Land banking with bk comments. Just what exactly are they doing with the money and why? and what is the strategy?
Sorry, it won’t really be that much clearer after reading this . . . .
AMENDMENT FOURTEEN
Agency/Project: Planning and Community and Economic Development / No. 23 – Land Banking
Page(s): 137
Sponsors: Alds. Sanborn, Pham-Remmele, ComptonRemove funding for Land Banking.
General Obligation Debt (5,000,000)
Levy Impact: (647,523)
Discussion/questions
Jed Sanborn says that when he looks at land banking, a couple things strike him, I’ve been told and you keep reiterating that we will not lose any money on this, that includes property taxes, interest, and any and all costs to maintain the land as long as we own it, so if we acknowledge the risks to that, he question is what are we taking the risk for, he hasn’t heard anyone say clearly why, is it that someone will develop in way that somehow city government doesn’t think is the right way to do it? Assuming that is correct, the thing that strikes him is the level of knowledge and expertise presumed by council and mayor and staff that supports this, it presumes we know the market value better than the market, if the market is not willing to buy it, it presumes we know how long it will take to turn around and sell this, and won’t lose money doing this and it presumes we know the best thing that should go on the land cuz market will want to do something you won’t, you should pause and ask if you have that level of knowledge.
Judy Compton says Marsha Rummel indicated that have an accepted offer on the Don Miller property, is that true?
Don Marx, Real Estate staff says yes.
Compton asks who determined what price?
Marx says that item has bee introduced and it is coming to you.
Compton asks if it is an offer to purchase in city name without coming to the council for a dollar amount?
Marx says that it is contingent on council approval?
Mayor Dave Cielewicz interupts and asks how else we might do this?
Compton says like on Allied Drive.
Mayor argues that this is the way it works, we make offer you approve or not. [Alright, first of all, we don’t ever seem to follow the same rules twice in a row any more and its been done different ways and second of all, why did the mayor feel the need to inject himself into this discussion? Doth he protest too much? Or is he just cranky.]
Compton says in her day job, you make an offer to purchase and you are signed, sealed and delivered.
Mayor says this is the way we work, right Marx?
Marx says correct.
Compton supports bland banking, its a fantastic tool, however, we only had one dip into the $5M pot, it was into development on East Washington where we created a situation that the developer lost the property and then we purchased for $3.3M, there is still $1.7 out there, the $3.3 offer to purchase was decision spoken about widely, everyone knew we were going to do that, we haven’t proven how we will handle acquisition of the land beyond any doubt. She says it with due respect, but on some projects we are sitting there like 12 year old kids playing with legos, land banking is a wonderful tool if the land is turned over to individual private developers, we don’t know we will do that, we haven’t proven that, we only have an offer to purchase for one piece of property that I have heard from several people that we will give to Habitat or a non-profit, if council decides to to that it remains to be seen, but that would take it off the tax roll. It would take away independent contractor in this city to make their living, having said that, an accepted offer on Don Miller, it is her property (?) and it is her strong, well informed, well let me say “I got knowledge”, opinion that there is an independent developer of great merit that has a offer on the property as well. We are bidding against the private sector on piece of property that is not abandoned, there is no reason to believe will lay fallow. We are just getting into a bidding game and will raise the price like we did on Allied Drive. Allied was at $3.8M and we bid up to $4.9 this should not be what we do. If we have the same property good, that makes sense, but she doesn’t support $5 M. It has already been tagged, there is an accepted offer, we are going to Don Miller property, won’t support this budget item, lets save taxpayer $5M.
Mark Clear is called on but interrupted.
Bridget Maniaci calls a point of order, she asks if they are asking questions or on debate.
The Mayor says he just wants to take people in the order they buzz in. [Seriously mayor? Too lazy to chair the meeting with some sense of order? Is it too much of a bother? I’m beginning to think he likes to chair a bad meeting just to make the alders look bad. At this point, one person asked me if we could just hire Scott McDonell to come in and chair the meetings for them. Not a bad idea. Maybe he could run for mayor instead!]
Clear says the Don Miller purchase is from this year’s budget.
Maniaci is shaking her head no while he is saying that.
