The Ypsilanti Courier
A Heritage Newspaper
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Concerns voiced on Water Street project
Almost $21.5 million spent for property and demolition
By Dan DuChene, Staff Writer
PUBLISHED: February 22, 2007
Despite the threat of a severe winter storm, more than 50 residents braved heavy snow fall and slippery roads Feb. 13 to discuss Water Street in an open forum moderated by planning department officials.
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The forum was held to discuss the past, present and future of the city's project.
Karen Hart, director of the city's planning department, presented what she knew about the project, and then took questions from the audience.
Among other people interested in Water Street, members of City Council, the Planning Commission, the Zoning Board of Appeals, the Historic District Commission, several local developers and landlords, and attended the meeting.
Currently, the property between Huron River and River streets, stands on a 38-acre plot of land all owned by the city.
Hart said the fact that the land is owned by a single owner, and the project's potential to connect downtown and Depot Town are among the Water Street Project's vital assets. She said liabilities include the blighted buildings that still stand and the contaminated soil.
"It's a challenge to develop, that's why we call it a brownfield," Hart said.
She said the community goals the city had for beginning the project "are still valid now."
Those goals, she said, were to connect Ypsilanti's two main business districts, to create more home-ownership and to generate more taxes for the city.
"In a community where almost half of the land space doesn't pay taxes, I think that's important," Hart said.
After talking about the physical aspects of Water Street, Hart began to discuss the financial aspects of the project.
"Some people, I know, are interested in money," Hart said.
Hart said the city has spent nearly $21.5 million for acquisition of the property, demolition of some buildings and some soil remediation.
Of that total, Hart said $13.1 million came from issuing bonds, grants and loans made up another $7.7 million and the remaining $600,000 was in cash from the city's revolving loan fund.
After several years of repayment, that total will probably double after fees and interest from the bonds and loans, she said.
"That's what would happen if you put it on your credit card," Hart said. "You'd have to spend more than you actually borrowed."
Hart said the city's first bond payment is due in November 2009. After that, she said, loan payments will need to be made in 2011.
"Which, in reality, is not too far away," Hart said. "Our reality is we do need to get on with getting on with this project, economy or not."
She made comments about Joseph Freed and Associates, the past preferred developer that pulled out of the deal late last year.
"While we're very disappointed it didn't work out with them, we departed on very good terms," Hart said. "They did not want to be in a position where they built buildings that didn't sell."
She said Freed is still interested in working with Ypsilanti, "but they couldn't make it work right now."
After working with Freed, Hart said the city still has a brownfield plan approved by the county, a completed Act 381 work plan and has almost completed an Single Business Tax Credit application.
The brownfield plan and the Act 381 work plan are detailed plans as to how the Water Street Project will be carried out. She said the city could see more funding through the completion of those plans.
The Single Business Tax Credit could benefit a company that develops the property, if the application is approved.
"We learned a lot in that process," Hart said, "and that makes us smarter in going to the next step.
"We absolutely need to do as much as we can to remove any barriers to redevelopment as possible."
Hart said the city may have another $1 million to spend on demolition and remediation for the sight.
"We've run into a little glitch in actually being able to use that," she said, "but we're working on resolving that."
David Kircher, a local landlord, asked what the taxable value of the property would have to be in order for the project to pay for itself through taxes.
He also asked if the city would have to fund the construction of infrastructure for the land.
"I can't sit here and give you a final number," Hart said in response. She said the city was looking at $100 million to $200 million in private investments.
As far as other necessary costs on the side of the city, she said it could take another $1 million to $2 million to get the property ready to develop.
Peter Murdock, a former Ypsilanti mayor, said there would need to be $30 million invested into the site by the end of 2008 in order for the city to make the payments that year. He said another $20 million would need to be invested the following year. Murdock asked if the city had a second plan if these investments were not made.
Ed Koryzno, Ypsilanti's city manager, said asking voters to approve a millage would be the city's next step.
Stewart Beal, a local developer pointed out that the city could refinance its debt. Koryzno agreed.
Before Freed was named Water Street's preferred developer, the city had sent out request for proposals to 35 different firms. No developers replied, Hart said. Freed had submitted a letter of interest, she said, and then negotiations began.
Beal asked if the proposal requests sent out by the city had been too restrictive. He asked if more developers would have responded if the requests were made much more open ended.
"I don't think an RFP is the solution to this particular challenge," Koryzno said.
After the meeting, Koryzno said developers would be more apt to negotiate through a request for interest. He said the topic of this meeting was to ask the community if it was flexible about the development of Water Street.
"The question for us is, 'how far do you want to stray?' " he said.
Many audience members said the city needs to be flexible about future developments for the property.
"If you keep striving for perfection, you're not going to get anything, one audience member said. "You reach a point were you really need to get something going, whether it's perfect or not."
Hart said, "Whatever it is, it has to pay taxes."
Ypsilanti Mayor Paul Schreiber said, "I thought it was a good meeting. It's a good start."
He said he is looking forward to a forum organized by YpsiVotes, hopefully to take place next month.
"I think it will make a good add-on," Schreiber said.
Mark Maynard, a local blogger and member of YpsiVotes.com, said the group is still planning to host a forum on Water Street. He said the format will consist of a panel of experts, "talking honestly."
"The next step is to hear the people," Maynard said.
He said the group will be asking the community for questions to ask the panel, and to gather information about the project from the city.
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