September 28, 2009

To:          City Council

From:    Gerald Frendt

Re:         Purchase of Vacant Riverfront Property

The Port Huron Times Herald article reporting that City Manager Brown has entered into a purchase agreement on the above referenced property, subject to council approval, was very disappointing, from many perspectives.

First, it seems a reversal of the position of the council that city is not a good developer.  It seemed that this council had recognized that the private market was better positioned to develop property.  A major amount of time has been spent on city owned assets and their associated burden.  McMorran Place, the city marina, the Quay Street parking lot, the city owned industrial buildings, were all subject of effort to get out of the development business.  Now this 180 degree turnaround. 

Second, the same article contained the good news that the city would sell one of its industrial buildings for more than $1 million.  It seems that every time this council has found a way to reduce spending or to liquidate an asset, that the “money burns a hole in their pocket”, and they find a substitute place to spend the funds.  From the early days of this council, when Mayor Moeller justified spending on the DARE officer, because he found a place where taxpayer money was being wasted, and the rest of the council reluctantly agreed with that logic, to more recently, when money being spent foolishly on the EDA at the county level, was substituted for money being foolishly spent by having our own Economic Development director.

Third, what’s the rush?  Congress is currently under criticism for taking action on legislation its members have not read.  Have you read the purchase agreement?  Is this property buildable?  What’s in the ground?  Hopefully the agreement addresses these questions and allows for the city to withdraw, if the answers are not acceptable.  Previous councils bought and sold land, under similar “hurry up” scenarios and lost credibility with the citizens in the process.  Would a 90 day option to purchase, make more sense?  Candidates in this election could take positions on the question, and allow the voters to ultimately decide.

Fourth, once the city owns this property, it cannot be re-sold, without voter approval, through a referendum.  A future city council will probably find it necessary to commission a study to find the highest and best use, and maybe we will need an appraisal – HERE WE GO AGAIN!

Fifth, just like the health bill in Congress, many rumors are circulating.  Some may be justified, others, most likely are not.  One, says that Manager Brown thinks the property is a steal… it can be re-sold at a profit down the road.  Maybe that’s true, but it is not good reason to gamble taxpayer money.  We could just as well play the stock market or invest in precious metals.  If Manager Brown thinks it’s a good deal then, let him tell some of those big developers, he’s supposed to be in touch with and let them turn a profit in downtown Port Huron – that would encourage investment in our community and increase the tax base at the same time.

A second rumor says that the City wants to buy it to keep the County from buying it. Beavis Beats Butthead!  The fear is that if the County buys it, it will permanently go off the tax rolls.  The taxable value is $243,782, which generates $4,075 to the city, and $9,415 to the various other taxing authorities. They lose more than twice as much as the city, if it goes off the tax rolls.  That doesn’t mean they won’t do something stupid.  In recent weeks they have been wringing their hands in anticipation of reduced State revenue sharing.  But they could define this as a Park and probably find the money for it.  If they did buy it and turn it into a park, it would be at their expense, and our citizens would be able to use it.

Sixth, if a private investor were to purchase the property, the following year the taxable value would more than double, giving the city more than $8,000 in revenue.  If it were improved, the tax revenue would increase more.

Seventh, the current owner of this property bought it, knowing full well that it is located next to the city sewer treatment plant.  He would have little recourse in complaining about the associated odors.  Anyone else buying that property would be aware of this condition and would take the risk when trying to re-sell it.  Anyone, except the city, that is.  If the city owns the property and the offending property, next door, we can expect that the city will need to solve the problem before it becomes marketable.  This could be more expensive than the acquisition price.  Some might say, that is why we should buy it.  We can make a huge profit once we solve the offending problem.  That’s like having a hog farmer, buy up the neighbor’s farm at a low price, because of the offending odors.  Then he sells the hogs and cashes in on “improved property”.  Maybe it would be legal – it certainly is not ethical.

I apologize for this quick response.  I’m sure that in a few days, when I review it, I will have more information and would write it differently.  If you wish to encourage your citizens to be informed, then you must allow them information to evaluate and time to make a reasonable evaluation.  This is not a crises requiring immediate action.  Please slow down.