Chelsea Standard letter to the editor, November 8, 2012 says it all

Save our history.

The Daniels Car Showroom graced Main Street and was the only Art Moderne structure in Chelsea. Sadly, the DDA demolished it on October 29, 2012

The end begins.

The building leans from the blow.

The building collapses.

The renovated clocktower watched over the end of an era.

And then it was gone forever.

No more demo!

Sun Times 10.31.12 Daniels demo -- click on text to read

Letter to the Editor details "DDA's Demolition by Neglect" -- Sun Times 10.31.12

During the public comment segment at the Sept DDA meeting Tom Girard, city resident and engineer at the U of M, spoke up about lack of basic care and attention to the Longworth complex that the DDA owns.  The property was bought so as to improve the appearance of the north access to Chelsea.  Sad to say but action, or lack thereof, speaks louder than words in this case, since the purchase of this property by the DDA has left it in pretty much the condition at the time of purchase about four years ago.  Bear with me as I share some of the history around this topic. 

I was a DDA Board member for twelve years.  Last year I was replaced at the choice of the mayor.  However, I was present during the process from the beginning regarding this property.  Mark Heydlauf, a board member since the Chelsea DDA's inception, brought before the board the need to purchase the Longworth property.  The basic reasons being: it creates a very poor image of Chelsea to those heading south on M52 via auto, and the flash view of Chelsea to those traveling on the train.   It was identified as a "significant" gateway structure and property that the DDA should purchase and improve. No question, the property had  been deteriorating for years and needed attention.  Years prior to this no one was at all interested in purchasing it and the property was only getting worse in it's appearance and upkeep.  After a series of presentations, evaluations and visioning to the DDA Board, a decision was made to purchase it.  The costs to purchase exceeded $400,000 that included: purchase, engineering studies, soil testing, purchase options, etc. The vote to buy the property was unanimous.  It was purchased at a price that exceeded the appraised value.  

I'm formerly a restoration contractor and builder.  Rule #1 when a property is purchased is: take necessary steps to ensure the entire exterior envelope be dry and secured.  Exterior envelope includes: windows, doors, grade for drainage, exterior walls and roof.  Studies and evaluations of the property clearly showed that the buildings needed to be protected from the elements.  Water was coming in from the roof and parts of the foundation.  Windows were broken and access to the inside was possible.  The DDA addressed the security issues but nothing else.  

Then, a visioning session was set up with the public to show what options were being considered for the property in hopes that improvement to the property could start within a year.  Of the options presented, Option B was selected.   Option B showed the adaptive reuse of only one of the three historic structures.  Two buildings were tobe demolished for parking and a small green space.  Consideration for saving all three of the historically significant buildings to be adaptively reused was not offered or considered by the DDA.  The fact that one of the historic structures would be adaptively reused was a revelation in itself.  In the twelve years I was on the Board, not once had the DDA purchased any historic property, improved and adaptively reused it.  I jumped on this opportunity in hopes this might occur.  The Board recognized "Option B" as the option of choice at the visioning session and voted to go forward with this choice.

Then the game changed.  Mark Creswell, a citizen and local businessman, stepped up to possibly purchase the property.  Ut oh!  No one thought there would be interest in this property.  Now the DDA was presented with a dilemma: does the DDA want to get the Longworth property off their books and allow an entreprenuer to start a business in this space that might produce revenue or does the DDA carry on with the envisioned plan for combination demolition/adaptive re-use plan which keeps the property under the public domain incurring expenses with all Option B elements they once felt needed to be there? 

Through much discussion it was decided to allow consideration of the sale of the property to other entities should the DDA's purchase conditions be met by a potential buyer.  Thus started the long and tedious effort to possibly have the property put back on the tax roles and it's improvement fall on the back of a possible future purchaser.  (The process being tedious because it involved: creation of a "Request for Proposal" ["RFP"] which is a written question/answer document of many pages, potential buyers requesting the "RFP" because it had to be completed to be considered a potential purchaser,  completion of the RFP, committee review of the completed version of the RFP and then, committee accepted RFP's went to the board for their review).   This is a lengthy, time consuming process. 

At this point, a number of the DDA Board members decided there would be no more monies spent on this property if it was to be owned by someone else in the future.  It was at this point that there appeared a division amongst the Board.  Some said that the property is nothing but old buildings that should be torn down and to go forward with the plan and others stating that if it can be purchased by an entreprenuer for private enterprise we should allow that option to go forward.  Once the prospect of private ownership of the property was in play, the boards commitment to protecting the structure further from deterioration during the RFP process and thereafter all but disappeared.

Twice, I put forward a motion to spend some money to protect the buildings. Reasonable sums of money to protect the DDA/City investment.   By role call vote the motions were defeated.  Now in the last four years nothing of significance has been done to improve the exterior envelopes and incoming water has continued.  Even the one historic structure that was planned to be adaptively reused is in peril.  Maybe those wishing to see the old structures go and have parking put in its place could see how this might happen.  Its known as "Demolition by Neglect".  Can I say for sure this was the plan?  No I can't.  Do actions speak louder than words?  Demolition is going forward as I speak.

