Archive for Thursday, November 18, 2010

City council agrees conditionally to help investors save downtown building

This building at the corner of Sixth and High streets was deemed unsafe by the Baldwin City Council in June. Now, a group of local investors want to fix the building.

This building at the corner of Sixth and High streets was deemed unsafe by the Baldwin City Council in June. Now, a group of local investors want to fix the building.

November 18, 2010

After an hour-long discussion and a 20-minute executive session with its attorney, the Baldwin City Council unanimously voted Monday not to demolish the building at 600 High Street.

The building was declared an unsafe structure in June. But at its Nov. 1 meeting, the council tabled a motion to spend $53,000 to demolish the two-story brick building. At the same meeting, a local four-member investment group proposed taking possession of the building, but action on that plan was also tabled.

The investment group asked that the city pay the past-due property taxes (about $17,000, including penalties and fees), and then provide a grant of $25,000 toward the building’s rehabilitation.

Last week, Mayor Ken Wagner and City Administrator Jeff Dingman met with investors Alan Wright, Dave Hill, Bill Harmon and Rick Deitz about their plans for the building.

On Monday, the council unanimously voted to enter into an agreement with the investors. By doing that, the city will meet the investors’ requests if an engineer declares the building to be structurally sound.

“What we’re finding out is it’s really nip and tuck whether this building can be saved financially without losing money versus just going ahead and taking the easy way and tearing it down,” Wright said. “Then you’d be left with an empty lot and waiting for something else to take over that lot. I’m thankful for the folks from the city who met with us last week to talk about what it’s going to take to make this work.”

The city approved the agreement with the investors with the condition no city funding would be forthcoming until a licensed engineer certified the building safe.

“We have a level of expertise telling us that it is unsafe,” City Administrator Jeff Dingman said. “We just need the same level of engineering expertise telling us that it’s sound.”

Councilman Tom Farmer asked Wright if the investors would sell the rehabilitated building, profiting from the $25,000 city grant.

Wright said he discussed that possibility with city representatives a last week’s meeting and they were fine with it. Councilman Mike Magers said that if anyone purchased the building from the investors that they would probably take it in the right direction.

In other news from Monday, the council approved an ordinance to establish 20 mph speed limits on Bullpup Drive and Elm Street, which are the streets that run between Baldwin Elementary School Intermediate Center and Baldwin Elementary School Primary Center. The ordinance also calls for no parking on the west side of Bullpup Drive and either side of Elm Street.

Comments

1776attorney 3 years, 8 months ago

While it is commendable that these four investors have stepped forward to save this historic building, I hope the city council ensures that the citizens of Baldwin City also receive the benefit of a proper and historically correct renovation of the High Street building.

The investors are receiving $17,000 in taxpayer monies to pay off the past property taxes and the taxpayers are giving a $25,000 grant. So the investors are receiving a $52,000 benefit upfront from the citizens and taxpayers of Baldwin City.

(If the city demolished the building and paid off the property taxes, the city would still own a downtown lot to sell and could potentially recoup all $52,000. The lot itself would be worth at least $52,000.)

This is a serious amount of taxpayer money. Money that could be used for street repair, sidewalks, utility subsidies, etc. So it is not to be taken lightly.

-- The investors receive title to a building, $52,000 and the right to sell the building for a profit sometime after renovation and pocket all the profit themselves. Granted, the investors will also invest substantially more of their own money for renovation of the structure.

-- The citizens of Baldwin City through the city council should insist that the building is restored to historical and commercial specifications. Given the fact that the citizens are subsidizing this project and receiving no profit, we should have a say in the project as our return on our investment.

I think that allowing apartments in this building would be a mistake and I would vote against this aspect of the project. Tenants will compete for parking, discourage some commercial tenants and may cause problems right in the downtown district. There are currently an abundance of rental properties already available here. This area should be zoned commercial, not residential.

While I favor this project and commend the investors for stepping forward, the city council has a serious obligation now to ensure that the citizen's subsidizing this project have a voice in what results from $52,000 in taxpayer monies.

Failure to handle this properly and we (the taxpayers) could end up with a sub-standard building, downtown problem and the loss of taxpayer money.

