Georgetown Mall demolition on hold as state gives 30-day extension for $1M grant
This story has been updated with comments from the developer.
The long-anticipated demolition of the vacant Georgetown Mall in Ann Arbor has hit a snag and likely won't occur any time before November, city and county officials said.
City Administrator Steve Powers addressed the holdup in an email to council members, saying the developer of Packard Square — the new development to be built in the mall's place — still hasn't finalized his proof of financing. There also is a hangup with the bids for demolition.
"I can’t tell you how frustrating this is," Council Member Margie Teall, D-4th Ward, wrote in response to the administrator's email, calling the situation "very disappointing."
Neighbors are in agreement with city and county officials: They all want the Georgetown Mall demolished as soon as possible.
Angela J. Cesere | AnnArbor.com
He said he has lined up the necessary financing for Packard Square and is moving toward closing. He said he's working toward having a contract signed with the demolition contractor as early as next week.
"Our goal is to have demo and cleanup start in the next couple weeks as soon as the contractor is selected, contracts are signed and permits are obtained," he said. "We have removed transformers and shut off utilities in anticipation of obtaining demolition permits immediately."
Washtenaw County is the lead local government on the project and the Michigan Department of Environmental Quality is responsible for the disbursement of demolition funds.
The DEQ in May announced a $1 million brownfield grant to help redevelop the 6.7-acre site on Packard Street. Vacant since 2009, the former mall property has three dilapidated buildings and has been a concern to neighbors due to vandalism and vagrants.
The state grant is being administered by the Washtenaw County Brownfield Redevelopment Authority and will pay for removal of contaminated soils and demolition of the existing buildings.
The Ann Arbor City Council voted unanimously in May 2011 to approve a site plan for Packard Square, a $48.2 million redevelopment of the blighted mall property.
Schubiner wants to construct a four-story, mixed-use building containing 230 apartment units and 23,790 square feet of retail space.
The project also is expected to include a 144-space parking garage under the apartment building, as well as 310 surface parking spaces.
Schubiner said last year he hoped to break ground on the project in August 2011 and have it completed by the end of 2012 or early 2013.
Schubiner now has requested a 30-day extension of the deadline to demonstrate project financing to the DEQ, which was a condition of the grant. The DEQ approved the extension to Oct.18.
"We don't know what position he's in because the (demonstration of financing) has not come through," said Nathan Voght, an economic development specialist for the county.
Schubiner said he's in a good position.
"We believe that we have satisfied the financing contingency in the grant and we are working with the DEQ in an effort to remove that contingency immediately," he said.
Because of the extension, Powers said, site demolition and environmental cleanup activities will not occur before Nov. 1 and might be delayed even further.
Schubiner maintains that's untrue.
He also said construction drawings should be complete by next week and building permits will be applied for shortly thereafter.
Civil engineering drawings for a new offsite sanitary line of 1,000 feet that runs offsite and will benefit the city also are complete now and permits will be applied for as early as next week, he said.
"The project is going out for final bids next week," he said. "There is significant retailer interest in the site and retail pre-leasing is moving forward nicely."
The county released a request for proposals for the demolition and hazardous soil remediation in July in hopes of moving forward as quickly as possible.
The county received five bids by the Aug. 17 deadline. County officials expected contractor selection would take about a week, and then another couple weeks to sign a contract, with work beginning as quickly as possible after that. But that didn't happen as planned.
Although the county asked for pricing to recycle or re-use the large quantities of brick from the buildings, Powers said, the bidders declined to provide pricing. He said all bidders have been asked to provide pricing by Sept. 24 to ensure the brick is not landfilled.
Teall said she wonders if there's any way the city can help by asking home-building agencies like Habitat for Humanity to haul the bricks away for their own use.
At least one of the low bids, not accounting for the pending brick pricing, has placed a condition that all private financing be in place prior to proceeding with any contracts with the county.
Powers said the county is assuming the contractor ultimately awarded the work will require financing to be in place, and the grant to be fully released prior to contract signing.
Asked if there's any way the demolition and cleanup can go forward if Schubiner can't demonstrate financing for Packard Square, Voght said county officials are working on that.
"What we're trying to do right now is get to the point where we can award the contract to the low bidder and the plan is to work with the developer and that contractor to sign a contract and move forward," he said. "One of the contingencies will be the payment on that contract, because until the financing of the project is demonstrated, the county will not front any of those monies."
He said he knows Schubiner is working diligently to secure the financing, and the county is hoping he'll have it in place by the Oct. 18 deadline.
Voght said "it would be a big disappointment" if the community loses out on the $1 million grant to clean up one of the biggest eyesores in Ann Arbor.
"This grant could really help kickstart this site and help clean it up," he said. "This is the hardest part of these sorts of projects — the environmental costs and the demolition."
