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.
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.
The resolution in front of the council, which needed an eight-vote majority on the 11-member council, was defeated on a 5-6 vote. It would have approved the exercise of the city’s right of first refusal, appropriated necessary funds, and directed the city administrator to notify Edward Brothers Malloy about the exercise of the city’s right.
The vote came after a closed session lasting an hour and 40 minutes. The council then deliberated for about an hour and 10 minutes.
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 2-18-14] [Feb. 18, 2018 memo to council]
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).
In their remarks, most councilmembers cited the overall risk to the general fund that remained in most scenarios that might play out. Those that voted in support of the resolution indicated that their understanding was that the University of Michigan would not be interested in collaborating on the future of the property, unless the city exercised its right of first refusal.
Most recently, the council had voted to postpone the question at its Feb. 18, 2014 meeting after a closed session that lasted about 25 minutes.
Before that, the council had on Feb. 3 postponed the item “to our next meeting” – which was scheduled for Feb. 18. But subsequently a special meeting was called for Feb. 10 to consider the question. That special meeting was then cancelled.
Earlier, 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.
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.
An item authorizing the $12.8 million purchase was approved on Feb. 20, 2014 by the UM board of regents, so that the university could move ahead if the city did not exercise its right of first refusal.
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 right-of-first-refusal window of 60 business days is a formal notification to the city by Edwards Brothers, which was made on Nov. 27, 2013. According to a staff memo from city administrator Steve Powers, the city has until Feb. 26, 2014 to exercise its right of first refusal. If the city decides to exercise that right, it must close on the purchase by Feb. 28, 2014.
This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]