Clear says that purpose of land banking well defined in original amendment to the 2010 budget and reiterated in guidelines the Economic Development Commission passed, it is to maintain large parcels that would otherwise be sliced up and not put to highest and best use and not be used the way the neighborhood intended. [Hmmmm . . . . but that is not the intent with the Don Miller Property, the intent with that is to split up a large parcel.] The money in there is for re-planning to look at property and find other ways for it to be used, this is not to take it off the market, it’s to hold and sell it to someone who will develop it, not holding it off the market, waiting for a good proposal to make us whole in taxes, and holding costs, including financing. In terms of being smarter than the market, he has faith in the real estate division to know good market pricing to know when bargains are available, right now for past years the credit market is the problem, its not that we have better ideas but we have credit. Whereas others don’t. They will and it will get better, don’t ask me when. When he put this in the budget last year, he wasn’t expecting to do it anther year, he thought there was no reason to be in this business and hoped the credit markets would be better, he thinks they should continue this excellent program.
Mayor chimes in and says Paul Skidmore has to leave at midnight and he’d like they to get this done so he can vote on the capital budget.
Maniaci wants to have Jim Bower, the guy who is getting paid to market the E Washington Corridor and worked on the Public Market and Villager Mall as a private consultant, come up to the microphone and answer questions.
Thuy Pham-Remmele tried to jump into the discussion.
The Mayor says that they have to vote yes or no on if Jim Bower can speak. It gets kind of confusing again as several people are talking and its kind of chaos.
The Mayor has them vote on suspending the rules to let Bower speak [which he didn’t force the council to vote on when Thuy wanted Bob Dunn to answer additional questions, there was no vote then. I think the Mayor just wanted to go home at this point, as he was hinting at it earlier.]
Roll call on question suspending rules to let Jim Bower speak
Aye: Rhodes-Conway, Rummel, Schnmidt, Solomon, Verveer, Bruer, Cnare, Eagon, Kerr, Maniaci, Palm, Bidar-Sielaff
No: Pham-Remmele, Sanborn, Schumacher, Skidmore, Claussius, Clear, Compton and King
That motion fails because it needed a 2/3 vote. What is ironic here is that all those people who are budget hawks just had this guy sit there for 6 hours, while we were likely paying him since he is our consultant, and then they didn’t let him speak. I know it was past 11:30, but they just wasted 100’s of dollars.]
Back to discussion/questions
Maniaci decides to ask staff the same questions she would have asked Bower. [So those who voted against hoping to save time: FAIL!] Maniaci asks Olinger about the role of land banking in the East Washington corridor and the planning efforts for the last year.
Mark Olinger, the soon-not-to-be Director of Planning and Community and Economic Development says that they have been working diligently, there is an opportunity to develop larger parcels but its problematic cuz of the credit markets, the lack of willingness to get into large parcels on E Washington and the opportunity to aquire key parcels of the Capitol East District was offered at price very much supported by and appraisal and we wanted to bring that to council for adoption.
Maniaci asks what the goals of this parcel are, has all land use planning done on the site?
Olinger says they adopted the Capitol East Gateway plan and parcels are pretty much identified as part residential and employment, we have building standards and massing details in the plan and the goal on acquisition is to help move into implementation of the plan on the three blocks.
Maniaci says the 800 on the Mifflin has a housing component and is in neighborhood plan, they have a developer and that can be undertaken in 18 – 24 months do you share that opinion?
Olinger says on the rental side, there is strength in rental properties, so they think there could be a market on Mifflin St frontage.
Maniaci starts talking again and the Mayor interrupts and asks people to be quiet.
Maniaci urges them to defeat the amendment, E. Washington is the next 40 year plan for the city, “I’m sitting on empty lots”, “Marsha and I are sitting on empty buildings”, she’ll let Marsha speak to it because she has lots of details, but there is real movement on the properties. She looked at the old Graskamp studies, how much has changed, she says it looks the same as when she was a small child (rude/snide remarks break out around the room), she says to look at the money they spent on consulting and studies, this is the big piece. One of questions she would ask Jim Bower about is the conversations he has had with property owners. Why Don Miller? Why no? It’s key, this firm is coming to the city and wants to be a partner to this, they have put the business plan in place, they are looking to do it, some property owners wanted to sell it for 35 per sq ft and the city bought at 14 per sq ft. Prior to this point it was a holding patter to see how they could hold out for the highest price, so for land banking, this is crucial to the corridor moving forward and it will move forward in a timely manner. She cannot tell you how frustrated the neighborhood was when the Gorman project did not go forward. They were in favor, they wanted to see development, that absolutely set the corridor back. [Yup! Thanks Mayor!]. This can start moving forward again, don’t handicap this, for jobs and industries actively looking at coming here, not in a hypothetical kind of way, they are talking timelines on breaking ground, please defeat the amendment.
