Shelby Township amends purchase agreement for Shelby Manor

By: Sarah Wojcik | Shelby - Utica News | Published October 9, 2017

SHELBY TOWNSHIP — The sale of Shelby Manor has a firm new sell-by date: Dec. 15, 2017.

Township Attorney Rob Huth has been working with the purchaser to find a favorable compromise for both parties. Two new developments recently approved by the Board of Trustees include lowering the purchase price to $14 million and extending the due diligence period another 30 days.

When the township put out a request for proposals, it received nine bids. The highest bidder was Shelby Township-based Shamrock Acquisitions LLC for $15,250,000. The second-highest bidder was Detroit-based American Community Developers Inc. for $12,800,000.

“We are now presented with an appraisal from the purchaser,” Huth said at the Oct. 3 Board of Trustees meeting. “The purchaser indicated to us this appraisal was the lender’s requirement, so they likely put in the proposal, went to the bank and the bank said, ‘We want you to use our appraisal company that we trust before we lend out this kind of money.’”

The appraisal prepared by Integra Realty Resources-Detroit for Bernard Financial Group, effective Sept. 5, placed the market value of the property as is at $13.5 million. The pending sale price — for $15,250,000, or $57,765 per unit — was higher than the appraised market value.

“That appraisal has caused an issue for the purchaser, because banks will lend at the appraised value,” Huth said. “The bank will only lend up to the amount of money (for whichever is) lower — the purchase price or the appraised value.

“As a result of the appraisal and us taking that appraisal and vetting it with others in the field, including those who work for the township and those who do not work for the township, we believe that that appraisal is accurate.”

He said the new appraisal is more than the township’s own appraisal “some time ago.”

He recommended that the board amend the purchase agreement from $15,250,000 to $14 million, “which is higher than the appraisal that we had and much higher than the second-highest offer we received for the property.”

Huth added that the title company overseeing the sale did a “thorough” check and found that there are no deed restrictions that would interfere with the sale.

The board unanimously approved lowering the purchase price of Shelby Manor.

It also unanimously approved a second request from Huth at the Oct. 3 meeting for Metropolitan Concrete to replace concrete at the property for $16,255. Huth said Shamrock Acquisitions agreed to install complementary handrails.

“This work is necessary. It is required during this due diligence period that we do that normal maintenance at the site,” Huth said.

He added that, under the Open Meetings Act, the township is within its right to address the sale of township-owned property in closed session, but officials wanted to address the sale during the regular public agenda for “transparency.”

“We know there’s a great deal of interest in the community regarding these high dollar amounts, and we are talking about it in full disclosure,” he said.

Treasurer Michael Flynn said the adjusted sale price is “still a good deal for the taxpayers.”

“It’s a little less than we had hoped for, but it’s still quite a bit more than we had hoped for at the beginning of this process, and it’s still quite a bit higher than the (other) bids we got,” Flynn said.

On Sept. 14, the board voted unanimously to extend the due diligence period established in the purchase agreement from 90 to 120 days in return for the term requiring the sale to go forward by Dec. 15, 2017. The due diligence period allows for the purchaser to investigate the purchase, Huth said.

“It’s important for the township that if we can close this deal this year to try to get that done, so we’re extending by 30 days the due diligence period, which is not unusual,” Huth said. “Frankly, 90 days could be seen as short, given the size of this sale. We’re extending it by 30 days at no cost to the township, and we’re getting something in return.”

Ryan Houlihan, CEO of Shamrock Acquisitions, could not be reached for comment by press time.

For more information about the sale of Shelby Manor, call the Treasurer’s Office at (586) 731-5145 or visit www.shelbytwp.org.