Washtenaw County commissioners approve portions of Packard Square project, but delay decision on loan
The Washtenaw County Board of Commissioners approved the grant application and the brownfield plan for the redevelopment of the blighted Georgetown Mall property on Packard Road Wednesday, but delayed making a decision on whether to back a $1 million loan on the project.
The commission cited public backlash to the idea of backing the loan from the Michigan Department of Environmental Quality on behalf of the private project as one of the reasons they wanted to delay making a decision. Commissioners also discussed at length changing the full faith and credit policy — typically used for public projects — and may make changes to that policy at the June 1 meeting.
An artist's rendering of the Packard Square project.
From The Harbor Companies LLC
“If we’re giving our full faith and credit, then we’re the ones on the hook for it,” he said.
The Packard Square project is a private redevelopment of the former Georgetown Mall site in Ann Arbor. The project is in the early stages and is estimated to cost $48.2 million. The Ann Arbor City Council approved a redevelopment plan at a May 2 meeting, and the developer, Bloomfield Hills-based Packard Square LLC, is currently seeking bids.
A brownfield property includes site conditions that present an obstacle to redevelopment. Packard Square LLC says contamination from a former dry cleaner is present in one area of the site.
County commissioners spent a work session Tuesday discussing the redevelopment of the vacant shopping center. Much of that session was spent discussing their reservations about the loan portion.
The brownfield plan includes tax-increment financing, the funds from which will be used to reimburse the developer for eligible costs and to repay the loan from the state, if the commission eventually votes to back the loan.
As the property that is contaminated is restored and developed, the incremental increases in tax revenues from the property are channeled back to the developer.
Commissioner Yousef Rabhi, D-Ann Arbor, said the brownfield plan is a “self-regulating” plan and if the developer ends up pulling out of the project or if something goes wrong, there will be no cost to the county.
“The developer doesn’t get money from TIF dollars if the property doesn’t gain in value,” he said.
The last tenant at the Georgetown Mall, Kroger, moved out of the complex in 2009. There are back taxes owed on the property to the tune of about $277,000. There have also been questions about The Harbor Co., of which Packard Square LLC is an affiliate, regarding its troubled Bloomfield Park development in Oakland County.
County officials said the grant application would be filed with the state in the next few days.
Commissioners implored Bruce Measom, who was at the meeting representing the owners of the Packard Square LLC, to hire local workers. Measom said bids are already being placed on the project and many of them are by local companies.
Commissioners said they had heard complaints from the public about the loan portion of the proposal loud and clear.
“The public perception on this project is absolutely not in favor of using full faith and credit on this particular loan,” said Commissioner Kristin Judge, D-Pittsfield Township.
Kyle Feldscher covers K-12 education for AnnArbor.com. He can be reached at kylefeldscher@annarbor.com or you can follow him on Twitter.
Comments
snapshot
Sun, May 22, 2011 : 4:07 a.m.
Good for you Yousef, you understand. Hey Rolland, the county and the city are "on the hook" anyway for the contanimated site and the "blight". What is wrong with you dude? Get a clue. Hey Kristin, what poll are you using to judge the "public perception"? The public perception is that you are misinformed and trying to misinform others. I urge the board to actually do something wothwhiole for the citizens of living in this area. Yes, I know it's not the "West Side" of Ann Arbor where most of your supporters live but we on the "East Side" are starting to take notice of your incestuous relationshipwith the "power brokers". Hey Leah Gunn, it's not downtown but it's still our town. How about putting some of that unearned power to a good use for a change and start twisting some arms on that "board of remissionors"?
Peter Eckstein
Thu, May 19, 2011 : 5:44 p.m.
There is a general and a specific issue that needs further investigation. Generally, as all know who have seen the screen classic, The Producers, it is possible to make money on a losing venture if you are using enough of other people's money. Are developers able to borrow so much of a development's costs that they can still make money if it fails--for example, though "management fees" and other rakeoffs? If not, why do so many developers stay in business despite repeated failure of their projects? The answer to that question might shed light on the aspirations of other developers, like the near-victors, Valiant. The specific issue here is: Did Schubiner experienced any net losses on the Bloomfield Park failed development--or did foolish banks and other outside lenders and investors bear the whole burden? And who bears the cleanup costs for a failed development like that?
eastsider2
Thu, May 19, 2011 : 4:40 p.m.