Lauren Cnare says she had two qeustions. She knew last year Union Corners was out there and she didn’t support land banking, but she voted for the Union Corners purchase. Are we thinking about other property, without tipping your hand, is there area out there for $5M?
Marx shakes his head no.
Cnare says we don’t want it broken up and scattered, doesn’t the plan comission have possibility to do that if they choose, can’t large parcels be held as large parcels?
Olinger says not actively looking at other properties, this has two parcels attached to it, that makes it 8 acres, but they look like the same project. On your point, can we manage through land use approvals or zoning, to a certain extent we can, that was not the issue here. In the Gorman project, we talked about breaking it up, bit it was all or nothing with Don Miller, he wants to sell it all. Opportunity is not o prevent breaking it up for things that do not meet with the plan but to acquire large parcel critical to implementation of the plan, this is an affirmative step in implementing city plan. [I’m surprised no one asks if that is allowed with the land banking policies.
Cnare asks about the $1.7 left over this year, is that $6.7 for next year?
Olinger nods his head.
Pham Remmele says that this item is something that makes people in her area very angry, when is city in real estate? The city set aside $5M last year, then ended up with Union Corners, if below market price, is it retail suggested price?
More confusion, Pham-Remmele is talking, I can’t tell who to or what she says.
Mayor says that she is asking a policy question of staff, that policy was made by the body and we might agree or disagree, but that is the policy.
Pham Remmele says with the policy, we heard from Dunn that the first time we heard about project was 3 years ago and the city takes 18 months and he is still not get to closing and building. What is the timeline here, she is afraid.
Mayor asks if there is any sense of a timeline?
Olinger says Capital Gateway gives guidelines for building but we need to do more work, but believes the market for residential portion on Mifflin will have sooner rather than later and people talking on employment side for commercial office. I think we will see activity in the year or 18 months.
Pham-Remmele asks if they will cross all the hoops?
Olinger says that gives people good guidance and clear direction about what they could and could not do in the plan. Plan commission, council and a committee adopted the plan, it has standards in the plan for many people they are clearly understood and he has not heard they are a hurdle to the redevelopment.
Palm says one way to restart this is to give an allocation for only one year – he asks Brasser, are there ways for council to limit the carry over, from funds from this year to next year at this point.
Brasser says that they generally try not to borrow until projects come to fruition, as they go forward they look at projects that expect to have finances, they borrowed the $5M, money is available, as they approach another purchase, you’ll have a resolution, fiscal note is in legistar, they spent $3.5M on unions corners, $1.7 towards this purchase along with 2011 funds assuming approved in the capital budget, the executive offer to purchase is contingent on budgeting.
Palm asks if Don Miller is less than 5M for next year?
Marx says yes.
Palm says if this year’s money doesn’t roll over to next year, what happens?
Marx says the cost of the land is $4.735 plus there will be money for taxes, it will take all the money for Don Miller acquisition. Not all if there is a carryover.
Palm asks if there is offer for Don Miller site from a private developer, he’s confused cuz can’t get into accepted offer if there are contingencies, but if there is a private entity can there be two buyers, isn’t that a problem, help me through that. Do we have an exclusive with Don Miller, if we approve it can they have another offer?
Marx says that is a question for Attorney Michael May.
May says he is not familiar with the offers, if the offer is contingent on the council approving it, it is not a completed offer, it depends on other terms of the offer, he is not familiar enough with the offer to answer more.
Palm says this is a policy issue, he thought we would not be competing against a private buyer, that is not what the money is supposed to go for, do we have policy documents that say anything about private buyer?
Marx says not in the policy?
Sanborn clarifies that this is the heart of the matter, he asked what we are taking all the risk for, cuz we want it to be used for highest and best use, which is one use higher than the other, is this taking new urbanism to new level, not just adding rules but controlling the property outright or as Clear insinuated, to do what teh surrounding neighbors want/ We risk the money of everyone in city so neighbors get what they want instead of poeple risking their own money, lets be clear about why we are doing this.
Kerr said something I missed. She asks Brasser if we track the expenses, foregone taxes estimates, etc cuz when it is off that tax rolls will we have an estimate and will we be able to track that.
Brasser says yes.