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robinbayer 3 years, 8 months ago

1776attorney,

The property at 600 High Street is in the Historical Overlay District that was created as part of the new Zoning and Subdivision regulations adopted earlier this year. Projects that require permits on structures within the Historical Overlay District must meet strict guidelines for conforming to surrounding properties. These regulations would guide the redevelopment of the building exterior to ensure that it conforms to surrounding properties. The building is not, however, on a historical register so there are, of course, limits to what a local government can (or should) do to enforce historical "correctness".

I encourage you to visit with Ms. Tina Rakes for further information about the Historical Overlay District regulations, or please feel free to contact me and I will do my level best to get the information to you that you require.

Also, just a minor point that the maximum obligation to the City would be $42,000.

Robin Bayer 913-645-6666

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Stacy Napier 3 years, 8 months ago

Looking at the tax website something is amiss. They show 38,222 in delinquent tax.

And 42,000 is how many years of property tax money to the city? Each year the taxes on this property was about $7500 so the city portion is only about $1700 a year.

So that means we won't recoup our money for 24.7 YEARS. Good job city that was a sweet deal for the investors.

Robin you cited that this was a better deal for the city than loosing the tax money when the building was torn down. Yet the land is assesed at 1/4 the value. So that means even with the building gone the city would receive $425 a year in property tax.

In reality the city would loose about $1275 a year if the building was torn down. Thats 32 years of taxes.

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robinbayer 3 years, 8 months ago

notwhatyouthink,

As if this process wasn't confusing enough already, the tax records for Douglas County actually combine the two separate "lots" between the building next door (the one housing Vaughncraft) and the building in question. Both properties are delinquent in their taxes, which would add up to the amount you cite. The amount of delinquent taxes for the specific property is approximately $17,000.

Let's not kid ourselves. There is nothing good about this whole mess. The owner of the building has put a big hurt on Baldwin City and has left it up to the taxpayers to clean up the mess. The desire of the City Council and Staff is to minimize the financial damage. I believe that an outlay of a maximum of $42,000* with the possibility of returning the property to the tax rolls at a reasonable assessed value is a MUCH better deal than an outlay of approximately $55,000 for demolition and asbestos abatement and ending up with a vacant lot.

Robin Bayer

  • There is a possibility that the tax liability to be assumed by the City would be reduced somewhat in negotiations with the County and USD 348.
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true_bulldog 3 years, 8 months ago

Agreed, Robin. He has left the city a mess. Why did that happen? How can someone get away with not paying taxes? I'd like for you to share that with us all because you have saddled us with the highest mill levy in the county. You mean I don't have to pay my taxes? Sweet.

As for the "historic" building, I know it was a tough decision. I hoped you would have set aside your bias for Dave Hill and the boys and do what's right for Baldwin City. For a change.

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robinbayer 3 years, 8 months ago

true_bulldog,

Douglas County is an administrative division of the State, and as such, derives its authority to seize private land for non-payment of taxes. A city does not have this kind of authority. I do not know why the County did not take action on the owner several years ago. It is my understanding that once a property is 3 years in arrears it is subject to sale at auction for recoupment of taxes owed.

Robin Bayer

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true_bulldog 3 years, 8 months ago

Nice try, Robin. You didn't answer the question about how the city has stacked us with the highest mill levy in the county. Let the county sell this property. Don't let your cronies stiff us for all this money with a city handout. Don't make it worse, idiot.

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Torch 3 years, 8 months ago

Why all the fuss?

It's for the kids!

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true_bulldog 3 years, 8 months ago

Cute, Torch. I have to wonder about you. The only real contribution you ever gave to this site was paragraph=friend. I always agreed with you. It's been getting out of hand. What's wrong with you, dude? Taxed too much? It's for the kids, dude.

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1776attorney 3 years, 8 months ago

Thank you Robin, for your reply and information. This is a difficult decision but one that offers opportunities and benefits if handled properly.

I would disagree slightly with you that the city council (on behalf of the taxpayers) is limited with respect to requiring the building be renovated to historical standards and appearance.

There are two primary options available:

Option 1: The city acquires the building, pays the past due property taxes and demolished the structure. The approximate cost to taxpayers is $50,000. The city then sells the vacant lot one day for substantially more than $50,000 and the profits benefit Baldwin City taxpayers. The downsides are that we lose an historic downtown building and may spend many years with a vacant lot for sale.

Option 2: The city agrees to "invest" taxpayer money in the proposed project of the 4 investors, paying off the delinquent property taxes and "giving" the investors $25,000 in taxpayer monies as a grant (not having to be repaid to the taxpayers).

