Proposed Bowling Alley Block Developer Had AA Problems

[XLFD]

Our brilliant city leaders are about to get involved by investing large amounts of your money with a panhandler and a grifter with a history of filing frivolous lawsuits against the municipal bodies he makes a living out of swindling.  

Strong words, backed up by the public record detailing the sequence of events which happened over a period of years (2005-2012) with developers Bob and Mike Jacobson and the City of Ann Arbor.  The annotated history will be replayed here for your convenience as a cautionary tale as to what our city leaders have in plan for us in the near future.

A Brief Local History

According to the Ludington City Council meeting of March 7, 2016, the negotiations with these developers was initiated by local bigwig, John Wilson, CEO of Western Land Services (WLS).  At the meeting, his association with WLS was not mentioned, but his association as local chairman of the Pennies from Heaven foundation was noted. 

Those knowledgeable about the history of the bowling alley block knows that WLS had originally planned to develop the same area in 2008 but backed out at around the same time the economy tanked.  The particulars of that deal was much more advantageous to the city than the current offer, and much more defined.  Those who believed like me that the deal for the new fire station property on Tinkham was a precursor to another deal, were correct. 

In fact, well before our local media attached on to this as news of confirmed development, it was broadcast in Michigan Construction News in early January in an article titled:  "Downtown Mixed Use Project Eyed For Ludington"

A developer, Bob Jacobson of LC Development LLC, Coldwater, has begun talks with a Ludington City Council committee on possibilities for building a mixed use development in downtown Ludington.

He is specifically interested in the site of a former bowling alley. It’s bordered by Loomis Street, Robert Street, and Rath Avenue. Jacobson has raised the possibility of housing for senior citizens and those with special needs, of limited income. It would have commercial and office use on its first floor, facing Ludington Avenue. The complex would be designed to work around existing buildings, such as Maude’s Gallery and the Rath building that houses Nautical Yarn.

To make the project eligible for tax credits through the Michigan State Housing Development Authority Jacobson is asking the Ludington City Council to approve a Payment In Lieu Of Taxes (PILOT) agreement. This would have to be granted before the end of March to meet an April 1st deadline for MSHDA applications.

A similar article was posted in the COLDNews on January 13.  In the intervening time of over 50 days the 'talks' apparently continued since a half dozen things dealing with the development appeared on the March 7 meeting agenda, after an article on March 3 presaged the same. 

As most folks in Ludington, this writer would love to have this block meaningfully redeveloped by an ethical and meticulous agency with a minimum of government involvement.  Did this secretive process deliver us such a developer?   In researching this developer I can resoundingly say "NO".

The Ann Arbor YMCA Building Redevelopment Fiasco with Emphasis on the Y

The most substantive information pointing to that conclusion is found in the home of the University of Michigan, Ann Arbor.  Back in October of 2003, fearful of the loss of 100 units of reasonable priced housing, the City of Ann Arbor (COAA) brought the YMCA Building for $3.5 million with plans to redevelop it; the local bus company had also wanted it for their non-residential applications.  The first mistake of COAA. 

In June 2005, the COAA chooses HDC LLC to develop the lot into reasonable rent apartments.  This company was ran by the father and son team of Mike and Bob Jacobson, who have went through almost a whole alphabet of limited liability companies in other projects in order to conveniently be subsidized by municipalities, counties, and the State of Michigan without raising too many red flags for having too much debts or liabilities. 

In November 2005, the Jacobson's introduce plans that call for the construction of two towers, 13 and 14 stories high.  Within weeks, the existing tenants at the YMCA vacate their home to live in alternate housing during the period of construction, being reimbursed by the COAA for being displaced to their new digs.  

In February 2006, the city council approves the site plan and development agreement for what will become known as the "William Street Station".  By October 2006, corporate welfare provider, the Michigan Economic Growth Authority (MEGA) pledges its support and notes the investments of the COAA and their DDA in their minutes:

As you can see the city government was paying a lot out, over $34 million when you do the math.  The MEGA also pledges over $8 million through a MEGA SBT Brownfield Redevelopment Credit and to allow the Jacobson's to sneak in over $3 million from the local public school system.   

In September 2007, paying large amounts for the displaced renters and seeing several deadlines being missed with HDC LLC, even with their $34 million in incentives, the COAA reluctantly decides to agree to sell the property to the Jacobsons if they don't miss any more deadlines.  According to the local news:

HDC will reimburse the $1.1 million the city has spent on housing and providing for the displaced YMCA residents since 2003. But that $1.1 million payment is contingent on the land sale going through.

Despite the developer's promises, several council members made it clear they are losing patience.