AA.com - PLEASE write more about this developer - Craig Schubiner aka Packard Square LLC. As others have pointed out, he is not just "a developer" - he is the one who has run this property into the ground over the last 10 years. I agree that it would be nice to remove the "eyesore" that Georgetown has become, but is lending Schubiner money really the lesser of two evils? What does he owe, who does he owe it to? Why has he let this property become so decrepit - even back when it was occupied with tenants? Is this really someone the county (or city or state) should be doing business with?
Ashok Gopalakrishnan
Thu, May 19, 2011 : 5:07 p.m.
Good questions, all of them. Other questions: How much funding has Packard Square LLC already lined up for this project? Who is putting up the money to pay the contractors? What about the back taxes owed; how are they going to be paid back and when? Could AA.com try and interview the developer and ask these questions?
gamebuster
Thu, May 19, 2011 : 2:36 p.m.
Use taxpayers money wisely please. Keep an eye on all public building projects. If we allow both grants and loan, then developer free from his back tax. If foreclosure happens, do we pay again? Please check the local past public construction projects. 1. Near North Main Housing: Allowed the developer upgrade the apartment complex, till the final cost over $350.000/unit. Even low-income people or residents with housing vouchers unable to pay the rent. 2. Gateway Housing in Ypsilanti, facing foreclosure, become a mess, lots of federal, state, city money gone. 3. 1500 Pauline. Borrow $8 million to rebuild. (Avalon Housing was originally supposed to rehab it with $2 million) Demolish 47 units & rebuild 32 units. Waste public money & lose housing units. Above all, making much material waste. Is it for the 15% of developer fee kicked back? Be careful investing money on public construction projects, and learn from the past. If we give grant & loan to Packard Square Project, you just don't know what stunt will come up later.
Veracity
Thu, May 19, 2011 : 1:33 p.m.
What do they say: if you do not pay attention to history you may repeat it? For those Georgetown neighborhood residents who believe that the present blight resulting from the closure of its mall can not get worse should familiarize themselves with developer Craig Schubiner's previous development debacle called Bloomfield Park. <a href="http://www.theoaklandpress.com/articles/2010/05/29/news/local_news/doc4c01c82e02500781419398.txt?viewmode=fullstory" rel='nofollow'>http://www.theoaklandpress.com/articles/2010/05/29/news/local_news/doc4c01c82e02500781419398.txt?viewmode=fullstory</a>
dotdash
Thu, May 19, 2011 : 1:12 p.m.
Hey, AA.com -- now is the time for a poll. Since the issue of approving the plan is now effectively divorced from the loan backing, let's see how everyone stands on the county using its full faith and credit to back a private developer.
Will Warner
Thu, May 19, 2011 : 12:18 p.m.
Of course we all prefer to have the eyesore eliminated by a developer assuming all the risk. But what if that isn't in the cards? Do we live with the eyesore indefinitely or do we do what might be necessary to see it removed? I'm not eager to co-sign on this, but it might be the lesser of two evils, and I would like the commissioners to make that assessment using their knowledge and judgment, and not go looking for the mythical "public perception."
Will Warner
Thu, May 19, 2011 : 1:29 p.m.
I thought somebody named Mr. Ed guessing at my first name would guess "Wilbur."
Mr. Ed
Thu, May 19, 2011 : 1:22 p.m.
Move on William Warner.
blahblahblah
Thu, May 19, 2011 : 12:14 p.m.
"Commissioner Yousef Rabhi, D-Ann Arbor, said the brownfield plan is a "self-regulating" plan and if the developer ends up pulling out of the project or if something goes wrong, there will be no cost to the county." "The developer doesn't get money from TIF dollars if the property doesn't gain in value," he said. If the property doesn't gain in value, there are no TIF dollars for the county to repay the loan either, so how can Commissioner Rabhi honestly say "there will be no cost to the county"??? If this development fails, the interest and principal payments will belong to the county and the developer will move on to the next chump city.
Yousef Rabhi
Fri, May 20, 2011 : 3:40 a.m.
Thank you for your concern! To answer your question, the County did not agree to go into debt for the developer. We approved TIF funding for the project and a State grant WITHOUT approving the Loan application.
InsideTheHall
Thu, May 19, 2011 : 11:28 a.m.
Please tell us how each individual Commissioner voted on the issue(s).
a2grateful
Thu, May 19, 2011 : 11:28 a.m.
Thank you county commissioners for exercising due diligence and fiduciary responsibility . . . Too bad that the entity (Ann Arbor city government) that created and forwarded the issue to you has not done the same!
My2bits
Thu, May 19, 2011 : 10:55 a.m.
Shame on us if we financially back this developer knowing its track record. If the project is good, it should be approved. The developer can find other financing.