I have been accused of costing the City $1 million related to the sale and re-purchase of the former YMCA property at William and Fifth. This is simply untrue.
The City purchased the former Y-Lot site in December 2003. Initially, the intent was to protect single room occupancy-type housing provided by the Y. Later the City determined that the building was in such poor repair that it should be demolished. The City planned to replace the affordable housing that would be lost in the demolition. The purchase of the Y-Lot was done with a loan that only required payment of interest for a number of years and then a balloon payment of loan principal.
The City issued an RFP seeking a developer to partner with to develop the site into mixed use with affordable housing included.
Over the course of the next few years, the City worked with a developer until Council withdrew from the development deal because of persistent delays. The developer sued the City challenging the withdrawal from the deal and that litigation tied up the property for about five years. The City was successful in defending the suit and was again in possession of the property with the balloon payment becoming due. The City decided to sell the site to the highest bidder.
In April 2014, a developer named Dennis Dahlmann paid $5.25 million to buy a city-owned parking lot in downtown Ann Arbor to build new apartments and commercial space. The terms of that agreement required the developer to complete the project by April 2018, the city would be able to buy the lot back for either the appraised value or $4.2 million, whichever was lower. The sale contract between the City and the developer included a number of other requirements, including the condition that the project would need to connect to a tunnel that would provide access from the building to the underground parking structure across the street. The tunnel was the responsibility of the City and had been canceled by Council, making the required connection impossible.
In April 2018, the developer offered the City $1 million dollars (in addition to the sale price of $5.2 million) to release him from the requirement to connect to the tunnel that did not exist. The City did not accept that additional $1 million dollars. The developer sued to void the contract and recover the expenses (approximately $400,000) he had incurred in planning the development.
On the one hand, the City argued that the developer had to surrender the property in exchange for $4.2 million as required by the contract. On the other hand, the developer claimed that the City should return his $5.2 million plus $400,000 in expenses because the City had made compliance with the contract impossible. The parties entered a compromise settlement that returned the $5.2 million purchase price, but not any of the costs incurred by the developer. Litigation is risky. Settling on a compromise somewhere between best case scenario and worst case scenario is common. That is what the City did in this dispute.
I voted against the settlement compromise because I preferred accepting the developer’s offer of an additional $1 million dollars to allow him to develop the property without the required compliance with the conditions originally place on the plan (including connection to a non-existent tunnel). The settlement was accepted by the majority of the Council, including Mayor Taylor, and Councilmembers Kailasapathy, Warpehoski, Grand, Krapohl, Westphal, Ackerman and Smith.
To argue that the City would have prevailed in the litigation and been required to pay only $4.2 million dollars to re-acquire the Y-Lot is wild speculation. This is a political season and some are willing to engage in such speculation for political advantage.
Why does Ned Staebler’s Talent Agenda engage in this kind of misleading campaigning? Mr. Staebler, himself, provided some insight to the Ann Arbor Observer’s political reporter James Leonard:
“A union-backed group mailed flyers detailing the purported flaws of four challengers, three running for council and one for county commissioner (see "End of a Dynasty?"). Many of the same attacks appeared on the Facebook page of the Michigan Talent Agenda, run by former state house candidate Ned Staebler. "Negative ads are effective," Staebler says. "They turn some people off, but the data shows it works."
I have a long record on Council. This campaign could be about differences in positions on the important issues facing the City but instead have devolved into negativity and misrepresentation.