Washtenaw County commissioners debate backing state loan for Georgetown Mall redevelopment
The details are complex but the question is simple: Should Washtenaw County use its public resources to boost the private redevelopment of Ann Arbor’s Georgetown Mall in light of the county's own economics?
That was the central issue driving debate Tuesday at a special working session called by the Washtenaw County Board of Commissioners to discuss the redevelopment of the vacant shopping center near Ann Arbor ‘s south side.
Georgetown is in the early stages a $48.2 million redevelopment project called Packard Square that would breathe life into the property with a new retail-apartment development. Kroger, the last tenant, pulled out of the neighborhood mall in 2009.
An artist's rendition of the proposal for Packard Square, a redevelopment of the former Georgetown Mall site that would include 230 apartments
From The Harbor Companies LLC
The work session Tuesday was called after county staff have asked the commissioners to consider applying for $1 million grant and back a $1 million loan from the Michigan Department of Environmental Quality on behalf of the private project. County staff would put in hours toward the grant application, and the bill for the loan could be the county’s if the developer were to go into default, commissioners worried.
The majority of commissioners present at the three-hour session indicated they weren’t thrilled with the idea of backing a state loan for a private developer. Others thought the board could help Georgetown and send a message that Washtenaw County is friendly to business development.
In light of the grant-loan request, the county is considering a change to its full faith and credit policy, which is typically used for public projects, in order to back the state loan for a private project, according to the commissioners.
The loan and grant from the state would help the developers clean up the property they say is contaminated with chemicals under a former dry cleaning business. The money would be used to install an underground venting system to keep vapors from any residual chemicals at bay and for soil removal.
Dan Smith, R-Northfield Township, repeatedly raised concerns about getting involved as a backer of a loan for an apparent affiliate of The Harbor Cos., which owes at least $277,000 in back taxes on Georgetown.
He wanted to know why the county, instead of the city of Ann Arbor, was putting its ‘full faith and credit’ behind the loan application to the state. And he pointed out the county faces deep cuts to address a structural budget deficit - 100 to 200 jobs are on the chopping block "just to get through this budget," he said. Wes Prater, D-York Township, echoed those concerns, noting the Georgetown Mall owner is facing a 14-cents on-the-dollar creditor settlement on its troubled Bloomfield Park development in Oakland County.
“If the local community isn’t willing to step up and say ‘We’re willing to put our full faith and credit behind this project,’ why are we getting in the middle of it?” Smith said.
Answered commissioner Rob Turner, R-Chelsea: “It might come down to the point where the local entity might not be behind it.” Maybe, he said, they could use the county’s help to get more jobs in the area.
“I’d like to see those barriers broken down,” Turner said.
Added Ronnie Peterson, D-Ypsilanti, “It’s about the commitment of Washtenaw County government to enhance economic opportunities.”
Conan Smith, D-Ann Arbor, said it was in both the public and the developer's interest to help the developer capture funds to help clean up the site. "We’re looking at the opportunity to work with this developer as a partner," Smith said.
Commissioners had scheduled time Tuesday to discuss a $5.8 million tax credit captured over a 14-year period to boost the redevelopment of Georgetown as part of a brownfield plan that needs county approval before moving forward. Ann Arbor City Council has already approved that plan. But commission members didn’t get the chance to have that discussion
Instead, the three hours of discussion that vastly involved request for help with the loan and grant request from the DEQ. Smith said he'd like to see the commission take formal action on the Packard Square items at its June 1 meeting.
A brownfield property is one in which site conditions present an obstacle to redevelopment. In Michigan, that can include properties that are contaminated, blighted or functionally obsolete — and the developer of Packard Square is claiming all three conditions exist.
