Saline City Council Votes 5-2 on Purchase Agreement for Hotel

 09/21/2016 - 01:33

In December 2015, few Saline city officials including the mayor began talking with James Junga of Ace Hardware and hotel manager Mark Kuykendall about the possibility of building a Best Western Plus Hotel and new stand-alone Ace on city-owned property along Michigan Avenue. Subsequently the idea was discussed with the full city council at a work meeting in July and two regular council meetings in August.

Last week the sale of the city property at Sauk Trail Business Park, across Michigan Avenue from Rentschler Farm, was on the agenda for the September 12 meeting, but was removed at the last minute. Later in the week, City Attorney Scott Smith, Mayor Brian Marl, Mayor Pro Tem Rhoads, City Manager Todd Campbell, Realtor Tony Caparese and the prospective buyers of the property met to seek agreement on the terms of the sale.

A revised agreement was crafted in what Marl called a very constructive meeting. This agreement was brought before city council for their consideration at their September 19 meeting.

The issue remained contentious. Some felt the city was getting a really bad deal on the sale of the property while others found the prospect of a classy boutique hotel not far from downtown to be well worth accepting the low offer. The purchase agreement was approved by a vote of five to two.

At the start of the Council meeting two citizens made comments on the project, John Olsen and Mary Hess.

Olsen, who is the director of the Saline Area Chamber of Commerce, was “excited about the possibilities” that could come to the community as a result of the deal.  He liked the fact that this deal was being led by three businessmen who live in Saline and he spoke of a general need for more hotel accommodations in our region.

“I’ve had many of our businesses say we’d really rather have our business customers stay here in Saline and use the services in Saline as opposed to – we always send them up to Ann Arbor and we lose all that business,” Olsen said.

Hess, a former member of Council, was not happy about the proposed sale. She was concerned about the outstanding debt of over a million dollars that Saline owes on the Sauk Trail property and disapproved of the terms of the proposed deal.

“I do not want the city to take on the moving of the utilities with an estimated cost of over $200,000,” Hess said. And I think it’s sad that you are putting this burden on the tax payers.”

The primary negotiator for the purchase agreement was attorney Smith. He and Campbell answered questions posed by Council.

Smith explained how the interested parties had come to a consensus the week before. They went over the purchase agreement making compromises in language and clarifying one another’s intent.

The developers team asked for some extensions on time limits and requested an ALTA survey of the land to be paid for by the city. An ALTA survey is a more detailed survey meeting fixed requirements of the American Land Title Association.

They continued to offer $430,000 to purchase the property and to require that the city move the utility lines at the city’s own expense.

Kuykendall and Junga each went forward to thank the city officials and especially Smith for their help and cooperation.

Council member Janet Dillon asked Smith for details on the movement of utilities. He replied that the city would still pay, but that they hoped to recoup some of the costs from businesses that move onto the Sauk Trail property in the future.

Smith also contested the notion that taxpayers would be paying for the utility move. He said tax payers would not be spending any money, they would just be making less on the sale.

Council member Dean Girbach was upset to hear about yet another expense to be paid by the city, i.e., the ALTA survey. He noted the utility move and the survey costs and asked how much more expense would be tacked on.

Campbell said that there would also be a 10 percent realtor fee and closing costs. The $430,000 selling price would be reduced to $140,000 to $150,000 net profit. Smith suggested some other expenses could come up in the future.

Rhoads moved to approve the purchase agreement, seconded by Council member Jack Ceo. Rhoads provided a list of reasons for his choice.

He noted that the property had sat vacant for many years with no revenue and this deal would put it on the tax rolls. He agreed with Smith that the cost to move power lines only reduced profits; it didn’t add new costs.

He noted many brainstorming sessions done at Saline Leadership Institute over the years where the need for a hotel always came to the fore. He said that the deal would create jobs. Finally, he said that approval of this project would indicate that we are “a redevelopment-ready community.”

Ceo said he viewed the cost of moving utility lines like the offer of tax abatements to provide incentives for industries to move into the community.

“To me it’s a one-time expense to what would otherwise be our bottom line in return for getting it back on the tax rolls,” Ceo said.

TerHaar said she had been inclined to like the deal from the outset. She was particularly motivated by the fact that the businessmen involved are all local and have a vested interest in the community.

Dillon commented that the deal is “not perfect” - as few deals are - but that this should be approved because of the effect a hotel would have on business development.

Council member Heidi McClelland said that she was conflicted about the deal. She liked the idea of bringing in a hotel but was concerned about the outstanding debt on the property, the extra costs to the city and some deviations from normal procedure that were allowed for the sake of this deal.

Girbach had no conflict in his decision. He said that the sale price was too low, given that the rezoning of the land had made the parcel more valuable. He suggested that the premium price recently offered by Jiffy Car Wash for adjacent property proved the land was worth much more.  

He also suggested that if Saline is to get a hotel it should be in town, not on the edge of town.

Marl reiterated some of the arguments others had mode in favor of the purchase agreement. He agreed that it was not a perfect deal, but a good one for the city nonetheless. He also called this deal a “legacy influencing vote.”

“If ten to fifteen years from now people look back on my tenure as mayor and say, ‘you know, Marl wasn’t great but gosh darn it he really fought, he was really a fierce advocate for jobs, for investment, for expanding the tax base,’ then I will feel like I did my job and I did it sufficiently.”

In the vote, both Girbach and McClelland voted “nay” with the rest voting “yea.”

Bob Conradi Is a retired pharmaceutical scientist who has redefined himself as a photographer and journalist. He has lived in Michigan for 36 years and in the Saline area for 10. He enjoys researching and learning about new ideas. Reach him at bobcphotography@gmail.com. Follow him on Twitter at @RobertConradi.