Stories indexed with the term ‘real estate’

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.

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 Area Transportation Authority board meeting (Oct. 17, 2013): The main business of the board’s meeting was the approval of a funding agreement with the city of Ypsilanti – a new member of the AAATA, and the first jurisdiction to join the authority outside of the city of Ann Arbor.

The funding agreement between the AAATA and the city of Ypsilanti formalizes the existing arrangement under which Ypsilanti passes its dedicated transit millage through to the AAATA. The board approved it unanimously. The Ypsilanti city council will consider the agreement on Nov. 5.

In another piece of business that came at the end of the meeting, after a closed session that lasted about an hour and a half, the board voted to establish a subcommittee to meet with whichever developer might make the winning bid on the city-owned property at Fifth and William – known as the old Y lot. That’s an alternative to the AAATA attempting to bid on the property itself, which was listed at $4.2 million. Bids were due by Oct. 18. The city paid $3.5 million for the property 10 years ago and still owes that much on a balloon payment due at the end of this year.

An item that simply authorized the purchase of additional vehicles for the AAATA’s vanpool program had some complex history behind it – involving the federal government shutdown. The shutdown prevented the AAATA from completing its pursuit of a waiver from the Federal Transit Administration for the Buy America requirement. And the Buy America requirements were pointing the AAATA toward purchasing more expensive vehicles (Chevrolet Traverses) that did not fit the needs of passengers as well as the non-qualifying vans (Dodge Caravans). So the board opted to use local millage revenue, and to backfill the operational expenses that the millage money was covering – by using federal preventive maintenance dollars.

In a final routine item, the board authorized the AAATA’s chief executive officer to execute contracts with MDOT that are less than $1 million.

A common thread among public commentary and other board communications was the 5-year service improvement plan the AAATA has developed, and the schedule of public meetings to introduce that plan.

Editor’s note: For the AAATA’s Oct. 17 meeting, The Chronicle hired a CART (Communications Across Real Time) professional to provide a real-time “text” stream of the meeting that was accessible online through The Chronicle. The resulting transcript from that live text stream is available here: [link]. The Chronicle is experimenting with ways to make public meetings more accessible to a broader segment of the community, and to provide archival transcripts of those meetings. [Full Story]

Several real estate deals – including one involving the building that houses Blimpy Burger on South Division – were authorized by University of Michigan regents at their Dec. 13, 2012 board meeting.

The university is buying three properties on the east side of South Division Street, north of Packard – at 545, 549 and 551 S. Division – for a total cost of $1.5 million.

The two properties at 549 and 551 S. Division are being purchased for $1.075 million. Krazy Jim’s Blimpy Burger, which has been in business since 1953, leases the building at 551 S. Division. The deal is expected to close on Dec. 31, but the lease to Blimpy Burger will run through Aug. 31, 2013. Tenants will … [Full Story]

Resolving a boundary issue between the University of Michigan’s Nichols Arboretum and a private landowner, the UM board of regents approved a land exchange at their July 19, 2012 meeting.

According to a staff memo, a decades-old stone wall located between the Arb and the property at 5 Geddes Heights Drive – near the southeast corner of the park – was assumed to indicate the property line. A recent land survey found that UM owns 508 square feet of land on the side of the private property, and the private landowner owns 224 square feet on the university’s side of the stone wall. [City records indicate the property at 5 Geddes Heights is owned by Ilene Forsyth.]

The agreement approved by … [Full Story]

At its Sept. 19, 2011 meeting, the Ann Arbor city council authorized the sale of a six-foot-wide strip of city-owned downtown land to the Ann Arbor Transportation Authority. The strip forms the southwestern border of one of the parcels where the AATA’s Blake Transit Center is located. The $90,000 sale price of the 792-square-feet of land was determined to be the fair market value by an independent appraisal.