Public comments on the Packard Square brownfield plan are on the agenda again at the board’s regular meeting Wednesday at 
6:45 p.m.
 at the 
Washtenaw County Administration Building, 
220 N. Main Street.
Juliana Keeping covers general assignment and health and the environment for AnnArbor.com. Reach her at julianakeeping@annarbor.com or 734-623-2528. Follow Juliana Keeping on Twitter
Comments
Christy Summerfield
Thu, May 19, 2011 : 6:30 p.m.
So many good points made in these comments. I think this would be a better use of taxpayer money than the hotel/conference center that was proposed for the library parking lot downtown. I personally miss this shopping center a lot and my understanding is that lots of people in the neighborhood would like another shopping center in this spot. The idea of a park is terrific but I think we should put a park downtown on top of the library underground parking structure. The problem with more parks is that the city claims it can't maintain the parks we have now. I've been very distressed about the green zone thing. I didn't vote for it and my misgivings seem now to be correct. What good is a green belt around the city if people have to get into their cars and drive there if they want to see some green space? I think the city needs neighborhood parks that people can walk to. If a new Georgetown shopping center is not feasible, perhaps a park could be put in and the neighborhood might be willing to maintain it. There's an idea. I know that when we lived in Burns Park, parents did a lot to maintain the park when the city didn't. For example, parents cut off tree branches that hung down too low over the soccer fields when we couldn't get the city to do it. Just some thoughts.
seasons
Wed, May 18, 2011 : 9:29 p.m.
I agree with the sentiments that using taxpayer monies for private development is not a comfortable commitment, especially given the financial history and current status of this developer. I think that Governor Synder is eliminating tax credits, etc. for brownfield re-development as part of his re-direction of monies. I also agree that if this project was such a great business venture, this developer would have financial backing from businesses who are in the business of doing just that. A green space in place of the Georgetown Mall would be lovely and would buy the time needed for a development project that would be truly healthy and well financed. This is not the time to take on unnecessary debt when money for necessities is so tight.
Bill
Wed, May 18, 2011 : 7:32 p.m.
This does not seem like a good way to spend taxpayer money. If the developer is unable to secure the necessary funding for the project, then the project should be stopped.
Bob Martel
Wed, May 18, 2011 : 7:18 p.m.
I believe that it would be very unwise for the County to give any form of financial guarantee to this project. If the success of financing a $30 million project comes down to a $1 million guarantee from the County, then I have to question the fundamental feasibility of the entire deal. If the County does give the guarantee, then in my opinion, they should appropriate the funds to cover the guarantee in the same motion since it is highly likely that the funds will be needed to make good on the guarantee.
Matt Whale
Wed, May 18, 2011 : 5:49 p.m.
I would like something built there but not by Craig Schubiner. The above comments support my opinion. If nothing can be built a park would be my next suggestion.
Basic Bob
Wed, May 18, 2011 : 5:32 p.m.
It sounds like the faux-progressive county commissioners want to see the toxic chemicals remain in the soil and the back taxes remain unpaid. I don't know if that's taking a stand as much as hiding ones head in the sand. Even if we turn it into another park that the city can't maintain, it will require demolition and cleanup. The other levels of government are kicking in to make this happen: the city of Ann Arbor and the state of Michigan in the form of tax breaks, the state DEQ in the form of grants and loans. The county is using their "full faith and credit" to obtain a lower interest rate for the cleanup, not to borrow the money for redevelopment of private property. This should have no impact at all on the county budget today, but redevelopment of this land will make a big difference in property values for the entire area in the near future.
blahblahblah
Wed, May 18, 2011 : 7:23 p.m.
"This should have no impact at all on the county budget today....". What if this development fails like Bloomfield Park? Then the county is on the hook for $1 million that it can not afford to lose "today" or tomorrow. Just ask the city of Pontiac or any the other city left holding the bag for similar type failed developments if they would do this deal.
Tony Dearing
Wed, May 18, 2011 : 4:39 p.m.
Please do not post comments in all caps. Thanks.
Ashok Gopalakrishnan
Wed, May 18, 2011 : 4:23 p.m.
