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City Commission approves amended purchase price for Parcel B

Commissioner Petro Tolas discusses the 410 W. Broadway Development plan at a City Commission meeting July 8 in City Hall.

Development will move forward on the plot of land next to City Hall. 

The Mount Pleasant City Commission approved an amendment to the purchase and development agreement with Michigan Community Capital at its July 8 meeting in City Hall.

Parcel B, located at 410 W. Broadway St. in downtown, has attracted multiple developers in the past two decades, but now, it is closer than it ever has been to be developed. 

City Manager Nancy Ridley said the city has been trying to develop the land since 2003 when the city began the West Broadway Revitalization project. The project included a multi-million dollar rehabilitation of the Borden Building that city hall is housed in. The city took out loans to pay for the Borden Building and hoped to pay the debt with tax money from the building on Parcel B.

However, J. E. Johnson, the company that planned to build on that land, never went through with the project. The original plan was for a mixed-use property with retail on the first floor and condos on the upper floor. When the housing market collapsed in 2008, Ridley said J. E. Johnson backed out of the project.

Since then, the city has vetted development proposals, with some looking promising, but ultimately none of them worked out. 

In May 2018, the city requested proposals for the land and received one for a mixed-use building from Michigan Community Capital. The Commission approved a purchase and development agreement with the nonprofit organization in September 2018, and MCC has been planning and performing due diligence since then.

During a June 24 work session, MCC updated commissioners on its progress with the project, and proposed an amended purchase and development agreement after discovering some issues with the land and the financing.

The original agreement from September listed the purchase price of the land at $360,000 with a 100 percent tax abatement for the first 15 years. However, MCC discovered that the maximum abatement allowed is 50 percent, so it wanted to lower the purchase price, since the city would be receiving tax revenue from the building.

The amended agreement includes a purchase price of $65,000. Ridley said even with this lower purchase price, the city will still come out ahead.

"In the first 15 years of the development at the 50 percent tax rate, the city will collect $401,000 in taxes," she said. "That amount, plus the revised purchase price, comes out to $466,000, compared to $360,000 a year ago when the purchase price was higher."

Commissioner Kathleen Ling expressed her support of the development.

"This is a project that finally will put on that property exactly what the city has hoped to put on that property for the past 12 years," Ling said. "(The amendment) is simply changing the way the city will receive revenue. Previously, the revenue would be from the purchase of the property. With this amendment, we will be receiving revenue in a different way, which is through the taxes we will be receiving over the next 12 years, which we would not have been receiving previously."

The amended agreement also requested the city to apply for a federal grant to complete three infrastructure changes on the land before MCC begins developing. The projects include moving the sanitary sewer lift station to the other side of Broadway, moving an underground pipe that carries storm water to the river and putting the electrical lines in front of the property underground. Mayor Will Joseph said the grant is worth $700,000.

"The state of Michigan has done a lot to show its support of this project," Joseph said. "If we were to do those projects on our own, we would be a lot worse off."

Commissioner Petro Tolas was not supportive of the development. He said if the city had approved previous developers like Mercantile Bank, it wouldn't be the city's responsibility to complete projects on the land.

"We don't have to be a partner to this developer," Tolas said. "If we had let Mercantile build, it would've been a $5.5 million project with no abatements and they would be paying taxes on a $5.5 million building."

Vice Mayor Lori Gillis also expressed concerns about the development.

"The Economic Development Corporation and the City Commission did not want Mercantile, they did not want a hotel. 'We must have residential on Parcel B,'" Gillis said. "Maple Grove may have only given us $30,000, half of what we're getting now, but guess what – they didn't ask for any tax abatements."

Commissioners ultimately voted 5-2 to amend the purchase and development agreement. Gillis and Tolas voted against it.

Ridley said MCC is planning to break ground by early spring.

Other Business

The commission voted to increase the special assessment for the principal shopping district in Downtown Mount Pleasant. The assessment increased $8,000 across all properties, from $115,000 to $123,000. Ridley said the last special assessment increase was in 2016, and before that, it had not been increased since 2007.

Gillis said there are openings on two committees, the Historic District Commission and the Parks and Recreation Commission. Applications can be found on the City's website. Those who want to run for City Commission this fall should submit a petition with at least 50 signatures by July 23.

"Please ask yourself what you can do for your city, and please ask yourself if we have the right voices up here," Gillis said.