Saginaw sold a century-old building to the low bidder. Here’s why it may pay off.
SAGINAW, MI — The sale of a Cathedral District building to developers with plans to open a 40-unit apartment was based on the project’s likelihood for success rather than its sale price, Saginaw City Hall officials said.
After a Saginaw City Council vote Monday, July 24, the city sold the former Jefferson Apartments, 505 Millard, to Fifth Avenue Limited Partnership for $1,000. The company plans to spend $4.2 million to reopen the apartments, which last housed tenants in 2008.
The company’s bid, however, was substantially lower than two other organizations that submitted proposals. Communities First, Inc. offered Saginaw $200,000 and Millard Apartments LLC offered $3,957 for the nearly century-old building. Both rejected proposals also involved reopening the building again as an apartment complex.
Still, City Hall officials recommended the council approve the bid offering Saginaw the least amount of money in return for selling the property. Why?
“We’re not necessarily looking to make money on the short end,” said Cassi Zimmerman, director of planning and economic development for Saginaw. “What we want is a project that is going to work long-term; that’s going to get done; that has a reputable developer that has been around and done quite a few things in Saginaw.”
City Hall officials have said they want to avoid a scenario where a developer fails to execute a plan to reopen the building, which could keep the structure empty and leave neighbors with the towering sight of an abandoned structure for years longer.
Those same officials have said that would be an unwise investment considering the amount of money and time Saginaw committed to renovating the aging building.
In 2011, Saginaw leaders launched a $3 million effort to gut the aged innards of the four-story, 31,368-square-foot facility. The initiative involved removing asbestos, lead-painted plaster walls, plaster-clogged wall meshing, steel water pipes, wiring, doors, and a boiler installed in the early 20th century.
The years-long effort was aimed at enticing new owners to purchase the property, which seemingly finally paid off this week.
Before making the sales recommendation to the council Monday, Zimmerman and other City Hall officials considered factors including the type of financing developers planned to secure to pay for their respective projects, she said.
Compared to the competing bidders, Fifth Avenue Limited Partnership representatives projected they required the smallest percentage of financing from incentive programs such as grants, Zimmerman said. Relying on grant fundraising was a riskier proposition that could derail a project before completion, she said.
“In my professional opinion, as an economic developer, putting your own equity and having senior lending on a deal is your own investment in the community,” Zimmerman said. “(Incentive program funding is) not necessarily going to be obtained.”
Zimmerman said Fifth Avenue Limited Partnership also was selected both because of its history of developing properties in Saginaw and because of feedback from residents living near the old Jefferson Apartments.
City Hall staff earlier this year attended neighborhood meetings in the Cathedral District, where Zimmerman said neighbors expressed a desire to see the building developed for market-rate housing rather than low-income housing, she said. The Fifth Avenue Limited Partnership proposal matched that wish, with plans to offer rent rates ranging from $390 to $2,125, city records showed.
The company’s experience redeveloping other residence- and business-occupied structures in the city included other aging buildings, including properties housing what today is Bauer’s Jewelry and The Bread Gal in Saginaw’s Old Town commercial district.
The choice Monday to sell the property to Fifth Avenue Limited Partnership was not unanimous for the city’s 9-member governing body. The council voted 6-2 in favor of the sale, which was enough to clinch the deal. Council members Michael Flores and Monique Lamar-Silvia voted against the sale. Councilman Michael Balls was absent from the meeting.
Jefferson Apartments first opened in 1926. The apartment was the brainchild of the Saginaw Business Women’s Association and was initially geared toward single women in the work force.
The facility remained privately owned until two years after it closed to tenants, when the Saginaw County Land Bank purchased the property in 2010 for $150,000. The county transferred the property to Saginaw the following year.
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