The desire of the AATA to acquire the six-foot strip has been mentioned at several AATA board meetings during routine updates. It’s part of the AATA’s plan to reconstruct the BTC on the South Fifth Avenue side of the block; the BTC currently stands on the South Fourth Avenue side, with a canopy that stretches towards Fifth. The AATA hope to finalize the design of the new transit center by the end of December 2011, with construction to start in early 2012.

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] [Full Story]

The University of Michigan Credit Union is real-estate shopping and is looking at the now-vacant Ann Arbor News building on the southwest corner of Huron and Division streets.

However, the three-story News building is only one of several properties being considered as a potential home for the credit union’s administrative offices, says Jeff Schillag, the institution’s vice president of marketing and community relations.

Not all the potential sites are downtown, Schillag says. And any acquired space would replace leased office space.

Opened in 1936, the Albert Kahn-designed News building was shuttered last July when Advance Publications closed the daily newspaper. [Full Story]

[Editor's Note: HD, a.k.a. Dave Askins, editor of The Ann Arbor Chronicle, is also publisher of an online series of interviews on a teeter totter. Introductions to new Teeter Talks appear on The Chronicle.]

Longtime Ann Arbor resident Metta Lansdale was recently hired as director of the Traverse Area District Library in Traverse City. Her first day on the job is today, Nov. 2. I talked to her on the teeter totter just before her move north. [Full Story]

It’s hard to keep something under wraps when your landlord’s real estate agent puts a “For Lease” ad on the front page of the local newspaper. That ad ran last Thursday to solicit a new tenant for the building at 2281 W. Liberty, where Fresh Seasons Market has been located for about 20 years. And it prompted the grocery’s customers to ask: What’s up?

“We’re not signed, sealed and delivered yet,” said Fresh Seasons general manager Jan DeMunnik, referring to their new, undisclosed location, which she characterized as “very close” to the current store. They hadn’t planned to announce the move just yet, she said, but the real estate advertisement forced their hand.

Since then they’ve put a notice about the move on the sign outside their business, and are passing out flyers to customers that explain the situation – and to make sure people know that they are not closing. [Full Story]

Skyrocketing enrollment and an abundance of inexpensive Ann Arbor office space are among the factors prompting Washtenaw Community College officials to consider opening a downtown Ann Arbor campus.

For possible classrooms the administration had been contemplating up to 30,000 square feet in the lower level of a building on East Liberty owned by McKinley. Deans from the college visited the space recently, but on Tuesday WCC administrators decided to pull back from making a decision about that location, according to Stephen Gill, chair of the college’s board of trustees.

Instead, they’ll take the next six months to strategize, figuring out what their programatic needs might be, how much space they need and what kind of presence makes sense in Ann Arbor. WCC already offers satellite classes in Ypsilanti and Chelsea, but this would be the first time the 43-year-old institution would have a significant presence in downtown Ann Arbor. [Full Story]

The momentous mixed with the mundane on Tuesday, as a phalanx of attorneys and real estate professionals converged on the Washtenaw County Clerk/Register of Deeds office to file paperwork for Pfizer’s sale of its Ann Arbor property to the University of Michigan.

Because documents for the sale of Chrysler’s Chelsea Proving Grounds were also filed that day in a separate transaction – a coincidence of timing – it marked the largest amount of transfer tax ever recorded in a single day for the county. Neither the purchase prices nor the taxes paid for those deals were disclosed. (See the end of this article for more information about how the real estate transfer tax works.) But for the Pfizer sale, the check received by the county was enough to make senior clerk Susan Bracken Case gasp, then grin. [Full Story]

When Rob Cleveland of ICON Technologies sent us a press release about his firm’s purchase of the Ann Arbor Art Center’s Felch Street property, we took the opportunity to get an update on the center’s plans for its main Liberty Street site.

We reported last year that the art center, like virtually all nonprofits, was struggling financially and faced a budget shortfall. Last August, with two weeks left in their fiscal year, they’d launched a “Close the Books in the Black Campaign” to raise $20,000. So how was the center faring financially now? [Full Story]