Jim Myles

Chelsea, MI     

         

Jim and Kim Myle
Owners and Innkeepers
website: www.chelseahouseinn.com
email: innkeeper@chelseahouseinn.com
toll free: 877-618-4935
local: 734-475-2244

That "old, simple building" (DDA) is a nationally important--Sun Times 10.31.12

Re: Chelsea Livery

Dear Editor:

For nearly three years, I have been following the news concerning the livery in Chelsea, a site I visited in the 1990s as the author of Great American Railroad Stations. This 570-page book was commissioned by the National Trust for Historic Preservation and published by John Wiley & Sons. The foreword was written by the late U.S. Senator Daniel Patrick Moynihan, who was responsible for the massive restoration and adaptive use of Union Station in Washington, D.C.

My extensive articles about historic transportation and adaptive use of railroad stations have appeared in numerous scholarly publications. In addition, I am the principal interviewee in two hour-long documentary films produced for The History Channels: one on the renowned Grand Central Terminal and the other on Manhattan’s original Pennsylvania Station.

For Great American Railroad Stations, which covers every state in the country, I conducted direct investigations and held consultations with hundreds of historians, architects, entrepreneurs, transportation specialists, librarians, and state historic preservation officers. The book has an extensive essay on the social and architectural history of the building type. It then profiles more than 700 extant depots (of all sizes), the most significant in the country. One of these is the Chelsea railroad station.

Among the criteria for a station to be considered, “context” was extremely important. Is the station still in its original location? Are the tracks still there? Do trains still run on these tracks? And—very relevant to Chelsea—do any railroad-related buildings survive in the vicinity of the station? Such auxiliary buildings tell the story of a station and vastly increase its historical and educational significance. Few places retain them. Chelsea is extraordinary and, in my view, literally unique in retaining not only the first hotel but also the livery. In my research, I uncovered no equivalent situation. An extremely limited number of railroad hotels remain; I know of no liveries whatsoever. A livery was an integral and critical part of a railroad station complex in the 19th and early 20th centuries. The loss of this building would affect not only Chelsea, but also the history of everyday life in the United States.

Sincerely,

Janet Greenstein Potter

8425 Navajo St.

Philadelphia, PA  19118

(215) 247-1836

Sun Times 9.25.12--click on text to enlarge

"Demolition by neglect." "It is called group think."

9.14.12 Letter from State Historic Preservation Office to Manager Hanifan (click on text to read)

Letter from State Historic Society 9.14.12 to Manager Hanifan (click on text)

Interview with Mark Heydlauff --The Sun Times 9.18.12, p 10

Heydlauff remembers the marvelous jump start the Downtown Development Authority provided downtown 20 years ago.  Beyond the grand beginning, it is  important to remember that the DDA also contributed to the Police Station and keeping it downtown at a multimillion dollar price tag.   In order to "clear the corner" for the station, the demolition of the previously grand "Dunkel House" took place.  Previous renderings of a $1.3 M renovation of the now for sale "old police station" were dismissed many years ago.

Below are Heydlauff's comments about the upcoming demolition.

Letter from John Frank, President of Preservation Chelsea (published in The Sun Times & The Chelsea Standard

September 10, 2012
To the Editor:

In news coverage last week of the Chelsea City Council's plan to sell the old police headquarters building at 104 East Middle Street, City Manager John Hanifan was quoted as saying, “We're not particularly interested in driving the development of a historical building. We've not been good at that, but we can always improve.” I respectfully suggest that driving the development and repurposing of Chelsea’s historic downtown buildings should be a priority for both the City and the Downtown Development Authority (DDA). The DDA-enabling Michigan Legislature Act 197 of 1975 lists the objectives of DDAs as maintaining the economic growth and encouraging preservation of the historic character of downtowns. The City of Chelsea now enjoys being listed on the National Register of Historic Places. This honor can help in our efforts to make Chelsea a Destination City. Indeed, the Chelsea First marketing initiative (www.chelseamich.com) was created by our Chamber of Commerce to promote this objective.

The old police headquarters building contributes to that character. It was built in 1910 to house the Holmes and Walker furniture and hardware business, replacing a two-story building that was destroyed by fire in 1909. Built in the late commercial Victorian style, this building is one of only two three-story buildings in Chelsea. Historic photographs show the store-front’s elaborate details and large first-floor display windows. The building was later owned by Margaret Gates Vogel who rented it to Paul Grafson for his supermarket. Beginning in 1946 it housed the municipal and fire department offices on the first floor and the Chelsea Library on the second floor. The third floor was used as a community hall. In 1971 the Chelsea Police moved in after a remodel that included the heavy brick façade on the first floor. This façade could be removed to restore the historic storefront, again making this a very attractive building for a retailer. The second and third floor façades remain unchanged from 1910: a trio of large “Chicago” windows fills the entire second story façade and the third floor is topped with a paneled and stepped brick parapet.