The 4 investors will contribute additional monies to renovate and restore the building and when the building is eventually resold, these 4 investors will reap the profits, Baldwin City taxpayers will not.

What the Baldwin City taxpayers will hopefully reap is a restored and historically authentic building downtown. This is the "profit" that we should require for our "investment" in the 4 investor's project.

I am in favor of Option 2, but I believe that based on the taxpayer's $50,000 investment in a private project that our profit should be a building we have a say in the architectural re-design since we will not be receiving any monetary profit when the building is resold. Taxpayers will not even be getting their $25,000 grant back.

It would not be a success if the building is simply stucco'd up the front and apartments are built on the 2nd story.

It would be a success if the building is returned to it's historic appearance and perhaps the street-level is dedicated to retail and the 2nd story to professional services tenants. This downtown intersection needs a showcase building as an anchor.

So, don't assume that the taxpayers do not have the negotiating stance to require certain design requirements. We are, in fact, making a $50,000 "investment" in a private project and thus we should expect certain returns on our investment.

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robinbayer 3 years, 8 months ago

1776attorney,

I think it important to clarify a few details with regard to the two options that you specify. First, the cost to the City to demolish the structure is known. The lowest bid received for the work was $53,000 plus approximately $2,000 for asbestos removal. If the City elected to demolish the structure it would not have assumed the back taxes of $17,000, nor would it have acquired the land. Instead it would have assessed the $55,000 to the property itself, thus making the back taxes on the land equal to $72,000.

Taking the steps that you outlined in your description of Option 1 would require an immediate outlay of $72,000. The City would then own a vacant lot which would not generate any property taxes until it was sold. It was agreed upon by even the most conservative Council member that the vacant lot might fetch $30,000 at the high end. It was also agreed that the sale of the land might take many years (we used 3 years as a working estimate). At the time of the sale the lot would be placed on the tax rolls at a value at somewhere close to its sale price. So in the most optimistic outcome for the taxpayers it would be a net loss of $42,000 after several years with the result of an underperforming property. It is hard to see how the payback to the taxpayers could be completed in under 100 years when the property was a vacant lot*.

Option 2 as voted upon by the City Council requires a maximum outlay of $42,000 of City taxpayer funds (a $25,000 grant and assumption of $17,000 in back taxes). The investor group would immediately stabilize the building and then invest their own funds to return the building to a usable condition for whatever purposes are allowed by the zoning for the property. The property would eventually be on the tax rolls at a decent valuation. For purposes of discussion let's use the figure of $300,000 based on the intermediate-term projections provided by the investor group. The combination of building permit fees and property taxes on the completed structure calculates to a payback in approximately 10 years. In addition, the building remains standing.

In both options the amount of back taxes might be a bit less than $17,000 because the County and USD 348 could lower the amount they would accept for settlement. And yes, some of the back taxes actually get "returned" to Baldwin City. But at the end of all the calculations it shows that Option 2 is actually a better deal for the taxpayers. This is why I was in favor of it and I suspect why the other Council members voted as they did.

Robin Bayer

  • It is possible that a developer would want to build a brand new structure on a vacant lot and then return the property to a higher valuation, which would lower the payback time. However, it is impossible to guess how many years might pass before there would be a demand to construct a new building in downtown Baldwin.
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BaldwinDad 3 years, 8 months ago

Robin is there any reason the city cannot seize the building now for back taxes or the fact that it represents a possible safety issue, w/o spending the $50k in demolition fees??

This way the City would only be on the hook for $17k to $20K versus the $70k some you mention.

Also not sure if this has been discussed, but is there a time frame for when the property has to be repaired and or restored by the new investors?

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robinbayer 3 years, 8 months ago

BaldwinDad,

It's an excellent question, but unfortunately the City does not have the power to seize property. That is a power reserved to the State and delegated to the County (as an administrative division of the State). The City also doesn't have any ability to force the County to move on the property either. And even if we did have power to seize, we would then be the owners of the property and would be forced to remedy the public hazard with either demolition or repair. Instead, we declared the property a public hazard back in June which gives the City the power to remove the structure if the hazard was not remedied (which, of course, the current owner did not do).