Voght said the county definitely is not going to front any money for the demolition or cleanup because it doesn't want to be in a position of risking public funds on a private project.
Residents say demolition can't happen soon enough.
"I drive by the former Georgetown Mall several times every day, and it's quite depressing," said Kathy Richards, who lives nearby on Stone School Road. "I'm sure this whole neighborhood will be happy when this blight is finally removed."
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
Rob B
Sun, Sep 23, 2012 : 4:42 p.m.
Unbelievable. whats the difference between failed non-proffit (Avalon) and co-mingled private(Three oaks), projects and this private project. Eigther way the tax payers are left footing the bill. Lets get this dilapitated site cleaned up. If maybe it does fail, this time lets have safe guards where at least someone can be held accountable.
Brad
Fri, Sep 21, 2012 : 12:21 a.m.
Can you get back to us tomorrow once the facts are known? This is nothing but confusing at this point.
Tru2Blu76
Sat, Sep 22, 2012 : 3:04 p.m.
@Brad: As I mentioned, I've been collecting the "history" of the Georgetown Mall for about 10 years. So, yes, I "caught" that statement and many others by this "developer." The entire history is one of periodic "promises" by that developer (read: real estate speculator). Even granting he HAS gotten financing - his record has been consistently poor since the time he got the badly degraded parking lot repaired but that repair lasted only about 2 years. A patchwork of quick (and cheap) fixes is all the evidence needed. At one point the AA News made available a list of his investors: this was a list showing retired persons and dentists (etc) in a "collective" which represented only "partial" funding, not adequate to actually support the property. The business tenants including Kroger, were always in a "take it or leave it" situation. The tenants finally couldn't take the deterioration any more and moved out.
Brad
Fri, Sep 21, 2012 : 6:06 p.m.
Thanks, Ryan. I know you're just reporting the things they're telling you.
Ryan J. Stanton
Fri, Sep 21, 2012 : 5:20 p.m.
Sorry, it is a little confusing when two sides say different things. Here's Voght's take on what's happening: "I think it depends on your definition of 'financing.' He has made quite a bit of progress, and, in the end, I can't speak for the status of financing on the project. Only Craig can speak for that. All I can tell you is that he has not met the MDEQ definition and stipulation in the grant award that the project be financed. Hence, the request for the extension until October."
eastsider2
Fri, Sep 21, 2012 : 12:52 p.m.
True, there are quotes from the developer. These are not worth the pixels that display them. When Craig Schubiner says financing is "lined up" that may mean he's lined up a potential lender, but they haven't said yes yet. When Craig Schubiner says he's "working toward having a contract signed" for demolition, that could mean he's written a contract. That's working, isn't it? He didn't outright lie, just more misleading statements. Tru2Blu76: if you've been tracking, maybe you can entertain us with some of his statements. I recall many from years past about how the mall would be redeveloped by such and such date, but I never documented them. And what about that "sheriff's auction" just after the mall closed - what became of that? A history of this site is exactly what we need to cut through some of the confusion and see more clearly what we're dealing with here.
Brad
Fri, Sep 21, 2012 : 12:28 p.m.
Sounds like you didn't catch the article "update" from the developer where he says that he does have financing lined up. That's why it's confusing.
Tru2Blu76
Fri, Sep 21, 2012 : 5:03 a.m.
It boils down to waiting for the state to issue its grant money but the state cannot do that until demolition financing is confirmed. This is one of those problem stories which just won't die. And it all falls on the "landlord" who has been consistently unable to maintain his own property. Now he's unable to even get financing for the demolition work on his own failed property. I've been collecting documentation on this for about 10 years now. It all started with over-optimism and under-financing. Now all that's left are the neighbors and the blighted property.
Tru2Blu76
Fri, Sep 21, 2012 : 12:09 a.m.
First, all my sympathy goes out to those living near the former Georgetown Mall property. The Georgetown neighborhood long held a reputation for being "high class" so it must come as a deep disappointment to those people who invested in having residences there. But I'm afraid that, due to our natural reaction to such frustrating developments, we may miss a significant fact about how this situation came to pass. It could be viewed as a lesson in the kind of economics touted by one of "our" political parties. Not that the Republican Party ever really considered everyone to be eligible as a Republican. Moderates and independents being among those "not invited to the party." So the claim is that the capitalist system is the answer to every problem and "government intervention" of any kind is the cause of every problem. Well, this example of the Georgetown Mall property shows us what happens when a practitioner of Capitalism proves to be not so qualified to operate without government oversight. He's bought a property he could barely afford on the speculation that any "commercial property" is going to pay off for him. But the record of poor maintenance was a warning sign that "things weren't working out" the way the propaganda told us it "always does." And now - as happens so many times - ONLY OTHERS are left to cope with the results of incompetence on the part of "an entrepreneur." Irony: the "deregulation" fad caused the economic slump which accelerated the decline of this mall. Now, ironically, everyone's waiting for a government grant to clean up the mess left by "entrepreneurship." It's not that honest businesses don't exist - they do - and they often end up paying for the mistakes and mishandling of their business colleagues along with the rest of us.
jns131
Thu, Sep 20, 2012 : 10:56 p.m.