Preservation Chelsea urges the City to indeed drive the restoration and repurposing of this beautiful historic building and not leave its fate up to the whims of a developer who may or may not value its historic appearance and its 100-year significance to Chelsea.
John L. Frank
President, Preservation Chelsea

Photo of Holmes and Walker provided by the Chelsea Area Historical Society (aka "old police station; aka muncipal building)

Humpty Dumpty

http://www.city-chelsea.org/file/longworth.rfp

Daniels Addition Car Showroom to come down. LEFT click to read.

Sun Times 8.22.12 cont'd

Letter published in Chelsea Standard on 8.16.12 (left click on article to read)

Chelsea Standard 8.9.12 (also Sun Times on 8.1.12)

Sun Times 7.25.12 page 1

Sun Times 7.25. 12 (cont'd from p 1)

Sun Times 7.25.12 p 3 (click to read) also in Standard 7.26.12 p. 3

Comments to DDA on 7.19.12 by Jane Creswell click 2 Xs to read

Open Letter to DDA, City Council, Residents of Chelsea 7.19.12

 Preservation Chelsea

J

PO Box 63, Chelsea, MI 48118

uly 19, 2012

Open letter to the Downtown Development Authority, City Council and residents of Chelsea:
All five resolutions presented during the meeting of the Downtown Development Authority on January 19, 2012 were to study situations related to the Longworth Property and Jackson Street corridor. Included among those five resolutions to be studied is the option of demolition of the Daniels addition showroom and the livery.

Since resolution number two is on the agenda today (demolish Daniels addition showroom), what is the evidence of that study? Although resolution three is not on the agenda today (demolish the livery), it should be noted that during the meeting on June 21, 2012, Mark Heydlauff said “The Livery building is old and used up and should not be saved.”

Questions that flow from the study of the situation are:

• Is there an appropriate engineering study completed that documents that the Mack Building is structurally stable enough so that it won’t collapse when its neighbors are removed?
• Although there will be hazardous waste remediation, what are the effects on ground water when buildings are demolished?
• Under Section 29 (2) of the Downtown Development Authority Act (MCL 125 1679, PA of 1975), a DDA is required to refer proposed changes to the exterior of sites listed on the National Register of Historic Places to the State Historic Preservation Office for comment. Has the SHPO been asked for its comments? What were they?
• The adjoining land is owned by the depot, but being proximate to a railroad line, what federal licensing may be required to do major work at the site such as demolition? If such licensing is required, doesn’t that trigger a Section 106 proceeding under the National Historic Preservation Act of 1966 for federally licensed or assisted projects?
• Doesn’t the use of federal funds from the EPA trigger a Section 106 proceeding?

The DDA has a responsibility to produce the results of the study before there is a vote for demolition of any part of the Longworth Property.

Very Truly Yours,

John L. Frank

President,

The Sun Times 7.18.12, front page, click 2 Xs

Sun Times 7.18.12, p 9 click 2 Xs to read

Sun Times 7.18.12, p 9

The question everyone should be asking: What Went Wrong?

John Frank repeated his request of DDA to City Council 7.10.12: initiate a committee to meet with Kadushin Associates

I’m John Frank; I live at 138 East Middle Street.

I am requesting that you please appoint a committee to meet with the developer, Kadushin Associates, who submitted a proposal to rehabilitate the Longworth properties. I made this request to the DDA at their last meeting and I was ignored.

The purpose of this proposed committee would be to resolve several misunderstandings that were created by a resolution the DDA passed on June 7^th.

When they presented their proposal to the DDA at a special meeting on May 31^st, Kadushin Associates made clear how they expected to finance the project, and the required timeline. At the following meeting on June 7^th the DDA passed a resolution that Kadushin perceived as having erected two insurmountable barriers. Some members of the DDA now say that the resolution did not say what they meant, and that led to a misunderstanding.

Upon receipt of the resolution Abe Kadushin asked our City Manager to meet with him to clarify these issues. Abe told me that he was stunned that the City Manager refused to meet with him. This was “the straw that broke the camel’s back.” ----- Abe then took the advice of his attorney and withdrew their offer, and told me that trying to work with Chelsea was, quote, “too much hassle” – “too much hassle”.

I believe Chelsea will suffer if we are silent about what we know from experience is wrong. And what is my experience? Although I do not own a business in Chelsea, I did devote eleven years, prior to my retirement, as a Senior Partner in a 250-person consultancy that worked with large organizations, helping them to improve their business processes. I do know something about business.

My experience in business taught me that criterion number one in doing business is:

Love Your Customer. A developer is – or should be thought of as – an esteemed potential customer. This customer wants to spend 3.7 million dollars in our community to create new tax-paying business. We ought to reach out to him. Make it easy for him to do business with us. Instead of saying, as one us did, “I for one am not ready to move forward by inviting them back,” we should have said “I will meet with you at your convenience to resolve misunderstandings and I will work with you to find a mutually beneficial way for us to move forward together.”

Since the name on the deed for the Longworth property has the City as the owner, it is time that the City Council exercise leadership on this matter, in accordance with the ethical principles for the government of the City of Chelsea. A non-voting sub-committee could be appointed to meet with Kadushin for the purposes of exchanging information and resolving misunderstandings, without violating the Open Meetings Act. Surely this ought to be done.