"I'm not sold," said City Council Member Stephen Kunselman, D-3rd Ward. "At some point, we have to think about cutting bait."

Council Members Chris Easthope, D-5th Ward and Stephen Rapundalo, D-2nd Ward, also said they were tired of the delays.

But Council Member Bob Johnson, D-1st Ward, said both the developer and the city have invested too much time to stop the project now, saying both parties are holding "a gun to each other's head."

The city would have to go back to the drawing board and start a lengthy development process all over again. That means its desire to have 100 units of very affordable housing delayed perhaps five more years. The developer has won $18 million in state tax credits that would be lost if the deal was cancelled and has also invested two years into the project.

First pitched in 2005, William Street Station now calls for a new bus station, a multi-use facility that includes a 100-unit affordable housing tower, a hotel tower, meeting and conference rooms, a restaurant/bar and 110,000 square feet of commercial/office space, according to city documents.

Jayne Miller, the city's Community Services Area administrator, said the developer is expected to pay $250,000 of the $1.1 million by the end of December and the rest no later than March 31. But Miller also said the city might not get that money if numerous deadlines aren't met by the developer and the project falls through.

Miller told the council there are a series of "milestones" the developer must meet. If any one is not met, the deal is dead unless the council extends it, she said.

The first deadlines is Oct. 15. On that date, the developer must present a letter and certificate from the Michigan Economic Growth Authority that shows approval of brownfield tax credits. The developer must have a joint venture agreement with the operator of the proposed hotel by Oct. 15. The developer must have a franchise agreement with a nationally recognized hotel chain by Dec. 1.

There are numerous other deadlines stipulated for the sale of the land to be finalized.

http://blog.mlive.com/annarbornews/2007/09/city_tells_developer_it_...

On October 12, HDC signs an option agreement with deadlines it has to meet to complete the purchase of the old YMCA property, but three days later they miss the first deadlines in the option agreement for demolition plans and permits.  Regardless, on October 16 the Ann Arbor Planning Commission approves a revamped site plan introduced by the Jacobsons that includes a hotel instead of market-rate housing units in the 14-story tower.

On the November 5 Ann Arbor City Council meeting, the city cuts its ever-growing losses and ditches HDC for the project citing their unprofessional record of missing deadlines for getting the work done.  The cost to the COAA include over $1.3 million in rental vouchers to the displaced tenants.  The agreements between the two parties and the project was scrapped.

The Ann Arbor News reported:  "Developer Mike Jacobson didn't deny missing the deadlines, but pleaded with the council to approve a five-day extension. Jacobson said that the project was complicated with lots of "moving parts." He said the missed deadlines wouldn't stop his company from completing the project by the end of 2009.

But not many shared his optimism.

"His track record was so awful," Council Member Johnson said after the meeting.

Immediately after the vote killed the deal, Jacobson stood at the podium where he had just pitched his case and appeared to be stunned. He asked the council if the project was terminated. They deferred to the city attorney.

Jacobson then told City Attorney Stephen Postema that he was going to tell his people who were planning to work on the project the next morning to stop.

"That would be wise," Postema answered."

HDC Turns Into LC Developments-- Litigating Complaint Developments That Is

Despite their shortcomings and failures in the process, the Jacobsons were apparently upset enough in losing all that money to their unprofessional conduct by taking the City of Ann Arbor to federal court asking for $30 million in litigation that resulted in the loss of more money to both, but only legal fees for the COAA.

The problems with the Ann Arbor projects culminated in a lawsuit that the Jacobsons made against the city, which they resoundingly lost on their claims:  HDC, LLC, et. al. v. City of Ann Arbor.  This was during the times they were doing their name changes and Bob Jacobson decided not to claim any relation with either company.

They further lost in the federal appeals court in 2012  Sixth Circuit Appeals HDC v. AA, the judges there opining:  "The developers claim that the demolition permit condition was impossible to meet and that Ann Arbor knew or should have known that the condition was impossible to meet. Ann Arbor stated it terminated the agreement because the developers failed to meet the condition, but the developers assert that Ann Arbor actually terminated the agreement for the unlawful reason that the project would accommodate handicapped tenants... We affirm the district court's dismissal of the complaint and its subsequent denials of the developers' motions to alter or amend the judgment and to amend the complaint."

If you read these complaints, they seem speculative and poorly presented by the Jacobson's legal team; one wonders why they would go through such bother with such flimsy and frivolous arguments. 

