Ypsilanti developers Eric and Karen Maurer say their latest redevelopment project will be their last
The husband-and-wife team responsible for several large, successful downtown Ypsilanti redevelopment projects say their current renovation will be their last.
Karen and Eric Maurer of Maurer Management & Properties are in the middle of a $2.2 million restoration of the Mellencamp Building and neighboring addresses at 120-124 W. Michigan Ave.
Counting the Mellencamp, they will have invested approximately $6 million over three large downtown projects in the last eight years. The Maurers also did the Kresge Building at the corner of Michigan and North Washington, and the Mack and Mack Building at 213 W. Michigan.
Karen and Erik Maurer in downtown Ypsilanti.
File photo | AnnArbor.com
Additionally, state tax credits and incentives once available are ending under Gov. Rick Snyder’s new budget, which will make similar renovations financially impossible, Maurer said.
The Maurers will have received $2.5 million in state, local and federal breaks by the time the Mellencamp Building is complete.
Under the new tax law, which goes into effect Oct. 1, the Michigan Economic Development Corp. will have a general pool of $100 million for a variety of different development incentives.
Mounting debt also played a role in the Maurers' decision, as did financial issues tied to the 200 W. Michigan Ave. building, which has never broken even and has 7,000 square feet of empty commercial space.
Maurer also said high taxes in the city make success tough on investors undertaking large renovations.
As for the Mellencamp restoration, Maurer said they weren’t planning to take on the building until they learned that the Mellencamp and two neighboring properties were in foreclosure. The opportunity seemed too good to pass up, but Maurer said they reached their limit.
“We have a lot to manage, and there’s only so much we can do,” she said. “We have 123 units and that’s about the limit on what we can manage — we just can’t handle any more work. We’re getting older and we need to slowly start paying down some debt.”
Even if they wanted to take on some more projects, there aren’t a lot of larger spaces left in downtown Ypsilanti, Maurer said.
“We feel we’ve done our share here,” she said.
Additionally, the city’s high tax rate is affecting the Maurers' decision. She said the 200 W. Michigan building brings in $10,000 monthly. They currently pay $16,000 in city taxes annually, but once their OPRA tax credit expires next year, Maurer said their yearly city tax contribution will jump to $57,000. Because the former J Neil’s Mongolian Grille and Keystone Lounge remain vacant, there’s no additional income there. Roughly half of their income off the building would go to city taxes. “The taxes are so high here that it would stop anybody from investing,” she said.
The two completed buildings hold a total of 23 Maurer-owned lofts, and the Mack and Mack building is connected to two other loft projects owned by developers Stewart Beal and George Fotiadis. Those buildings have 12 lofts each, and units in all the properties have largely remained occupied since opening.
The Maurers are hoping the Mellencamp building will be ready and occupied by April. Notably, crews are adding a third-floor addition that was approved by the Historic District Commission. Erik Maurer said that addition was approved because it wouldn't affect the character of the front facade.
The units, which are 800 to 1,000 square feet and have 10- to 12-foot ceilings, will largely remain open with the exception of a few walls around the kitchen and bedroom areas.
Maurer said she’s proud of everything they have accomplished.
“I think we’ve done beautiful work and I’m glad we’ve done it,” she said. “We can walk into these buildings now and they’re beautiful and that can never be taken away.”
Tom Perkins is a freelance reporter for AnnArbor.com. Reach the news desk at 734-623-2530 or news@annarbor.com.
Comments
zax
Wed, Jul 27, 2011 : 11:17 p.m.
No one must be editing these "articles". The information provided in the article is not thoroughly developed to provide the reader with any real knowledge of the facts. The Mauers are through with developing that is certain. What is unclear is the underlying tax structure and changes that are referred to, as well as what kind of profits the Mauers are already making. It does appear that they saved 2.5 million in the previous tax breaks, and now are expected to pay regular taxes like everyone else in Ypsilanti. Sounds like a sweet deal to me.
Corby
Sat, Jul 16, 2011 : 4:20 a.m.
Am I the only one that finds it a bit hypocritical that the Maurers, in one breath, bemoan the loss of tax credits and, in the next, bemoan high taxes? Tom, this a bizarre story with no perspective offered other than the Maurers who are well known for their anti-tax posture (unless, apparently, the taxes fund their projects/profits). They might have well written the entire article themselves. Given their history of opposition to taxes that benefit many local residents (transit, public safety, libraries, schools, and parks, if I'm not mistaken) wouldn't it be prudent to get other perspectives on this? How much do they earn on their 123 units? What are those properties valued at? How much do they pay in taxes? Gary Hann, The city property tax records are available to the public. Please point me to just one of the "many poor folk" who pay $2500 on an SEV of $5000.
Mr. Burns
Fri, Jul 15, 2011 : 1:13 p.m.
