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Grosse Pointe Park purchase agreement draws crowd, criticism

By: K. Michelle Moran | Grosse Pointe Times | Published November 5, 2019

GROSSE POINTE PARK — It likely wasn’t the reaction Grosse Pointe Park officials were expecting.

During an Oct. 28 council meeting, a real estate purchase agreement that’s part of a forthcoming new art center was met with boos from a packed council chambers. Those expressing opposition weren’t necessarily against the art center, but were concerned about how the city was handling the deal — one they said came with too many unanswered questions — and they were unhappy about the fact that they couldn’t speak about the purchase until after the council vote, during a public comment period at the end of the meeting.

At issue was the city’s purchase of property at 1038 Ashland Street in Detroit, formerly home to Joe’s Garage, a shuttered auto repair business that was established in 1946.

City Attorney Dennis Levasseur said the purchase agreement and related land contract with the nonprofit, Park-based Urban Renewal Initiative Foundation and the city were for the construction of the Paul and Carol C. Schaap Center for the Performing Arts and the Richard and Jane Manoogian Art Gallery, which will be constructed on property adjacent to City Hall and will partially be in the Park and partially in Detroit. The venue is slated to be the new performance home for Grosse Pointe Theatre.

“This project has been underway for several years and has been discussed with the council,” Levasseur said.

He said the foundation agreed to sell the land to the Park for $366,000, which is the same amount the foundation purchased it for. Levasseur said the foundation acquired the Joe’s Garage property after it was abandoned, as a way to protect the area — which directly borders the Park — from further decline. The former Joe’s Garage building “will be used as a place to store vehicles for our Public Works Department,” Levasseur said.

Because he also sits on the URIF, Mayor Robert Denner asked the council to recuse him from voting on the matter, although he said he has “no financial interest in this transaction.”

The council agreed, voting unanimously in favor of the recusal request.

“There may be the appearance of a conflict,” City Councilman Daniel Clark said.

Echoing concerns from residents, City Councilwoman Lauri Read said she had a number of questions about the proposed purchase that she felt needed to be answered before the city agreed to it. Read wanted to know the full cost of the project and why the council was voting now if the URIF hadn’t completed raising money for construction; whether an independent inspection and appraisal of the property had been conducted to determine its market value, and if there were any environmental hazards; whether the Joe’s Garage building would need modifications for DPW use and what those would cost; tax implications for the city and its employees by having a DPW facility in Detroit; what the costs to the city would be to maintain the art center and grounds; and why the URIF was keeping an office at City Hall even after the art center gets built.

Project cost
Denner said the art center is expected to cost about $25 million to construct, which will be paid for by private donations.

“We have commitments for a substantial amount of that,” said Denner, but he noted that the city needed to take steps like this one first, and then it could get the architectural team working on costs associated with different designs.

As to the cost to operate the art center, City Councilwoman Barb Detwiler said the foundation had budgeted $5,000 per month for that purpose, but it now believes it will actually be $2,297 per month for operations.

Denner said the city originally thought it would be leasing the Joe’s Garage property for 20 years — the city first authorized the lease on Jan. 9, 2017 — and then acquire the title “for a nominal fee,” but after Denner and some city administrators expressed reservations about this, they decided it would be better to purchase the property now instead.

City Manager Nick Sizeland said Detroit’s income tax for nonresidents is 1.2%. The Park anticipates having one mechanic in the Joe’s Garage building full-time, which would work out to about $600 in income taxes per year. As to Detroit property taxes, Sizeland said those would be roughly $13,000, but the Park plans to apply for an exemption. He said 30% of the Park’s current DPW garage is in Detroit. Sizeland said the Park’s Downtown Development Authority would be contributing approximately $25,000 toward plantings for the art center building, although, as Read pointed out, DDA funds “are taxpayer dollars.”

Sizeland said the city already clears snow and salts around the Ewald Branch of the Grosse Pointe Public Library — which is adjacent to the City Hall parking lot — and the city would do the same for the art center. The terms of the purchase agreement call for the URIF to operate the art center.

Paul Schaap said they have $15 million in hand now for the art center.

“It should be pointed out that all of that (total project cost) will be paid for with private (contributions),” he said.

