Saturday, December 9, 2006

Water Street Project Looses 2nd Developer

Saturday, December 09, 2006
BY KHALIL E. HACHEM
News Staff Reporter

The Water Street project in Ypsilanti is again without a developer.
The city announced Friday that Joseph Freed and Associates of Illinois is no longer interested in the multi-use development, dimming hopes that the project could boost tax revenues at a time when the city is struggling to balance its budget.
"It's a significant impact on the city,'' Keith Peters, president of the Ypsilanti Area Chamber of Commerce, said after the announcement was made. "It's a great project, but bad timing.''
Peters said the city has invested a lot of money in Water Street and continues to work hard to make it successful at a time when the economy continues to be slow.
Mayor Paul Schreiber said Water Street, while a good project, can't compete with the poor economy. "I'm really disappointed,'' he said, "but we need to continue working on developing the project.''
The city owes about $17 million on Water Street, money used to buy the 38 acres east of downtown and prepare it for development. In April, city leaders selected Freed to build the residential and commercial portions. That was 17 months after parting ways with Biltmore Properties of Troy, the project's first developer. Biltmore and the city parted ways after disagreeing over the commercial aspects of the plan.
Freed was expected to sign a development agreement this month.
Laith Hermiz, managing director with Freed and Associates, did not return telephone calls Friday. Assistant City Manager Bob Bruner said Hermiz told the city his firm halted discussions because of concerns about the local economy and what many are calling a buyers' market for residential homes.
According to the Ann Arbor Area Board of Realtors, the number of homes for sale in Washtenaw County, 7,738 year-to-date through July, was up 11.5 percent this year over 2005. But sales during that time were down nearly 8 percent, to 2,001 homes sold this year.
Ypsilanti officials, business owners and some developers received Friday's news about Freed's decision cautiously. City Council Member Trudy Swanson, D-Ward 1, and downtown loft developer Stewart Beal were among those who declined to comment.
Peter Rinehart, owner of Bombadill's coffee house and president of the Central Business Community, said he would have to discuss the issue with CBC members before commenting. But as an individual business owner, Rinehart said, he did not build his business around the success of Water Street.
"It would be tremendous asset,'' Rinehart said. "We're here and we will continue to be here doing good business in downtown.''
Ypsilanti Downtown Development Authority Director Brian Vosburg said the Water Street project would boost downtown, but the lack of it is not fatal.
"We will continue working to market downtown and make it successful,'' Vosburg said.
Dave Hamilton, chief executive officer of Swisher Commercial in Ann Arbor, said Water Street is prime property because of its location on the Huron River and its proximity to downtown, Eastern Michigan University and I-94. The city should not have any problems attracting developers in a good economy, he said.
"The economy is definitely a problem,'' Hamilton said. "The timing is not good for the city.''
City officials had hoped the project would create a new neighborhood and increase city revenues.
"We're certainly disappointed,'' City Manager Ed Koryzno said. "We knew the economy was bad, but ... we did not anticipate this impact.''
Koryzno said he plans to ask a group of business owners and developers to find alternatives before making a recommendation to the City Council on how to proceed. The city could find another developer, develop only the commercial areas or sell certain parcels, he said.
The city refinanced its debt on the project this year, deferring the first payments until 2009. The plan was to have some construction completed before 2009 to generate enough tax revenue to make the loan payments, Koryzno said.

Khalil E. Hachem can be reached at khachem@annarbornews.com or 734-482-3225.

©2006 Ann Arbor News
© 2006 Michigan Live. All Rights Reserved.

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