I request that you please appoint a committee to meet with the developer, Kadushin Associates, to resolve several misunderstandings that were created by the resolution the DDA passed on June 7^th.

Thank You.

Two points communicated to City Council on 7.10.12 regarding timing of funding and process required of DDA

July 9, 2012

Chelsea City Council

Meeting July 10, 2012

Good evening, Members of the Chelsea City Council. My name is Ellen Thackery and I am the Southeast Michigan Field Representative for two nonprofit organizations, the Michigan Historic Preservation Network and the National Trust for Historic Preservation. I am here tonight to communicate two points of interest about the Longworth Complex—a complex both of my organizations believe is a valuable historic asset to your community and to our shared heritage. I am directing these comments to you because you are the elected, legislative body and I know that all things that affect your city and its residents are relevant here and because I believe that the Longworth Complex issue has become urgent and the discussion of this issue should not wait until the next DDA meeting on July 19.

The first point of interest that I’d like to convey is a matter of timing as it pertains to the Longworth Complex. On June 7, the Chelsea DDA passed a resolution that requested that the development team chosen to rehabilitate the Longworth Complex submit an irrevocable bank letter of credit of $1 million along with their modified proposal by June 21. It’s important for you to know how difficult or even impossible that request is to fulfill. We speak from our own current experience. The Michigan Historic Preservation Network (MHPN) is developing a historic property ourselves in Old Town Lansing as our offices. The property agreement was finalized in November 2011, asbestos abatement has occurred, our architectural designs have been developed, and many other due diligence activities and engineering and environmental studies have taken place on the property since November 2011. And we are, just now, in July of 2012, waiting for the permanent loan commitment from our bank, which will indeed come.  It has taken us about 8 months of environmental and financial investments before we could obtain that commitment. I don’t know how it would be possible to obtain that kind of commitment from a bank within two weeks or even 90 days of a project’s start.

The second point of interest that I’d like to convey is to note for you that the state law that enables DDAs requires that any city-owned properties listed on the National Register of Historic Places receive a State Historic Preservation Office review before the city changes the exterior of the building. As you know, the National Register is an honorary designation that affords access to the Federal Rehab Tax Credit program, and in the vast majority of cases, there is no oversight of any of these properties listed on the National Register. In this case, because the Longworth Complex is City-owned and listed on the National Register, the complex requires a State Historic Preservation Office review before the City and/or the DDA make final decisions about the buildings. The DDA is determining now and over the coming weeks what its intentions for the Longworth Complex are, but if the intentions could involve demolition or even simply changing the exterior, I did want to bring that necessary review to your attention.

In conclusion, because of both of these points, I am urging you to act on behalf of the historic buildings in your care and to intercede if the DDA does decide to do anything than have these buildings rehabilitated by a seasoned development team committed to their revitalization. These buildings were purchased by the City and these buildings are City assets. We urge you to encourage more time for gathering approvals, due diligence, and securing bank support. Several MONTHS are needed for this project, not just a couple weeks. And please ensure that the buildings’ State Historic Preservation Office review occurs in accordance with the state law.

Thank you for your time and consideration.

Sincerely,

Ellen Thackery

Michigan Historic Preservation Network and the National Trust for Historic Preservation

107 E Grand River Ave.

Lansing, MI 48906

(517) 371-8080

Two other developers explain financials commonly used to redevelop historic properties to City Council 7.10.12

To Members of the Chelsea City Council,

As Chelsea leadership deliberated about the Longworth property and the proposals that were submitted to rehabilitate the property and revitalize the corner of Jackson and Main, it was suggested by some members of the DDA that the development group is not putting enough “skin in the game” relative to the financial package they’ve developed. To some, the group appears to be taking advantage of too many financial benefits—benefits that put them at an unfair advantage to others in town.

Not so. The financial tools specifically made available for historic preservation are designed to level the profoundly lopsided playing field that disadvantages the rehabilitation of historic buildings relative to other kinds of construction, especially new construction. Here’s what we mean by “lopsided.” Seeking financing at the bank, the historic property developer finds a banker who, almost always, is skeptical that an old building can be saved. The resulting loan-to-value ratio is low, forcing the developer to become extraordinarily creative in attracting any kind of loan, grant, or incentive available. The more complicated the package, the riskier. And the greater the risk, the less likely there is a return commensurate with what it takes to work on a property that has surprises at every turn – a weaker foundation than expected, asbestos in the plaster, rotted floor joists or ceiling beams, and the like. If returns were assured, generous, and easy, don’t you think everyone would be doing preservation projects?

In spite of these challenges, the Kadushin/Beal group has been skillful in suggesting a financial package that can revitalize the Longworth property, a large, complicated, deteriorated complex of buildings that only a seasoned preservation group would even consider taking on. Let’s take a closer look at the financial components proposed by the group.