The Maurers complaint about taxes is something I hear from some landlords in Ypsilanti a lot. Recently one told me, "Renters in Ypsilanti need to quick complaining about the rental rates, the taxes are so high in Ypsi I don't even make any profits from my rental property." Rental properties are long term investments, you can not expect to make profits in the first ten years. I know some families in Ann Arbor that have owned some beautifully kept big rental homes for over 2o years, and their families are comfortable, but just started to really see the bigger profits roll in after about 12 years after buying their rental homes. Also many of these "new landlords" seemed to be shocked when their rental homes need a new furnace or a new roof, or when renters skip out without paying...it is not a McDonalds franchise, it's a apartment building. What is it with Ypsilanti and the hero worshiping of landlords and someone that owns one or two businesses? Really? Come on it is not the great depression. If the Maurer's had not come along...then what would have happen to Ypsi!? Well, I imagine one or two people would have bought those buildings. I don't consider someone that just buys, and opens abusinesses a hero. I do consider business people a hero when they build hospitals, or civic centers like the Herrick Family in Tecumseh Michigan. A perfect example a small town Michigan family that truly have helped their city.
Curious
Fri, Jul 15, 2011 : 12:29 a.m.
Try to imagine a downtown Ypsilanti without the Mauers. To me, that is a scary thought. Many businesses and residents are here solely because of their investment. I'd say that they have done more for the community than the city council could dream of. The mayor and city council should find away to show their gratitude to the Mauers for helping to keep Ypsilanti afloat by coming to a reasonable adjustment of their property taxes. --- then, work on mine!
Dr. Vag
Thu, Jul 14, 2011 : 8:21 p.m.
Love these two. Thanks for all you do for our great city!!
gsorter
Thu, Jul 14, 2011 : 6:15 p.m.
I think the biggest problem with property taxes here in Michigan is that the assessors valuations do not reflect a true value in this market. Anyone who thinks valuations automatically adjust to sales prices is sadly mistaken. We bought a property less than 12 months ago (Not in Ypsi) that is appraised at triple what the actual sale price was. When pressed at the assessors board of review, the board said "We got a really good deal, but the assessment stands". Seeing that there is a 2-3 year backlog at the State Tax Tribunal, and significant legal expenses are involved, most people are stuck. If valuations actually adjusted to sales, many homeowners and banks would not just walk away, solving a big part of the blight problem caused by ownerless houses
John B.
Mon, Jul 18, 2011 : 4:10 p.m.
If valuations actually adjusted (only) to selling prices, up AND down, business associates / friends could sell each other properties at unrealistically low prices to avoid paying their fair share of property taxes. The old "One Dollar plus valuable considerations" comes to mind.
Chase Ingersoll
Thu, Jul 14, 2011 : 4:59 p.m.
The only entities that can afford the taxes in Ypsilanti are "not for profits" and business who are given a tax break. There is a tipping point at which the taxes become so high that owners "walk" from the property and let it go back to the bank. Then there is the point where the banks "walk" from the property and let the county treasurer have it. That is where Ypsilanti is at - look at the upcoming treasurer auction. Also note that while they might not understand it, renters are in fact real estate tax payers. A person renting a 50k house in Ypsilanti is probably paying $350.00 per month in property taxes.
John B.
Mon, Jul 18, 2011 : 3:59 p.m.
"A person renting a 50k house in Ypsilanti is probably paying $350.00 per month in property taxes." Sorry, I don't buy your exaggerated tax number. I could believe they are (indirectly) paying maybe $150 per month.
Cash
Thu, Jul 14, 2011 : 4:23 p.m.
I wonder what the Mauers think of how there are so many groups making decisions and the groups are made up of people NOT elected to do so. This has concerned me more and more as we see SPARK, DDA, DYA, Depot Town groups etc...all people making decisions but NOT elected to do so with our tax money. We are losing our right to representation regarding tax spending. Maybe it's just me.
sig.melvin
Thu, Jul 14, 2011 : 4:53 p.m.
one question most of the buidling have in ypsilanti for over 100 years.SO why is the taxbase so high? most building are Historic and get a taxwrite -OFF and low interset loans ! really like to know?
sig.melvin
Thu, Jul 14, 2011 : 4:51 p.m.
Spark got your taxpayer money from the goverment...called EARMARKS..
Christine Moellering
Thu, Jul 14, 2011 : 3:05 p.m.
I don't think they are whining at all, simply stating the facts of why they are not going to do further projects. Financially it makes no sense. The taxes in Ypsilanti are obscenely high. I live there and our accountant did not believe us when we told him what we pay for our small house. He called to make sure we were not wrong and then shook his head in surprise. These people have done wonderful things for the city and I admire and appreciate them for all their hard work. Kudos for their honesty.
blph
Thu, Jul 14, 2011 : 2:23 p.m.
Dear Maurers, Thank you for all you have done to make Ypsilanti a more special place!
Mr. Burns
Thu, Jul 14, 2011 : 1:57 p.m.
Didn't the Maurers look into what the taxes were before the bought all the properties? Seems silly to whine about it now.
Cash
Thu, Jul 14, 2011 : 4:19 p.m.
I think part of their issue might be what happened AFTER they renovated and got stuck for the obscene increases, And businesses that leased could not afford to do so at the rate needed to even pay the taxes...as there is not much foot traffic downtown. It is a sad thing really.
RxDx
Thu, Jul 14, 2011 : 1:18 p.m.
As a nonbusiness person, I wonder what the Maurers' feelings are on getting rid of the development tax incentives and dropping the business tax. It probably fits their current game plan just fine, but overall I don't see where the state tax changes do anything to create jobs.
Wolf's Bane
Thu, Jul 14, 2011 : 12:07 p.m.
Hey, about the Thompson Block? Seems like these two get the job done. Get her done!