I've previously shared with you the plans for demolishing North Towne Mall. Since then, more details have been revealed.
Under the plan, the current owners would pay back taxes (around $200,000) and fees of $70,000 for utilities and other costs incurred by the city. Upon payment, ownership of the property would transfer to the city of Toledo which would then borrow around $700,000 from the federal brown fields revolving loan fund (from the EPA) and pull around $100,000 from the Capital Improvement Plan fund (CIP) to demolish the buildings. The Super Fitness portion would remain.
A new detail revealed this past week is that the current owners would have the ability to repurchase the property for the cost of the demolition, or they could benefit from the sale of the property. According to some reports, that share of the sale could be as much as $3.4 million, if the city gets the highest potential price.
This is a "developer bailout," as Councilman Adam Martinez correctly called it.
Why in the world would the the city bail out a developer? Well, as Mayor Mike Bell explains, because it's a nuisance. But then there is the dirty little fact that the current owners might have the city over a barrel. As the local paper is reporting:
Not that the city has much choice in the matter, according to Toledo attorney Matthew Fischer, who is representing the owners in negotiations with the city.
If the purchase and demolition deal does not go through, the current owners will drag out attempts to mandate demolition of the property through the court system for another two to three years, he said.
Sounds like blackmail to me - if Toledo doesn't bail out the current owners, they'll just drag out the court process several more years. In fact, the negotiations over this deal have been going on for about six months and I understand the owners wanted much more than this.
Of course, everyone 'believes' that they'll be able to sell the property 'very quickly.' But we have a prime example of why this 'belief' is nothing upon which to borrow and spend.
In 2009, city officials said the same thing about the old Southwyck Mall and nearly three years later, it's still empty. If anyone was interested in that much land to develop, they'd be looking at the Southwyck property, not waiting for the city to spend taxpayer money to clear another one.
So, despite the 'firm beliefs' of elected officials, there are no guarantees that the property won't continue to sit, cleared or not. And many Toledoans would just as soon let it sit as is rather than risk taxpayer dollars.
If the property isn't sold by 2012, the taxpayers of the city will be on the hook for repaying the borrowed federal funds. And that doesn't even get into the use of dwindling CIP funds.
For several years now, the city (with permission from the voters in a ballot issue) has been transferring money from the CIP fund into the general fund to cover every day expenses. The 2012 budget calls for a transfer of $11 million, though 2012 is the last year the city can do so unless it goes back to the voters with another proposal.
As I've previously said about raiding the CIP:
If we keep raiding our capital budget, we won't have any money for structural items like roads, which are a major expenditure out of that fund.
If my addition is correct, over the last several years we've transferred over $50 million out of the CIP and into the general fund. Can you imagine how much better our roads would be if we'd spent that money on repairing potholes and repaving rather than using it to balance the yearly budget???
We don't need to take even more money, even $100,000, from the CIP.
It's clear to see that this is a great deal for the current owners: they get the buildings demolished, the property cleared and, the longer it takes to sell the property, the more money they get.
And who, in their right mind, sets a sales price that increases the longer it remains unsold?
Yes, you heard that correctly. If the property is sold in 2012, the price per acre would be $55,000. If they sell the property in 2013, the price goes up to $57,500 per acre. And if they sell it in 2014, the price goes up again to $60,000.
And this makes sense to the city?!? This definitely qualifies for 'stuck-on-stupid' designation. By the way, they current value of the property is about $22,000 according to the Auditor's AREIS system.
Here's the thing, the longer the property sits, the lower the value will be, resulting, eventually, in a price that a private developer will find attractive. Or, if they don't pay their property taxes, the property should go to a Sheriff's sale over delinquent taxes. That, too, would result in a price that a private developer will find attractive and the property with change hands without the involvement of the City of Toledo - and, more importantly, without the involvement of tax dollars, borrowing and spending.
Thankfully, we have some members of city council who are opposed to this. Today, council will vote on the proposal. Let's just hope that more than half of them will 'just say no' to bailing out North Towne Mall.
UPDATE:
I listened to Tom Crothers on WSPD this morning when he called in to talk about this issue. He said a couple of things that don't make any sense:
* that no taxpayer money was involved - that the funds were coming in a grant from the federal government through the state and were in a revolving loan fund under the control of the city. Apparently he doesn't understand that the federal government gets its money from....TAXPAYERS!
* he said the loan doesn't need to be repaid. But he then said that the fund was repaid upon the sale of the property. Apparently, he doesn't understand the term "repaid." I understand that the fund doesn't need to be repaid to the federal government, but the fund will need to be repaid - one way or the other. If the property is never sold, the funds will still need to be repaid to the revolving loan fund at some point in time.
* he said that tearing down the buildings will help surrounding properties in the area and lead to their growth and expansion. Morning show host Fred Lefebvre then asked him to name one company at or near Southwyck that expanded or grew as a result of tearing down the Southwyck Mall. After saying that was a really good question, he couldn't name a single one - and admitted so. This proves that his claim was bogus. Apparently, he was willing to make a claim he knew not to be true, never expecting to be called on it.
Basically, he made a bunch of bogus claims as justification for the city to take this course of action. His interview alone is reason enough for city council members to 'just say no!'
1 comment:
Okay, so there's $200,000 against the property in back taxes. Give me one good reason why this whole thing is even an issue. Foreclose on the property and sell it at auction, taking $200 grand for taxes and a few more for handling fees. As for the utility (First Energy?), they're on their own. Let 'em sue.
This whole thing is stupid. Have you driven by the old Southwyck location recently? It's bombed out and deserted; there's vacant buildings all over, and the hotels at the end of Reynolds should have been turned into a rock pile. However, by comparison with North Towne, Southwyck looks like a fat pigeon just waiting to be plucked.
North Towne never was any good, and any ten year old with the experience of a paperboy could tell you the place was a failure whose time had come as soon as it opened.
The whole business is so stupid that taken by itself it is proof positive that somewhere, some people are getting paid to sit on their hands.
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