Quoting from the article: ... Conan Smith, D-Ann Arbor, said it was in both the public and the developer's interest to help the developer capture funds to help clean up the site. "We're looking at the opportunity to work with this developer as a partner," Smith said. .... Yes, there is a public interest in cleaning up the site, and I will even accept that there is a case for public funds being made available. However, do we really want to have this particular developer (Packard Square LLC) as a partner, when we know that: (a) Under the name Harbor Georgetown LLC, the developer has owned the Georgetown Mall property since 2001. (b) The developer let the property go to seed over the past 10 years. (c) The developer owes a bunch of money in back property taxes to the city (earlier articles alluded to $324,000 as the actual amount, not $277,000 as mentioned in today's article). (d) The developer has a less than stellar track record of completing such development projects. (e) The developer is facing a potential 14 cents on the dollar creditor settlement on the Bloomfield Park project. If you go to a bank asking for a loan under these circumstances, you will laughed out of the premises. I am surprised A2 city council dropped this in the county's lap, knowing public funds to the tune of $1 million were needed. They could have at least made approval of the plan contingent on the back taxes being paid up front. Earlier reports mentioned a TIF plan with an 18 year tax-abatement period, which would not have required any grants or loans from the state government. Would that have not been a viable option? But in the end, this developer just does not seem the right one for the job. Let A2 foreclose on the property. If redevelopment is financially viable, and there is money to be made, it should not be that difficult to find a developer with the proper credentials to do the job. Then, and only then, sweeten the pot by providing TIF and other credits.
JSA
Wed, May 18, 2011 : 3:57 p.m.
This project is so far from being financially viable at this time I would have to question the sanity of any commissioner voting for it as well as being will to sign any recall petitions. If the city of Ann Arbor wants to continue its merry path of financial mismanagement that's fine. Leave the county out of it.
a2huron
Wed, May 18, 2011 : 3:34 p.m.
Businesses generally hate the government. Until they want/need something ($).
serene
Wed, May 18, 2011 : 3:13 p.m.
The developer Craig Schubiner sounds like a child who is constantly trying to get what he cannot afford and scheme his way to make it happen. I just hope Ann Arbor is smarter than the Pontiac and Bloomfield township to let this go ahead. After some protest, a vote was taken in 2001 in Bloomfield township regarding Bloomfield Park. For those interested, go to the attached article <a href="http://joelontheroad.com/?p=4655" rel='nofollow'>http://joelontheroad.com/?p=4655</a> . This is an article describing what this developer would go through to have his way, even bribing votes to make it happen. The city should just go ahead and make the developer pay up his back taxes. Seems like he is playing a game trying to buy some time delaying his taxes. Put it in foreclosure, and let someone else come in with a better plan. If its a feasible project, a bank will finance it. Public money should not be counted on for private means. This developer is no Ford or Chrysler, so no bailout.
tommy_t
Wed, May 18, 2011 : 3:06 p.m.
" (insert quote here) " .... P.T. Barnum
1bit
Wed, May 18, 2011 : 2:38 p.m.
Fool me once, shame on you. Fool me twice, shame on me.
gamebuster
Wed, May 18, 2011 : 2:35 p.m.
This country is heading the wrong path. Leaders give tax-break to the rich and cut education and tax seniors more. See all the vulnerable in our community, young and old. Our taxpayers money is supposed to go there. Private development should never be supported by public money. If foreclosure happens.....???
fishermon
Wed, May 18, 2011 : 1:58 p.m.
Hopefully the comissioners will vote no on this loan deal. This is a private deal for which all profit or loss should fall on the Developer and Investors. This should be the way for all private investments. The only exception for government involvement is where private profit is expected but a compelling general welfare issue is involved. The classic example being the land given to private hands to build the railroads in our early years of major infrastructure improvements to the nation. I do not see this Georgetown project rising to that level for the county or city of Ann Arbor.
dotdash
Wed, May 18, 2011 : 1:52 p.m.