The Ludington City Council Meeting and its Aftermath

I spoke and brought up as much as I could about this Ann Arbor snafu at the LCC meeting of March 7, 2016.  The developer Bob Jacobson, went to the podium shortly after me and avoided addressing anything about his past works, concentrating only on what he plans to do to for Ludington.  The councilors and officials asked him softball questions not related to anything other than the plans he had for this project.  One could easily see why the City of Ludington was so easily dismissed by Western Land Services back in 2008. 

Today, the City of Ludington Daily News did report on an anonymous E-mail being sent to them detailing a group of concerned locals would be fighting this developer who seems to only develop when the city, county, and or state funds are flowing.  Good luck to them.  The newspaper just like the city councilors, of course, ignored my data and warning about Ann Arbor.

[Willy]

Where else can people go to get the real story on what is going on in Ludington. Certainly not the LDN or Alway's paper. The only place is right here on The Ludington Torch. Again I have to praise X for his thorough, concise and in depth article regarding Ludington's Council who have aligned themselves with an entity who has a questionable reputation. Ludington's elite has, in the past, chased out of town a hard working college student,   also know as Claire the book girl, whose only crime was trying to pay her way through college by selling books, door to door, in the City of Ludington.

Then those  elites want to welcome a developer who has a dubious reputation. Not only do they want to welcome him but are more than willing to give him Ludington citizens' hard earned tax dollars.

[XLFD]

You'll get it nowhere else, because even if the COLDNews or the Mason Clown Depressed had all this and more, their editors would determine that they could not print it because they just might upset someone in their corrupt little clique.  Provided above is the extent of what they report as to the dissent made by an anonymous entity, followed by the developers presentation.  This anonymous letter will never be reproduced at the COLDNews in its entirety and analyzed fairly, but it will happen here once I get the FOIA response back.

[shinblind]

Will be interested to read the email from the FOIA that you filed X. Do you think that they are going to stonewall this until after the March 31 deadline?

From the FAQ on the Community Foundation of Mason County website

 "Can I make a gift to the Foundation and retain income for myself or a family member?

Yes, we offer several opportunities to make life income gifts. We are happy to work with you and your professional advisors to determine which type of gift is right for you."

Can someone explain how this works?

Life income gift is defined as,"life income gift, you donate cash, appreciated securities, or other assets, such as REAL ESTATE, to The Trustees of Reservations. In exchange, The Trustees will pay you or another beneficiary income forlife or a fixed term of years."

So as a hypothetical example say I bought some real estate for about say $1.2 million dollars and as an investment it went south with the real estate market. Say it is at best worth only a couple of hundred thousand in today's market. Hmmmm, so say I donate this to an outfit, let's call it the MC Community Foundation, and they use it to either sell or rent to a developer who gets a State Grant to put up oh say subsidized housing on this land. They in turn kickback er pay me and my heirs an income from this property where I will recoup my investment many times over.

Is this how this works?

This is more twisted  than a pretzel.

So much corruption, so little time.

[XLFD]

What I find amusing with the COLDNews is that they devoted all those column inches of newsprint to an anonymous e-mail with generalized concerns about this issue, yet totally ignores the specific concerns I brought to the table at the open meeting where they attended about this company's past and their methodology.  The Ann Arbor deal isn't the only black mark in their past and I'm busy tracking down more leads and some more info from Ann Arbor too. 

This city council is so willing to sacrifice our citizens limited prosperity for the promise of growth coming from this project.  But this is faux growth, where you put tax dollars into propping up semi-public projects that may temporarily boost the local economy, but are unsustainable over the long term.  I am hoping to post some tutorials on the topic, because these projects are so complex in their set-up that few people understand what's going on outside the developer pirates and the government corporate welfare agencies who love them. 

I don't even completely get them yet, because the ideas seem so illogical and too socialistic to be tolerated in America.

[jfc123]

They need to make sure that the whole city is available for use, not just what they own. Imagine if the area that brought marinas and sportfishing to the area was revitalized? What impact would that have? If you only knew how many phone calls we get every year and have to turn down and they decide to totally change their plans. If we cant get anything out of it why refer anyone? Basically say things are not well here! Used to have large companies with 20 or so charter boats for their company outing. How often does this happen now? They stopped calling and it is Ludington's fault. Fix what is broke FIRST for all of this city.

Also support the ones that can afford to upgrade their business around this smelly bayou that have not been hurt as bad as us. Think of how to clean the mess that you left on the others that makes it so they cant afford to do anything! The time has come to accept your responsibility! Clean your sewage and road and waste water out of the PM BAYOU darn it!

[jfc123]

You want growth, go back to what worked to build this city! It surely wasn't a west end project or snooty council, it was hard working business men and women! Right now this council and mayor are lost in paradise!