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ESCANABA -- The Escanaba City Council has voted to accept a bid from North Shore Marine Terminal and Logistics to purchase the shoreline portion of the old Delta County Jail site -- for $100,000 less than the appraised value of the property.
North Shore Marine had initially offered $12,000 for the property that the city had purchased for $65,000 in 1998 ($115,000 in 2022 dollars). The most recent appraisal conducted by the city put the current value at $165,000, but the shipyard's revised offer was equal to the $65,000 purchase price.
"We feel by covering the City of Escanaba's initial purchase price of the property and offering the storm water easement, this is a fair offer and helps all parties proceed with their portion of this substantial project," the shipyard said in a letter sent to the city on Oct. 12.
North Shore Marine has agreed to allow the storm water sewer to be rerouted across their property to allow for a drain to be relocated on property being sought by Terrace Bay Hotel for the construction of a Hilton-branded hotel. The shipyard will also be selling Terrace Bay a portion of the property purchased by the shipyard to create enough land for the footprint of the building.
Council Member Karen Moore objected to accepting the $65,000 offer, arguing that it was unfair to the other developers working to redevelop the old jail and Delta County Chamber of Commerce sites, who paid the assessed values for their properties. Her sentiment was echoed by Lisa Vogler, the city's attorney.
"I find it difficult to accept two of the appraisals out of three conducted by the same individual as valid and applicable for the property at issue, but then somehow deviate from it and reject the third one," said Vogler.
North Shore Marine and the city had previously sparred over the appraisal, which came back significantly higher than appraisals done by North Shore Marine. City Assessor Jim McNeil had previously said North Shore Marine's appraisals were faulty due to the number of extreme adjustments that were made to the values of comparative properties used in its calculation.
Council Member Ron Beauchamp didn't argue the city's appraisal was inaccurate, but he did argue it wasn't a deal-breaker in his eyes.
"In my opinion, a $100,000 difference is a small price to pay to get a $50 million project or projects off and running," he said.
Council Member Tyler DuBord agreed that the offer was fair, especially in light of North Shore Marine's willingness to offer an easement to move the storm sewer.
"That is a fair, super-fair offer, and to sit here and prevent that is digging our own hole. And I'm not going to sit here and let that project drop," he said.
City Manager Patrick Jordan noted that an easement could be worked into the purchase agreement and North Shore Marine's willingness was not, in and of itself, a reason to move forward with the sale.
The exact cost of moving the storm sewer is unknown. Early estimates put the cost of pipe alone at just over $140,000, and dewatering, permitting, construction and other associated costs are expected to raise the total cost significantly. While the fact the project is on a designated brownfield site means the developers could pay for the costs through the collection of tax dollars, the initial work would be done at the city's expense.
"We've got to figure out where the money would come from because we don't have it," said Jordan.
McNeil reported that there are some state agencies working with Terrace Bay to secure funding for the project. How much money will be made available is still unknown
The location of the property was also a topic of discussion, as Moore noted the city will not be collecting tax dollars from the property even after the period related to the brownfield redevelopment's tax capture is over because the old jail is located in the downtown development authority district. Taxes for properties in DDA districts are collected to fund DDAs and do not go to cities or other taxing entities, with the exception of taxes used to fund local schools.
"The only way we're going to make any money off of any of this project is through the sale of the property. We're not going to get any tax dollars from it because the DDA will collect the tax dollars. The city collects nothing. It all goes to the DDA," said Moore.
The council voted 4-1 to accept the $65,000 offer with only Moore dissenting.