I think AA raises a very important point: these stores and apartments will compete with Ann Arbor's current businesses and landlords. Is it fair to subsidize (because what else is it) some private entities and not others? Another point is the precedent. What is going to stop the next 1000 development projects from asking the county to back their loans? How can the county draw a clear line between projects it is willing to guarantee and those it is not? What is that line? This seems like SUCH a mare's nest of problems.
AA
Wed, May 18, 2011 : 1:38 p.m.
ABSOLUTELY NOT. I had to save, borrow and go without to start my buisnesses. Why on earth would I want to use my tax dollars to help someone else compete against me? We have all lost our minds.
MjC
Wed, May 18, 2011 : 1:10 p.m.
I can't believe the council even approved the developer's plan. The artist rendition of the proposed building appears similar to the ugly Plymouth Green Crossing bulding. Just another neighborhood nightmare in teh making. See photo: <a href="http://www.showcase.com/property/3393-Plymouth-Road/Ann-Arbor/Michigan/6116759/?LT=2" rel='nofollow'>http://www.showcase.com/property/3393-Plymouth-Road/Ann-Arbor/Michigan/6116759/?LT=2</a>
Ryan
Wed, May 18, 2011 : 12:52 p.m.
Do NOT spend taxpayer money on this project! If the private investors cannot come up with the money PRIVATELY then it is not a good enough business plan and too risky for private investors, which definitely makes it too risky for taxpayers. I say again DO NOT SPEND TAXPAYER MONEY! Being unemployed I have nothing to do this summer so I will have plenty of time to go door to door throughout my community causing trouble should this get approved. Anyone else unemployed and spoiling for a fight? You are welcome to join me! Keep an eye out for the commissioner's decision!
Linda Peck
Wed, May 18, 2011 : 12:47 p.m.
No, No, No to public funds for private investments.
blahblahblah
Wed, May 18, 2011 : 12:40 p.m.
Any bank asked to back a $1 million development loan would require a business plan and credit check at a minimum. So the business plan for this site has similarities to the failed Bloomfield Park development and the credit check shows the developer owes back taxes. Easy decision: Loan denied!
PLGreen
Wed, May 18, 2011 : 12:21 p.m.
If a private investor can not obtain the credit necessary for a Development, there is no reason for the County to become an "Investor" in the Development.
belboz
Wed, May 18, 2011 : 12:03 p.m.
I'd like to build a new house on my lot. But, funny thing is, there is already a house hear that is presenting an obstacle to me redeveloping it. I'm going to apply for a brownfield...... Georgetown is not a brownfield - it is just a building that has been let to run down and is out of style.... Commissioners, are they that out of touch, to think that there is so much demand for real-estate in Michigan and Ann Arbor that we need more? Why should my tax dollars be contributing to the real-estate glut? I am not in favor of the government providing more surplus housing. It may not compete directly with where I live, but it is all a part of the chain. Come on guys....
treetowncartel
Wed, May 18, 2011 : 12:56 p.m.
Actually, the dry cleaner that was there is the brownfield qualifier
dotdash
Wed, May 18, 2011 : 11:54 a.m.
How can it be that the county commissioners are ignorant of AA's position? ("the local entity might not be behind it") Or is this cover for no one being behind it but no one willing to take the political heat for saying no? Or cover for everyone really liking it but not willing to take the political heat for saying yes? We need a good old-fashioned political reporter who knows the scoop. I'm completely unclear, like the other posters here, why the county would change its own policies to back a private project by a dubious developer with a track record of manipulating government entities into taking on his risk. If we can't learn from history we are doomed to repeat it, I guess.
Wolf's Bane
Wed, May 18, 2011 : 11:50 a.m.
Plant trees.
Kristin Judge
Wed, May 18, 2011 : 11:40 a.m.
