way to those standing at the curb.

Some of the public’s perspective and council discussion on the crosswalk issue might be aired out during the council’s Sunday caucus, held in council chambers at city hall. This week the caucus has been rescheduled for 1 p.m. instead of its usual evening start time, in part to accommodate more discussion of the local crosswalk law.

Another topic that could extend the meeting is related to the pending sale of the Edwards Brothers property on South State Street to the University of Michigan for $12.8 million, which was announced in a press release last week. A right of first refusal on the property is held by the city of Ann Arbor as a condition of a tax abatement granted by the city council almost three years ago, on Jan. 18, 2011.

There’s some interest on the council in holding a closed session on Dec. 2 to review the options and the impact of those options. Any interest on the council in acquiring the land, which seems somewhat scant, would be based on a desire eventually to put the land back on the tax rolls. The topic of land acquisition is one of the legal exceptions to the Michigan Open Meetings Act, which requires all deliberations of a public body to be open to the public. If the council holds a closed session on that topic, it could extend the Dec. 2 meeting.

One reason the council may have little appetite for acquiring the Edwards Brothers property is that the city has just now managed to sell a downtown property the city acquired 10 years ago – the old Y lot on William Street, between Fourth and Fifth avenues. Approval of the $5.25 million sale to Dennis Dahlmann came at the council’s Nov. 18 meeting. But it’s possible that not all the due diligence will be completed before Dec. 16, when the city owes the $3.5 million principal it used to purchase the property. As a hedge against that possibility, the council will be asked on Dec. 2 to approve a six-month extension on the installment purchase agreement with Bank of Ann Arbor for the $3.5 million.

In the meantime, the minutes of the Ann Arbor Downtown Development Authority’s most recent operations committee meeting reflect the DDA’s expectation that all of the equipment used to operate the public surface parking facility at the old Y lot will need to be removed by Dec. 31, 2013.

The city’s right of first refusal on the Edwards Brothers property is linked to a tax abatement. And on the council’s Dec. 2 agenda is an item that would establish an industrial development district (IDD) for a different property, at 1901 E. Ellsworth, where Extang Corp. and GSG Fasteners are located. Creating an IDD is a step in the process for granting a tax abatement.

Land control and use is a predominant theme among other Dec. 2 agenda items as well.

The council will be asked to give initial approval to a rezoning request for the Traverwood Apartments project – from ORL (office, research and light industrial district) to R4D (multiple-family district). The First Martin Corp. project would include 16 two-story buildings for a total of 216 one- and two-bedroom units – or 280 total bedrooms. The site plan and final rezoning approval would come before the city council at a future meeting. The Dec. 2 meeting will also include council’s consideration of a donation of 2.2 acres to the city from Bill Martin just north of the Traverwood Apartments project site. The acreage to be donated is next to the city’s Stapp Nature Area and the Leslie Park golf course.

At its Dec. 2 meeting, the council will also be asked to approve the site plan for a three-story addition to the Running Fit store at the corner of Fourth Avenue and Liberty Street in downtown Ann Arbor. The first floor will be retained as retail space, but six residential units would be built on the upper three floors – one two-bedroom and five one-bedroom units.

The city council will also be asked to place a value on land currently used as on-street parking spaces – $45,000 per space. By formally adopting that figure, any future development that causes the removal of on-street parking could be charged that amount. It would be paid to the Ann Arbor DDA, which manages the city’s public parking system. In this matter, the council would be acting on a four-year-old recommendation, approved by the Ann Arbor DDA in 2009.

In non-land issues, the council will be introduced to newly hired firefighters at its Dec. 2 meeting. The budgeted staffing level for the fire department is 85. However, the statistical section from the most recent comprehensive annual financial report (CAFR) for the city shows 82 AAFD staff in fiscal year 2013. That’s because the council approved the hiring of additional firefighters after the fiscal year began, bringing the total to 85.

The CAFR itself is indirectly included in the council’s agenda – as part of a presentation that will be given by chief financial officer Tom Crawford on the result of this year’s audit. It was a clean audit that showed the general fund doing about $2.4 million better than budgeted.

Among the other myriad statistics in the CAFR are the number of parking violations recorded by the city – which are again down in the range of 90,000, as they’ve been for the last three years. That’s about half what they were in 2006 and 2007. Those numbers in the CAFR don’t include University of Michigan parking tickets –  although the city and the UM have an agreement under which the city processes tickets and hears appeals for the university. A renewal of that agreement is on the council’s agenda for Dec. 2.

On Dec. 2 council also has a fair amount of its own internal business to wrap up, associated with the seating of the new council, which took place at the council’s Nov. 18 meeting. That includes adoption of the council rules. Based on a less than 10-minute meeting of the council’s rules committee on Nov. 29, no changes to the rules will be put forward at this time. Based on that meeting, it appears that Sally Petersen (Ward 2) will replace Stephen Kunselman (Ward 3) on that council committee. The rest of the new council committee assignments are also supposed to be made at the Dec. 2 meeting.

The council’s calendar of regular meetings and work sessions will also be adopted at the Dec. 2 meeting. The basic pattern is first and third Mondays for regular meetings, except when there’s a holiday or an election during the week of the meeting.

This article includes a more detailed preview of many of these agenda items. More details on other agenda items are available on the city’s online Legistar system. The meeting proceedings can be followed Monday evening live on Channel 16, streamed online by Community Television Network. [Full Story]