As one of the conditions of the deal with the investor group, their contractor will begin stabilization of the building on December 6. The incentive to the investors to get the job done as quickly as possible is threefold:

1.) If the building were to collapse after the transfer of ownership to the investor group, then that group would be on the hook to demolish the structure at a significant cost to them. 2.) The $25,000 grant will not be paid to the investor group until a structural engineer certifies that the building is no longer structurally unsound. 3.) A building permit issued by the City has an expiration date associated with it (usually a one year period). If the work is not completed within the expiration of the building permit then another building permit would need to be issued at additional cost to the investor group.

Robin Bayer 913-645-6666

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1776attorney 3 years, 8 months ago

My primary concern is not the taxpayer outlay. I favor getting something done with the structure. The exact figures don't mean much to me although I appreciate you offering them.

What concerns the people I speak with is that the investor group will turn the building into an ugly, plainly designed, modernized stucco-coated structure that fails to retain or capture the history of the building from the early 1900's.

Although the VaughnCraft building is a nice building from the outside, it totally failed to capture and retain any of the design and features of the original historic building. Now that history is gone forever.

Additionally, almost everyone I talk to shares the opinion that additional apartments are not appropriate for the downtown district.

These are issues the City Council had leverage to discuss or insist on with the investor group by way of the taxpayer contribution to the project. The city should have insisted on architectural design consultation or approval as the price of taxpayer's "investment" in the project.

Although these 4 investors are good people, the taxpayers should have a say in the design of the building. We seem to have no guarantee now that we will not be stuck with a plain, boring, stucco fronted building intended for a quick resale and fast profit.

These concerns could be alleviated if the investor group would offer their thoughts on the project or perhaps show their architectural designs to the public.

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robinbayer 3 years, 8 months ago

1776attorney,

I think you might gain some comfort about the project from the description of purpose of the Old Town Overlay District portion of the new Zoning Regulations passed earlier this year. The purpose for the district, as described in the codes is to:

1.) Encourage development that conforms to the size, orientation, and setting of existing buildings in the "Old Town" neighborhood of Baldwin City;

2.) Conserve and improve the value of property in and around designated landmarks and other historic properties within the "Old Town" neighborhood

3.) Foster and encourage preservation, restoration, and rehabilitation of structures in the "Old Town" neighborhood;

4.) Conserve the cultural resources, historic resources and property values within the "Old Town" neighborhood; and,

5.) Foster civic pride in the beauty and noble accomplishments of the past as represented in the "Old Town" neighborhood's landmarks, historic districts, and historic resources.

Permits for new construction or substantial renovation of existing structures require that the architectural plans and site plans be reviewed by the Zoning Administrator for "appropriateness". Among other things that are considered for appropriateness are "architectural features" and "materials, colors, and textures". I believe these regulations can help to ensure that the exterior will be true to the spirit of old downtown Baldwin. I encourage you to visit with Tina Rakes about this further, should you have any questions.

One thing that the Old Town Overlay District does NOT do is regulate usage. It is controlled by the underlying zoning classification for the property, which is designated "CP3 - Planned Central Business District". CP3 allows for residential use when not on the ground floor.

(continued on next post)

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robinbayer 3 years, 8 months ago

(continued from previous post)

I think it important that you have stated your strongly-held concerns about residential units downtown. I confess that I don't exactly know your reasons for this, but the fact that you hold these concerns and seem to share these concerns with others means that it is important for you to bring these concerns forward. The Zoning Regulations are constructed to allow them to be adapted to a variety of factors as Baldwin City grows. This might be a very good example of something that needs to be adjusted now or in the near future. I highly recommend that you voice this concern in the public comment section of a City Council meeting or send correspondence to City Council members.

Also, your point is well taken that the Council could require more detailed specifications and hold developments to a higher degree of scrutiny if a grant of public money is at stake. In this case we did not go above and beyond the Old Town Overlay District regulations simply due to the deadline we were facing. The Council believes in continuous learning with regard to the decisions we make. To be honest, though, we hope never to have to deal with something like this again.

Thank you for your contribution of ideas. It is vital to a well-run government (whether local, State, or national) to have avid participation by citizens. And since government is not some distant evil being, but is instead comprised entirely of people it is important to have those folks be the brightest and most well-informed as they possibly can be. Based on your passion for communicating ideas of public concern I would highly encourage you to put your hat in the ring for the upcoming City Council elections that will be held in April 2011.

Robin Bayer

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