Two former prison site projects still stalled | News, Sports, Jobs

ESCANABA – Despite significant progress toward one of three planned developments for downtown Escanaba, two projects planned for the site of the former Delta County Jail have stalled on purchase and development costs, city ​​officials reported this week.

According to city assessor Jim McNeil, a condominium development planned by Swanee, Inc. on the site of the former Delta County Chamber of Commerce is, to his knowledge, “almost a done deal.” However, a planned hotel development on the site of the former prison by the Terrace Bay Hotel Development Group and the expansion of seawall and ship repair operations by North Shore Marine Terminal & Logistics are still pending.

There are two main issues facing the developments: a disagreement over the valuation price of the property sought by North Shore Marine – part of which is expected to be sold later in Terrace Bay – and a disagreement over who should be responsible for upfront the costs of moving a storm sewer on the property Terrace Bay intends to purchase from the city.

Aaron Kadish, project manager for North Shore Marine, raised concerns that the property sought by North Shore Marine was valued by the city at 13 times the value of the neighboring property sought by Terrace Bay. He also argued that the city’s valuation of the property was significantly higher than the valuations the shipyard made on the property in 2014.

“We are just asking that the city allow us to obtain a third expertise”, Kadish said, adding that North Shore Marine had no problem paying an assessment if the city agreed to recognize it.

According to McNeil, the property appraisal paid for by the city valued the one-acre parcel at $165,000. North Shore Marine has offered $12,000 for the property, which is roughly equal to the assessed value of the parcel sought by Terrace Bay.

“This plot in Terrace Bay has the problem of a very irregular size – I’m not sure if you could put a building on this plot alone – and there’s a storm sewer running right through the middle of it, and it’s not not on the seafront Either. So there’s a reason why it’s so different from the riverside plot,” he said.

McNeil also said he would not view the 2014 assessment as a “good appreciation” mainly due to the significant adjustments made to the values ​​of the comparative properties used. As he addressed the council on Thursday, he noted five separate adjustments, most of which distorted property values ​​by 30% or more. The largest adjustment devalued a comparative property by 68%.

“When you have adjustments, they are derived from the market and when you have so many adjustments and so many adjustments, the valuation becomes very difficult to defend because comparable sales, when you have to adjust them so much, are not- they are not comparable at the start”, he said.

Although McNeil noted that he was unsure whether the city originally purchased the property at fair market value, he said the city purchased the property for $65,000 in 1998. Property values ​​generally increase more than the rate of inflation, however, inflation alone would bring the value to $115,000 depending on the purchase price.

In order to place the Hilton-branded hotel that Terrace Bay intends to place on the site of the former prison, it will need to acquire three separate properties: the part of the waterfront parcel which now depends on negotiations between North Shore Marine and the city, the odd-shaped package portion worth $12,000, and the jail itself.

According to Jared Drown, one of Terrace Bay’s developers, the prison purchase is a done deal. The property was owned by the county, and the Delta County Board of Directors voted unanimously Tuesday to accept a purchase agreement for the property.

Drown said the county also agreed to move utilities to the jail site. He argued that the city should take similar action regarding the storm sewer.

“I think it’s reasonable to ask the city to consider participating in the brownfields plan in the movement of stormwater,” he said.

The former prison site being designated as a brownfield under Public Law 381 opens Terrace Bay to a variety of grants and other sources of funding, but the biggest benefit is the ability for the developer to access Additional Tax Financing (TIF) reimbursements for certain development expenditures. Essentially, the difference between the assessed value of the property on the date it was designated brownfield and the value of the improved property is captured for a specified period and refunded to the developer to cover specific expenses. These expenses must meet state requirements, and the city must agree to reimburse these costs in what is called a 381 plan before work can begin.

Relocating the storm sewer would be legally covered by Public Law 381, but that doesn’t mean the city council would agree to foot the bill.

“Relocation is brownfield eligible, and that’s a good thing, but it still requires money to be spent,” said McNeil.

It is unclear exactly how much the storm sewer relocation work would cost, as several unknown variables are involved, including engineering issues as well as state and federal requirements. Initial costs would be paid from the city’s road funds, which total $247,000 from the local streets fund and $2.9 million from the main streets fund. Both funds are under the auspices of the city’s general fund.

“This expense to the city would come from street funds and we would consider reducing paving. We have tens of millions of dollars of work planned for water and wastewater works and these street funds are going to play a major role in trying to keep up with that work. So we really need to preserve every possible dollar in those funds,” said McNeil.

Theoretically, the city could bond the project and attempt to time bond payments against TIF collection, but this would expose the city to significant risk and use up the city’s bonding capacity, which may be needed for development projects. utility infrastructure.

No matter where the initial money comes from, the general fund will not directly benefit development. Because the property is located within the Downtown Development Authority District, all property taxes collected on the property after Plan 381 ends will go directly to DDA funding.

“The idea of ​​the general fund participating in this, which is already having difficulty, would be assuming a risk for something that it won’t really receive a benefit (from) in the future,” said McNeil.

Additionally, the city has historically denied operating utilities on private property for development, and McNeil cautioned against setting a costly precedent. He also noted that there was nothing wrong with the current storm sewer that would require replacement if development did not occur or if development with a different footprint was placed on the property.

Council members varied widely in their thoughts on how the city should proceed. Councilman Ron Beauchamp said he didn’t know why the storm sewer was an issue at this point in the process and argued the city was holding a multimillion-dollar $100,000 development hostage. Council member Tyler DuBord argued for a review of a third assessment of North Shore Marine. Council member Karen Moore said she thinks the storm sewer relocation could be removed from the current purchase agreement, but the city should stick to its assessment in the interests of fairness.

No real decision has been made on the issues. However, Moore brought a motion to void the storm sewer portion of the agreement, settle storm sewers in the future, and require the city’s appraisal as the sale price. This motion was seconded by Council Member Todd Flath, but failed, with only Flath and Moore supporting it.

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