Rummel says if you had asked me a while ago if we would be buying Union Corners I would have said no, there may have been a private interest in buying Union Corners but the bank refused to sell, she is not aware of any here. What is the risk here? The risk is nothing will happen. Manaici says it has not changed since she was a kid, she’s pretty young, but still, we approved an addition to buy and sell shop which is a cool destination and we amended the plan to allow it. Everyone in my neighborhood knows about it, not just my neighbors, we have been planning since 2004, when she got on her neighborhood association board. We are reaping benefits of all that planning today, the BUILD and Urban Design District. If Bower had been allowed to come up, he could have told us about the research he has done. On some level we can talk in abstractions, but the market abandoned this area, we are taking our money and taking a risk, sometimes to hold and sometimes to keep whole and sometimes to break up a site. She thinks the Don Miller site will move faster. She was talking earlier about a sustainability enter, they have a $300K grant, and are issuing an RFP for design of the center based on the charrette and these are people who are potential tenants. We are reaping the benefit, lenders like site control, we have a business plan, you will get your money back, she is confident, and this is not just one side of the avenue, but it will be both sides, the money will help us get a jump start, we will. Maybe Yahara Station would have been another way, but we have more control over this.
Pham-Remmele says it could be that becuase we are so sold on this that we don’t see any risks. She has no more questions to ask and I’m just going to say one thing that is not very pc, when talk about $5M from people who are facing foreclosure, earlier we allowed people to pay taxes in installments, not long ago we had . . . and here I just don’t know what she said . . . and then she said “this is what the communist s are doing in Saigon” [I really wish I hadn’t missed what she said, I was listening, but it didn’t make sense to me enough to repeat it.
Compton says the conversation on Don Miller has gotten us askew, but the Don Miller site has cars in the windows and sales going on, it is not in foreclosure, it is not challenged, we don’t know if going to buy it, we are talking about land banking. She offers a substitute motion.
Compton substitute motion
Compton says to change $5.5M to $3.3M. Someone seconds.
Compton asks Brasser to come up with levy impact, she says land banking is a wonderful thing to do, would like to see all ??? taken out, wants to see what we are going to do and if we get to Don Miller property, see what going to do with that as well. Why set $5M cap until know what going to do, $3.3 for Union Corners, , let’s get that $3.3M back and start back at $5M, that doesn’t take back the $5M we have our eyes on . . . “wait a minute”, this would be $1.7M instead of $3.3M.
Mayor steps in and tells her she wants to cut it by $1.7M.
Compton says cut by $1.7M, to bring to $5M with reauthorization.
Clear tries to step in, Brasser gets involved, more confusion, Mayor says this brings the authorized borrowing back to $5M in 2011, asks if the numbers work out?
Brasser says 1.423K is available from 2010 cap budget, the rest spent on Union Corners, so $1.4 left.
Mayor asks how much Don Miller is what would be left.
Brasser says $5.5 is needed for Don Miller and another related property.
Mayor says the bottom line is there si not enough money to purchase Don Miller and additional property.
Compton says that we have $1.4 left and $5.5M on the table, so that means we need $6.9M and if we it the way it is we have 6.7M, so she withdraws the amendment.
Mayor asks Compton if her intent was to leave enough money to buy the property.
Compton says no, she wants to keep the money to $5M total. She says her motion is not withdrawn, she wants to vote on it. She says Cnare is not here to agree to withdraw and she was the second.
Mayor calls for a vote to reduce by $1.7M, leaving $3.3M.
Maniaci urges to not support this, there was very diligent work done by city staff to ensure we were moving forward in the corridor. “This is . . this is . . . this is bad”.
Roll call:
Aye: Schumacher, Cnare, Compton, Kerr and King.
No: Rhodes-Conway, Rummel, Sanborn, Schmidt, Solomon, Verveer, Bidar-Sielaff, Bruer, Claussius, Clear, Eagon, Maniaci, Palm, Pham-Remmele (who initially passed)
Absent: Skidmore.
Main Motion
Mayor calls for the vote without allowing for further discussion.
Aye: Pham-Remmele, Sanborn, Schumacher, Cnare, Compton, Kerr, King
No: Rhodes-Conway, Rummel, Schmidt, Solomon, Verveer, Bidar-Sielaff, Bruer, Claussius, Clear, Eagon, Maniaci and Palm
Absent: Skidmore
All that, and nothing changed.
or says bus, – voter on Compton amendment
Another vote