A Tax Incentive Program:

For 32 years, the Federal Historic Tax Credit has quietly and effectively created skilled jobs, stimulated local economies, and revitalized historic buildings and communities. Nationally, 37,000 historic properties have been rehabilitated with the help of this credit, generating 2 million jobs and attracting $90 billion in private investment. The amount of tax credits paid by the U.S. Treasury is far less than the amount of federal taxes generated by these projects. Michigan has used the program since its inception. What many people forget is that the credit is not a benefit provided before the work is done. Rather, the investor must cover all rehabilitation costs and conduct all work in keeping with the “Secretary of the Interior’s Standards for Rehabilitation” without any assurance of qualifying for the credit. Only when returned to service and certified by the National Park Service, may the property owner claim the 20% credit that is taken against qualified expenses.

A Grant Program, a Loan Program:

Governor Rick Snyder is keenly interested in the revitalization of urban, suburban, and small town Michigan and last year created the “Community Revitalization Program” to make his vision a reality. He factored in historic preservation by having “creates jobs,” “addresses blighted properties,” and “works with historic resources” included among the selection criteria for program participation--clearly all of which play to the desire to see historic preservation supported. Successful applicants receive an incentive of up to 25% of rehabilitation expenses as a grant or a loan, both with dollar maximums. The pool of dollars currently assigned by the Governor is $100 million with at least $20 million for Brownfield and Preservation projects. The Michigan Economic Development Corporation is charged with getting the program up-and-running, and preservation projects have been among the first to be approved. We understand that Chelsea has been deemed a promising environment for successful use of this program.

A Tax Freeze Program:

Michigan’s Obsolete Property Rehabilitation Act (OPRA) was established in 2000 as another means by which to spur development. While not specifically for historic properties, they have often been the recipient because they reclaim some of the state’s most deteriorated properties. Unlike a tax abatement, OPRA freezes the current tax liability for a property so that improvements can be made without the taxes going up for from 1-to-12 years. A developer can finance a rehabilitation, an existing business can finance an increase in capacity or efficiency, or an entrepreneur can finance a start-up, knowing that they have a period of time to get underway. Rather than creating a competitive advantage for a project, it allows a project to compete when its neighbors may already be going concerns. The payoff? The municipal unit gets a more robust business able to pay its fair share at the end of the tax freeze, rather than one stunted by a tax burden that forever places it behind its neighborly competition. And of course, even as a historic property is being assisted through OPRA, the community benefits--i.e. sales tax is paid on building materials, people are employed to do the rehabilitation, employees in the new business spend their earnings in the community, income taxes are paid, visitors are attracted and spend their dollars around town, etc.

If Chelsea’s community leaders are not using all the tools available to make a historic preservation project successful, they are short-changing their community’s economic success and compromising the architectural history they are responsible for stewarding. Rather than making it impossible for the Kadushin/Beal team to work with the Longworth Property by dismissing their use of one tool or another, the City of Chelsea, its City Council, and especially its DDA should be helping create a great project—a genuine success story that will grab attention and attract others. And best of all, these tools are not just for outsiders who can bring new ideas and vitality to Chelsea. They’re for those who already have invested in Chelsea’s future and deserve a level playing field, too.

Sincerely,

Scott Lowell

Owner

Traffic Jam and Snug Restaurant

Detroit, MI
 &

Gregory Saxton

Director of Development

J. E. Johnson, Inc. 
Midland, MI

Postscript:   

We challenge the belief held by some that the Kadushin/Beal group is taking advantage of too many financial incentives in lieu of their own equity – i.e. at a DDA meeting, it apparently was noted in a critical tone that the group had factored $500,000 into their term sheet for themselves.  It must be noted that Kadushin/Beal are not investors who simply are putting dollars into a project with no sweat equity involved.  Rather, they ARE the project.  They need to pay themselves for the hours they invest as professional architects, planners, builders, and retailers.  They need to pay themselves for the risks they are taking using the Federal Tax Credit which is not paid, or even assured, before the project is undertaken.  And don’t forget they have invested cash equity as well.  This is indeed “skin in the game.” 

DDA meeting of 6.21.12

May be viewed by the public on channel 18 on Tuesdays and Saturdays at 9 am and 7 pm.  The followed article in the Sun Times reports that meeting.

Chelsea Redevelopment Project Scrapped 6.27.12--double click to read

Sun Times, p 7, "Project Scrapped"--double click to read

Letter to the Editor -- Sun Times 6.27.12

Janet Kreger's Comments at DDA meeting 6.21.12

Hello. I’m Janet Kreger with the Michigan Historic Preservation Network. I am here to again speak with you about the Longworth Property.

The Longworth Property has been a feature on the Chelsea streetscape for more than a century. During that time, the three buildings have seen their heyday, but also a more recent period of decline.

Until earlier this week, these buildings were slated to become a lively new center of dining, retail activity, and downtown living. We thought these buildings were safe when a qualified development team stepped forward to invest in them. But that team has backed away.

These past few years have been tough for old buildings. The Michigan Historic Preservation Network knows this because it works all over the state with DDAs, City Councils, preservation groups, and individuals who are re-using economically viable historic buildings.

In many communities, projects have not gone forward because there simply have been no investment dollars out there. But the development team of Abe Kadushin, J.C. Beal, and their partners seemed to reflect a sea change. They wanted to invest in Chelsea because they knew the potential of the Longworth site.

What stood in the way was nothing more than the need for additional time because the DDA’s June 7 Resolution raised concerns for the development group.