Schaap said he and his wife had already spent $1.6 million for land acquisition alone for the art center, including $300,000 for a parcel of green space on Maryland Street. He noted that GPT would be raising funds as well toward the art center.

Given Read’s concerns, Schaap offered to make the council’s approval contingent on him giving the city an environmental report he had commissioned for the Joe’s Garage parcel, but Read wanted an independent assessment done.

“I understand the desire by this council, and former councils, and some residents, for this art center,” Read said by email after the meeting. “I also understand that the Grosse Pointe Theatre is seeking a permanent home. However, I have never seen any community engagement on this topic, and I cannot substitute the rumor mill for proper public engagement. I am very concerned about the cost to the city and the taxpayers. These gifts and projects have financial consequences for everyone. There is nothing in (the) purchase agreement which (describes) how this art center will be available for use by residents, who are partially funding it by the proposed land contract, the gifting of city-owned property and the ongoing services the purchase agreement contemplates.”

Clark said land acquisition by the city has been a “critical component” of work to improve the community. He said the city has made a number of such purchases over the years, including a gas station and car dealerships that “contained significant unknown liabilities” at the time.

“I view the art center as the capstone of a 30-year effort to revitalize Jefferson,” Clark said.

Retired Park City Manager Dale Krajniak, who’s listed as the director of the URIF, said Schaap’s real estate agent estimated the value of the Joe’s Garage property at $450,000.

“It’s tough to find comparables” to determine the value of the parcel, Krajniak said, adding that the price of $366,000 was arrived at based on what Schaap paid for the property.

Schaap said he negotiated with the seller on the price for which he purchased the parcel.

“It wasn’t the asking price,” he said.

After audience members protested Schaap being allowed to speak, when they weren’t — though officials noted that Schaap was a party to the agreement — Schaap left.

The vote and reaction
After the council voted 6-1 in favor of the purchase — Read cast the dissenting vote and Denner accidentally voted, despite his earlier recusal — a number of audience members booed the council, and one woman said, “This is so unethical.”

Denner said the next steps in the project include fundraising by the URIF and continued work on designs for the building. He said city administrators will be working with Detroit’s legal and building departments on continued use of the garage, albeit now for the Park’s DPW use. Denner said the full project will come before the council for review at a future meeting.

“This will be an amazing amenity for the community,” he said. “I’m excited that we’ve gotten to this particular step.”

In response to one of Read’s questions, Denner said the Park would be conveying city-owned property to the URIF for construction of the art center once all of the funding for the project is assembled and guaranteed to the city in writing. The art center will be located on a site next to City Hall on Jefferson Avenue between Maryland Street and Alter Road. According to the agreement, Wayburn will need to be vacated between Jefferson and Hampton Street.

Sue Steiger, who said she’s lived in the Park for 44 years, agreed with the council that it was better to purchase the land than lease it, but said the city should have conducted “an adequate inspection” first.

“It would cost you a lot more money and a lot more time to clean up that property (later),” Steiger said.

Another resident who’s lived in the Park for more than 40 years, Dennis Partridge, said the council breached its fiduciary duty by approving the purchase.

“You’re spending our money, not your money,” he said. “You could have waiting on this purchase. What was the rush?”

Park resident Graig Donnelly accused the council of conducting business in secret.

“Just because we have a generous donor doesn’t mean processes that should occur in the public (sphere) don’t,” he said.

Park resident Mary Rouleau criticized the council for not allowing public comment before the vote.

“It doesn’t do any good” to be limited to making comments only after the vote, Rouleau said. “Saying this is the regular order (of business isn’t good enough). Things need to change around here.”

Denner emphasized that the Park is working in cooperation with Detroit on this project.

“This is a terrific project for Grosse Pointe Park and the entire region,” Denner said by email Nov. 4. “It will add a lot of value to the area, as a gateway development for both the Grosse Pointes and Detroit. We are grateful to the Schaaps and the Manoogians for their generosity and support. We are in active discussions with Detroit officials to ensure the project and the use of the former Joe’s Garage are developed in complete cooperation between Detroit and Grosse Pointe Park, consistent with all Detroit permitting and regulations and in the best interests of the immediate area.”