Sounds like Ann Arbor needs to take some lesson from us Ypsi folks who know how to tear a building down. Condemn it, tear it down and sue the owners.
Tru2Blu76
Sat, Sep 22, 2012 : 3:17 p.m.
This sounds like that kind of situation. But what isn't publicized is that this developer was orginally backed by investors who were really just a list of dentists and retired small investors who apparently "sold" the idea that Georgetown Mall was a better investment than it actually was. So if the "owner" is sued, it may put these small investors (who are innocent in this) into desperate straights. I think that's why stronger action wasn't taken much earlier. Everyone kinda "had to believe" that Schubner would come through somehow but he never did.
glacialerratic
Thu, Sep 20, 2012 : 10:55 p.m.
Why doesn't AA.com do some reporting on Schubiner's record as a developer?
G. Orwell
Thu, Sep 20, 2012 : 9:58 p.m.
You can thank Obama and Bush for giving their bosses, the big banks, trillions of our money that is being horded by these banks while paying themselves huge bonuses. While businesses, other than insiders, are denied loans. What a scam.
Tru2Blu76
Sat, Sep 22, 2012 : 3:43 p.m.
Actually, you can "thank" Bush and former Fed Chairman Alan Greenspan for "selling" everyone on deregulation. I once met Greenspan - he's an adoring fan of Ayn Rand who was noted for her hatred of "big government" and any kind of regulation applied to the "Market." And by now, everyone understands that Bush was just as lucky baseball stadium promoter who, in the end, never understood the implications of the ideology he supported. Ideologies seem to work - but are always dependent on every participant's honesty. Deregulation, when properly applied, goes after only the dishonest "participants" with the least burden on the honest ones. In other words: do it right or don't do it. Obama: was handed the situation after things fell apart. His mistake is to try to tell us that he can fix it so easily - by using ideology. Ideology (right or left) doesn't solve problems, it creates them. Still, Obama's strategy (taking baby steps) seems to be a good way to fine tune the liberal economic ideology. But will the impatient voters stand for this? We have reason to doubt that.
JRW
Thu, Sep 20, 2012 : 9:57 p.m.
With this guy's track record, why would anyone lend him bug bucks for a tentative project? Adding mixed use apartments and retail without any prior commitments from retail tenants is not a good way to do business. 144 spaces built under the apartment building? How long will that take?
eastsider2
Thu, Sep 20, 2012 : 8:54 p.m.
Am I surprised? Not at all As posters above said, not only does this "developer" have unfinished projects elsewhere, the reporting in this very news source showed us the string of predictions and promises he has made, only to break them later. With such a track record, who will lend the guy money? Ryan and AA.com - is there any other way he can use the grants for demolition without having the financing for rebuilding? Or are there only grants for complete redevelopment? Might be a pipe dream, but I'd rather see a vacant lot than crumbling buildings.
Anne
Thu, Sep 20, 2012 : 8:47 p.m.
Perhaps he should try an Ann Arbor banker...supposedly they "get" us. (Sorry, couldn't resist). Ann Arbor has many things going for it but, like Ypsilanti's Water Street Project and the Thompson Block, there isn't funding to be had. The banks are not taking on any risk at all these days....entirely due to their previously flamboyant lending. We are now paying for their misdeeds with blight and unsold homes.
MRunner73
Thu, Sep 20, 2012 : 8:22 p.m.
One of the few ugly spots in Ann Arbor. Hard to believe.
Richard Dokas
Thu, Sep 20, 2012 : 7:53 p.m.
This mess was so avoidable if only someone had bothered to simply google Craig Schubiner name they would have found that he has a pattern of projects that were underfunded and half built followed by endless lawsuits. I actually think we are lucky because if he hasn't started this project yet. If he ever does we might find ourselves in the position of Bloomfield Park. Here is a link that you should read: http://www.crainsdetroit.com/article/20120716/FREE/120719908/testimony-begins-in-bloomfield-park-lawsuit Notice that that project was stopped 5yrs ago and is just now going to trial. No wonder he is having a hard time raising money!
John Q
Thu, Sep 20, 2012 : 7:51 p.m.
Why is anyone shocked by this? Schubiner's record is well-documented. There's a massive eyesore in Oakland County still waiting to come down that he left behind the last time he couldn't get financing in place.
