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Future bank branch closer to reality

GLADSTONE — The Gladstone City Commission took steps Monday to help bring a Gladstone branch of Upper Peninsula State Bank closer to reality.

The agenda for Monday’s city commission meeting initially included a recommendation from staff for the city to transfer a portion of city-owned property to the bank for the construction of a parking lot, water feature, and for signage space. However, a survey completed Friday indicated that while the city owned the property, it was not land that could easily be transferred to the bank.

“We thought it was a parcel of property that we owned, and when the surveyor went out there what we found is that it’s actually a … street that’s not currently there. It’s part of Lowrie (Avenue),” said Renee Barron, community development director and zoning administrator.

Over the years, the intersection where Lowrie Avenue meets Lakeshore Drive and South Hill Road has been re-engineered multiple times, and in the process the section of property went from being part of the road itself to a city-owned right-of-way, sidewalks, and undeveloped property.

While transferring a portion of the property and maintaining the necessary right-of-way would have been easy for the city if it had been a parcel of land, extending the bank’s property onto what is legally a road is more problematic. Before the city can sell the property to the bank for development, the road — which physically does not exist — must be vacated.

Vacating a road is a drawn-out legal process. Recent road vacations by the city have taken between eight and 11 months and involve public postings, served papers, and court ­proceedings.

“With the new off-ramp that we have, that area of property that we’re looking at is really unusable by the city. So it doesn’t have a whole lot of value to us. It does have a whole lot of value to them in order to accommodate their site plan as presented,” said Barron.

Upper Peninsula State Bank’s site plan was approved on June 6, and the bank, which has already faced delays with the project, hoped to break ground on the property as soon as possible. To do so, the commissioners voted to enter into a lease agreement with the bank.

The agreement has not yet been drafted, but will allow the bank to begin construction on the property and gives UPSB the option to purchase at a later date after the city has vacated the road.

“The lease agreement would allow them permanent access to that property until the point of purchase, and then they would own it,” said Barron, noting that the city could not take the land back after construction had begun.

Typically this type of lease allows the lessee access to the property for 50 years, with the possibility of an additional 50 years after the fact if certain conditions are met. For this lease the city is anticipating an agreement equal to the life expectancy of the building, which would be a similar period of time.

The city will maintain the right of way along South Hill Road and the existing Lowrie Avenue, as well as a portion of land at the corner to ensure that vision is not obstructed at the intersection. Currently existing sidewalks may be rerouted to accommodate the construction.

The commission also approved a request from the Gladstone Downtown Development Authority to provide up to $150,000 in funding to Upper Peninsula State Bank for the project over the next five years. The DDA has already budgeted $25,000 to contribute to the project this year, but because the contributions will continue for five more years the commission needed to approve the long-term commitment.

The site of the future bank is a brownfield site, meaning it at one point was contaminated by a past development. Because brownfield sites are more difficult to develop than other types of properties, brownfield developers have access to tax refunds or abatements to offset certain qualifying costs. However, processing a brownfield site requires a significant amount of city staff’s time to return captured taxes to the property owner.

Because the land is within the DDA district and property taxes on it would be captured by the DDA, the DDA voted at a special meeting on June 8 to contribute up to $150,000 to the project instead. Taxes will be collected normally on the property, and essentially, the bank will have a reimbursement for brownfield-related expenses without the added cost of staff time.

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