First, the Resolution specifically stated, “that the DDA invites the development team to submit its draft agreement to the DDA on or before June 21, 2012…(and it) must be accompanied by the irrevocable bank letter of credit of $1M or other security acceptable to the DDA…” This was a two week timeframe.

Second, the Resolution specifically stated, “Due diligence and other contingencies, including financial commitment, shall end September 7, 2012, when the agreement shall become firm...” This was a 90-day timeframe.

Both timeframes were too short to pull together the financial packaging for an adaptive reuse project of this size and scope.

Here’s why. In addition to other financing, the developers needed to qualify the Longworth project for two incentives reserved for historic buildings. The first incentive’s application has a 60-day review process. It must be approved before the second can even be prepared and begin its own 30-day-plus review process. Only when these incentives, other financing, and due diligence come together, could a letter of credit or other security be secured. If you were counting with me here, 90-days had been exceeded.

This is a seasoned team of professionals with a track record of working with challenging preservation projects. Their proposal was for an approximately $3.7 million redevelopment including private equity, incentive financing, and debt financing in addition to the equity investment of one of the project partners who wished to live in Chelsea in the Longworth Property. What they sought from Chelsea was flexibility on timeframes based on the realities of their challenges.

The City of Chelsea had the opportunity both to save historic buildings important to the community and to fulfill its fiscal responsibility to its residents. Some flexibility was needed. The development team might still be available to talk. Will you, as members of the DDA, talk with them?

Jan Bernath's Comments 6.21.12

My name is Jan Bernath, and I am on the Preservation Chelsea Board of Directors.

Janet Kreger of the Michigan Historic Preservation Network has just spoken about the time constraints that were determined by the Kadushin/Beal Team and their legal counsel to be too tight to complete what needed to be done.  Additionally, however, I believe we also arrived at the point of the withdrawal of the Kadushin/Beal proposal due to misunderstanding.  Specifically, the resolution passed by the DDA at the meeting on June 7, 2012 placed new requirements on the developers beyond the goals and requirements of the request for proposals issued by the DDA and to which Kadushin/Beal responded.  One key misunderstanding stemmed from how the developers were to demonstrate their financial ability to do the project.    

  

Goal 2 of the RFP stated that the “offer to purchase must be accompanied by a firm commitment from a financial institution or equivalent source for a minimum of $1 million for investment in the property and improvements.” Accordingly, the Kadushin/Beal development team presented a financial package of $3.7 million in their proposal to redevelop the Longworth Property.  They presented their sources for their redevelopment dollars including private equity, incentive financing, debt financing, and the equity investment of one of the project partners who intended to take up residency in the building.  They presented these ‘equivalent sources’ – equaling well more than the $1 million minimum - knowing that a firm commitment from a financial institution would not be possible this early in their project.

However, the resolution of June 7 stated that “the agreement must be accompanied by the irrevocable bank letter of credit of $1 M or other security acceptable to the DDA to secure improvements in the property and to cover any cost or damages incurred by the DDA and the City for site restoration or removal of incomplete improvements if the project fails, after satisfaction of due diligence contingencies.”  Just as the “firm commitment from a financial institution” requested in the RFP was not possible, it was even less possible to secure an “irrevocable bank letter of credit of $1 M” in this short timeframe.  Unable to ask questions of Chelsea leadership about what further they could add about “equivalent sources,” the Kadushin/Beal attorney told them to back away from the project. 

As you can imagine this resolution caused misunderstanding between the DDA and the developers. Sadly, the Kadushin/Beal team withdrew their proposal based on this misunderstanding.

John Frank's comments at DDA meeting 6.21.12

John Frank’s comments to DDA 21JUN2012

I’m John Frank, President, Preservation Chelsea.

It can be said that perception is reality. Your resolution of June 7 has been perceived to have imposed a higher level of financial performance than the RFP had specified. It could be perceived to have erected insurmountable barriers – show stoppers – in the path of this project.

A $3.7 million investment in Chelsea is within our grasp. Surely nobody here wants this to slip away due to misperceptions.

The Kadushin Associates team has an excellent track record of accomplishment. If Chelsea loses this, their 3.7 million dollars will wind up in another community.

Please initiate a meeting with the Kadushin/Beal principals to resolve the misunderstandings.

Thank you.

draft minutes from 6.7.12 meeting

CITY OF CHELSEA

DOWNTOWN DEVELOPMENT AUTHORITY

BOARD OF DIRECTORS SPECIAL MEETING

7:30 A.M., THURSDAY, JUNE 7, 2012

DRAFT

Present:	Flintoft, Cleary, Finger, Heydlauff, Holman, Lindauer, Merkel, Morrel-Samuels, Pierce, Povlich, Sanville, Schwarz
Absent:
Others Present:	City Manager Hanifan, Library Director Harmer ; Albertson, Anderson, Feeney of City Council; Cathy Bean, Jan Bernath, John Frank of Preservation Chelsea;Janet Kreger, Katherine Reisig of MHPN; Joe Jeffreys of First Congregational Church; Nicole Pangas Henry, CCA; Residents: Kathy Carter, Hank Muir, Nancy Whitelaw, Nancy Anderson, Peter Heydlauff, Jane Creswell, Scott McElrath; Lucy Silverio of Sun Times, Lisa Allmenger of AA.com; Ron Gordon of FCC; Tom Girard - Chelsea Connection; Cathy Clark, Cary Church, Rob McFate

President Flintoft opened the meeting at 7:30 a.m.