Lets Get Real
Tue, Sep 25, 2012 : 9:29 p.m.
When you drive by that part of North Telegraph Road, it looks like a bombed out building. Shell only stands - no floors, or roof. Just packed up and left it. Othere must be a way to force the sale of the property - there must be a reason: unpaid taxes, unkept property, safety hazard, something. This project was doomed from the start. You would think the city would have done its due dilligence. Read about this guy - developer is a kind name to call him. http://www.crainsdetroit.com/article/20120716/FREE/120719908/testimony-begins-in-bloomfield-park-lawsuit
mr_annarbor
Thu, Sep 20, 2012 : 7:46 p.m.
Doesn't this seem to happen with just about every big project in this city? I think the City Council/Planning Department needs to do a better job of vetting these projects.
Rob B
Sun, Sep 23, 2012 : 4:48 p.m.
maybe they finally learned their lesson over the failed Near North project? Although Avalon "gave" back those dilapitated properties and cant repay the nearly two million in loans/grants towards the project, at least those homes do not pose such a threat.
Brad
Thu, Sep 20, 2012 : 7:42 p.m.
As a long-time neighborhood resident and one who has been following this closely this is a major disappointment. I was under the impression that once the bids were received in August that the demolition wouldn't be far behind. Recycling the bricks would be great, but there is NO WAY that should be allowed to delay anything. It simply isn't that important relative to the eyesore that the mall presents each and every day to the people living in and traveling through the area.
craigjjs
Thu, Sep 20, 2012 : 8:14 p.m.
At this point, the brick recycling is not delaying the project. The developer has failed to obtain financing. It might turn into a problem at some point, but not yet.
Elaine F. Owsley
Thu, Sep 20, 2012 : 7:32 p.m.
I'd be willing to bet that if you rented a bunch of bulldozers, the neighbors would do the job for nothing.
Billy Bob Schwartz
Thu, Sep 20, 2012 : 8:35 p.m.
Does the army have a use for it? Tank target practice, for example?
Mark Salke
Thu, Sep 20, 2012 : 7:29 p.m.
I just drove by it yesterday and wondered about when the new project would start. Hey, we've waited this long, a little more patience won't hurt. It is prudent to assure that proper financing is secured to complete the project. Remember the 'approved project' on the former Oldsmobile dealer site on Washtenaw? That's still a vacant lot! Let's make sure it's done right.
DonBee
Thu, Sep 20, 2012 : 7:25 p.m.
Even if Ann Arbor is the economic engine of the state, financing is hard. This is not the first or the last project that will find it difficult to find the money to make the project go. The last thing we need though is for either the city or county governments to step in and make promises on financing or to take actions that will bind the city or county to expenses on this project. We have seen the results of that in some of the townships and towns here in Washtenaw County already. Be patient in a few years at most, the economy should be better and this will get done.
Rob B
Sun, Sep 23, 2012 : 4:53 p.m.
I agree on your comment regarding "government stepping in", however believe Government should hold those responsible for failed projects that leave city and/or taxpayers paying off poor management practices. Lets not forget a recent example, the "Near North" project.
brimble
Thu, Sep 20, 2012 : 7:17 p.m.
The disappointment is that Ms. Teall campaigned on this project as one of her accomplishments on Council, and it appears entirely possible that the site will look the same for years to come. The idea of recycling -- rather than landfilling -- the bricks is absolutely a noble one. Is it too large an impediment for the contractors? Are we cutting our nose of to spite our face? Are there other steps the City can take to facilitate the process to get the demolition accomplished?
Homeland Conspiracy
Thu, Sep 20, 2012 : 8:46 p.m.
Saving bricks cost jobs
Billy Bob Schwartz
Thu, Sep 20, 2012 : 8:34 p.m.
Knock it down, then publicize the fact that good, free bricks are there for two weeks. BYOP (Bring Your Own Pickup). Might save some.
Craig Lounsbury
Thu, Sep 20, 2012 : 7:28 p.m.
I would say IMO trying to save those bricks is extremely costly. It would be very labor intensive to save bricks in a useable fashion. It could work in some third world location where labor costs are measured in days not hours.
Alan Goldsmith
Thu, Sep 20, 2012 : 7:11 p.m.
"I can't tell you how frustrating this is," Council Member Margie Teall, D-4th Ward, wrote in response to the administrator's email, calling the situation "very disappointing." I don't understand. Ms. Teall took ALL the credit for making this work out right before the August election. Those of us in the 4th Ward are not surprised--take credit for an accomplishment you shouldn't have right before election time. Speaking of fed up--trust me Ms. Teall. You are no more fed up about this new failure than the voters are about your excuses.