There has been very in-depth conversation and debate on this issue by the board, residents and the developer. The bottom line for me is this, "What is the role of County Government?" As a commissioner, I take the responsibility of protecting the taxpayer dollar very seriously. It is difficult for me to justify using the taxpayer's credit as a guarantee for a private developer. That is a job for private banks or investors. If this $30 million project cannot be completed without the $1 million loan from the State and County backing, it could be a risky proposition. County Government can support Brownfield Redevelpment projects to help clean up contaminated sites and spur economic development, and I will vote for that. However, unless someone has a good arguement I have not yet heard, I will not support a private developer with the people's credit.
snapshot
Thu, May 19, 2011 : 7:19 a.m.
This is a good deal for the city and the county Kristin. It will cost more money for taxpayers in "blight costs" if allowed to further deteriorate and allow toxic waste to seep into groundwater. By the way, did you vote "yea" on increasing property taxes to fund SPARK using an antiquated law from 1912 to circumvent the electorate? If so, your statement that you are "serious about protecting the taxpayer dollar" is meaningless if not insulting.
Mr. Ed
Wed, May 18, 2011 : 1:01 p.m.
The property is 277 thousand behind in back taxes and they want a secured loan on the backs of Washtenaw County, Hell No.
cette
Wed, May 18, 2011 : 12:35 p.m.
All up and down Packard the apartment buildings have had for rent signs up for a few years, and Pine Valley, right next door is offering free wifi for a rental. I just can't see bankrolling a project like this publicly, let it happen privately. If the market won't bear profit, let it go. If the city ends up owning the property, well, that money that could have been essentially given to a developer can be used to make a usable public space, like ball fields or soccer fields or something like that.
dotdash
Wed, May 18, 2011 : 12:20 p.m.
Thank you, KJ, for commenting and for being open about your position on this issue and others... So I'm figuring the commissioners on the "yes" side of this are Conan Smith, Peterson and Turner. I'd love to hear their side of the story. Any chance you can get them to comment here and/or answer questions?
mojo
Wed, May 18, 2011 : 11:35 a.m.
The real estate market is in the toilet. Some would say it might be a good time to buy in. but no one knows for sure how long to wait for some sort of return. Certainly the location is prime for some development at 'some time' but perhaps now is not the right time. Perhaps now the County/city could switch to a park with tennis courts and lease it from the owner for 10/15 years for an amount equal to the taxes - then build the development later with the owner. County/city gets rid of blight, neighbors get a park, owner gets some tax relief and the development turns fully profitable.
outdoor6709
Wed, May 18, 2011 : 11:34 a.m.
If you wonder why the U.S. is going in the wrong direction, this could be a teachable moment. Like Fannie Mae and Freddie Mac, government backed student loans, loans under community redevelopment, public takes all of the financial risk, someone else takes all of th profit. If taxpayers need to back this loan, we should not allow this project. If it is a winning idea, a bank will back it. that is how true capatialism works. Person takes risk, if they correct they make money, if they fail they lose their money.
alan
Wed, May 18, 2011 : 1:01 p.m.
I think each of these situations is different. Fannie and Freddie are the result of 70 years of federal policy to convince people that home ownership was a desirable thing for all. But subsidizing student loans for 18 year olds with no credit history and no means of repayment during their schooling is generally recognized as beneficial to society in the long run. In this case, I think that subsidizing a private individual who has proven to be fiscally inept is a bad idea
Awakened
Wed, May 18, 2011 : 11:22 a.m.
Lets see.... A failed development project that cannot find private investors confident enough to put money behind the business model. I know! The politico's can use the taxpayer's credit to finance it. After all. It isn't their money.
tom swift jr.
Wed, May 18, 2011 : 10:17 a.m.
It is amazing to me that the County Commission is even considering to guarantee a loan for a private individual already facing credit problems and who has failed to pay debts in the past. A little green space along Packard would be a good thing. That's a nice spot for a park!