1. Flintoft opened the floor for Public Participation:
   -John Frank noted that either project would support and preserve landmarks, financially benefit the city, spur economic growth, improve the tax base, improve property values. He is available to assist with historic knowledge
   -Cathy Carter spoke of a 400 yr. old community whose city center changed and evolved. The developers who responded to the RFP see value in the property and the proposals are opportunities even if not perfect.
   Janet Kreger hopes that the DDA can work with the developers because securing grants and tax credits can be time consuming. If abatements granted, can be rolled back.
   -Kathy Bean encourages transformation and making a choice. Larry Bean is a member of the Depot Association Board of Directors, which controls the parking on both sides of the depot. The Board would like to meet with the DDA in that regard.
2. Flintoft asked that each Board member comment on the two RFPs, stating their preference.
   -Pollack's plan was the choice of several members. Povlich, Pierce, Lindauer originally rejected both because of concerns regarding financing. Flintoft observed that they did not meet their financial commitment. There must be a financial commitment to cover the unlikely event that the project begins but is abandoned and the DDA must restore the property.
   -The tax abatement issue concerned the board because DDA has no control over that and the point of development was to return the property to the tax rolls. IFTs are for existing industrial properties which enhances what the city already has. The taxes generated by a new development is necessary to support the the project.
3. President Flintoft presented Draft Resolution #6 which the Board reviewed. The Board had a general discussion regarding what would happen if the project was in process and failed. Once they have a final mortgage on the property, the DDA has no claim on it.
4. Motion by Flintoft, second by Morrel-Samuels to approve Resolution #6.DISCUSSION: Holman was concerned that there be a specific financial commitment by a bank, after due diligence, and by a specific date. The original request by the developer was for 6 months. Heydlauff pointed out that there needs to be progression in the project and wants a commitment in 90 days. The DDA needs to protect its investment.Motion by Sanville, second by Lindauer to amend Resolution #6 to include amount of $1M bank letter of credit, no tax abatement and allowing for due diligence on part of developers. Motion carried. Followed by vote on original motion . Motion carried.

Chelsea Downtown Development Authority

Jackson Street Corridor/Longworth Resolution #6 (as amended)

At a regular meeting of the Chelsea Downtown Development Authority of the City of Chelsea, County of Washtenaw, State of Michigan(hereinafter referred to as “DDA”), held on June 7, 2012

The following resolution was offered by Member Flintoft and supported by Member Morrel-Samuels and after discussion and upon roll call vote was duly adopted:

Whereas, the DDA's Request for Proposals (RFP) has solicited two proposals, one by Kadushin/Beal development team and another by the Prochaska/Zachary development team. Neither proposal has demonstrated the financial commitment as requested. Each proposal requests tax abatements from the City which are beyond the authority of the DDA to accept or obtain. The mixed use of the Kadushin/Beal proposal is the most viable.
Be It Resolved, that the DDA invites the Kadushin/Beal team to submit its draft agreement to the DDA on or before June 21, 2012, for acquisition and development of the Longworth property on the conditions and requirements of the RFP with the following modifications:

1. The agreement must be accompanied by the irrevocable bank letter of credit of $1M or other security acceptable to the DDA to secure improvements in the property and to cover any cost or damages incurred by the DDA and the City for site restoration or removal of incomplete improvements if the project fails, after satisfaction of due diligence, contingencies.
2. No tax abatements in the agreement.

3. Due diligence and other contingencies, including financial commitments, shall end September 7, 2012.

4. Any conveyance prior to final mortgage financing shall be subject to a right of reverter on the condition that the project is completed and on breach of the condition title shall revert to DDA.

5. Developer can have immediate access upon the execution of agreement for due diligence activities.

5. Public Participation: Pastor Joe Jeffreys of First Congregation Church noted that his office overlooks the proposed project space andwill be happy to get involved.
   Jan Bernath expressed concern that 90 days was too short of a time.
6. President Flintoft declared the meeting adjourned at 8:15

Notes: In the Board discussions, there was several times when members echoed agreements without additional comments. To avoid redundancy, those were not included.

Chelsea citizen Harry Zoccoli emailed a letter to the DDA Board, read by the members, in support of the Longworth project. He sited the official DDA Mission Statement as reference for moving forward.

Developers withdraw proposal for redevelopmenet of Longworth Properties

because of the DDA resolution.  See side bar for resolution.

Sun Times 6.13.12--triple click to read

Today's DDA meeting can be viewed on Channel 18 on Tuesdays and Saturdays at 9 am and 7 pm

Make history to preserve history THIS THURSDAY at the DDA meeting

If you are able, show your support for keeping our historic buildings.  Your presence counts at the DDA meeting this Thursday, June 7, at 7:30 am in the McKune Room.

DDA decision meeting will be on June 7 at

7:30 AM in the McKune Room.  According to the agreement established previously, public comment may be made at the beginning and ending of the meeting.  If at all possible, please attend.  See the previous post for the times and days the taped meeting of the presentations of the two proposals on channel 18. 

Watch the presentations on the Longworth Proposals on channel 18

The DDA meeting held today, May 31st, can be viewed on Tuesday and Saturday at 9:00am and 7:00pm. .

Information from DDA meeting 5.17.12

• The format for the DDA work session on the 31^st will consist of submitter presentations followed by questions and answers by the DDA members.  This meeting will have no public participation although the public is invited to observe.  Issues of time line will be of particular interest. The session is scheduled to begin at 7:30 am. in McKune Room.

• A special meeting is scheduled on June 7 at 7:30 am. in McKune Room for the purpose of reaching a decision: pick one or the other; reject both. Public comment will be allowed at beginning and end of meeting. However, comments need to be new information only. This will be videotaped.

• The proposals will not be posted on the city website. Those wishing copies of the proposals should request both of them from John Hanifan at jhanifan@city-chelsea.org or 475-1771 ext. 201.

• Greg Raye asked for assistance with window replacement on the Welfare Building. As a result of this request, a facade improvement program, created and utilized a number of years ago, may be considered for reinstatement. Guidelines will need to be established at a future discussion.

• The buyer of the Post Office is requesting a liquor license for a restaurant as well a REU assistance.

Chelsea Standard article on DDA meeting 5.10/12 (click here for link)

window restoration workshop

http://www.heritage.com/articles/2012/05/10/chelsea_standard/news/doc4fa95e0d1d64e935861612.txt

Notes from DDA work session on 5.10/12

Points from DDA work session 5.10.12

discussion of two proposals submitted for

redevelopment/reuse of Longworth Properties

Discussion largely related to Goals of RFP and Redevelopment goals below:

GOALS OF THE RFP INCLUDE: Select an interested private party to

1) Purchase the property and return it to the tax rolls

2) Offer to purchase must be accompanied by a firm commitment from a financial

institution or equivalent source for a minimum of $1 Million for investment in the

property and improvements

3) A time line for the project and a business plan acceptable to the DDA

The project should contain, but will not be limited to, a combination of such uses as

Mixed Use Development

(1) Retail;

(2) Housing;

(3) Restaurant;

(4) Parking.

Redevelopment Goals:

In addition to the general list of uses for the development of

the "Former Longworth Plating building," a series of goals for the redevelopment of

the property were established through a planning process. Those goals include:

Continuation Revitalization of the Downtown.

The development of the Longworth Plating site shall serve as a continuing development effort and redevelopment of the entire Downtown.

Linkages and Connections.

The site should be designed so that the development forms physical and visual linkages and connections with the Downtown and the McKinley Clocktower Complex.

Design Quality.

The development should be designed with "landmark" visual qualities befitting the strategic location of the site. The architecture should follow local historic examples and redevelopment guidelines.

Fiscal Benefit to the City.

The development of the site should be fiscally beneficial to the City of Chelsea by enhancing economic growth in the City, increasing the tax base, attracting new businesses and promoting job growth.

Proposals submitted: (Please see previous postings on blospot for proposals)

#1. Proposal submitted by Prochaska and Zachary projects an investment of 3.8 M.

#2. Proposal submitted by the Longworth Building Development Co (Alex Pollock, JC Beal, Kadushin Assoc., Dangerous Artchitect) projects investment of 2.1 M

Comments:

All DDA BOD present were pleased that two proposals were submitted.

Both proposals exceed the required 1 M investment.

Concerns:

Is a pottery studio economically viable?

Would another restaurant in town be able to compete?

What about parking?

Time line on proposal #2 is a concern.

What role does the DDA play?

Who owns parking near Depot? City? Depot Association?

Who bears the cost of the street scape?

General comments:

• Tax abatement is a Council concern, but not favored by DDA.
• Accommodation for Farmer's Supply is an advantage for owners.
• DDA has the ability to wave some requirements of RFP.
• #2. proposal addresses mixed-use more thoroughly.
• Future of Chelsea is mixed-use.
• # 2 will serve as a tourist attraction. Jiffy Mix brings in 25,000 visitors a year.
• We need downtown housing.
• Like downtown housing of #1 but concerned about that it is spec housing.
• There most likely is a liquor license available for that site.

• Jackson should be one-way with effort to reduce the speed.

• # 2 proposal removes Daniels showroom.
• Don't worry about what goes into mixed-use.
• Consider the Baltimore plan: if developers don't have the building ready for inspection by X date, building reverts to city in better condition. Then write new RFP.
• Allow pedestrian movement to building from West Middle Street.
• Selected proposal will need to go to Planning Commission.
• Wait until building and street scape are done before considering additional lighting.
• Want control over lighting.

Next steps: Regular DDA meeting next Thursday, May 17^th.

Invite both developers for presentation on submitted proposal (not changed) and question and answer period. Invitation will be for Thursday, May 31^st, at 7:30 a.m. in McKune Room. Public invited to observe only.