County 'cautious' about possible lawsuit

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The county brownfield authority wants protection from the city in case it's sued over shifting public parking deck money to Gerald Snowdon's proposed River West Development. Record-Eagle/Jan-Michael Stump

August 31, 2010

BY BRIAN McGILLIVARY bmcgillivary@record-eagle.com The Record Eagle Tue Aug 31, 2010, 07:47 AM EDT

TRAVERSE CITY — Plans to switch developers for a West Front Street parking deck with $5.6 million in public funding has Grand Traverse County looking for insurance protection from Traverse City.

The county Brownfield Redevelopment Authority is prepared to move funding for a parking deck from Federated Properties LLC's stalled project across Pine Street to developer Gerald Snowden's proposed River West development. Snowden, however, declined to indemnify the brownfield authority from a potential lawsuit by Federated. The authority is now asking the city to defend any possible lawsuit and pay any damages.

"I don't think (Federated) would have a valid lawsuit but ... it's a matter of being cautious," brownfield authority attorney Scott Howard said. "You're talking about a $5 million proposal and I can see where someone might get upset about that."

Snowden said the request surprised him.

"I didn't think it was appropriate for me to indemnify the county for actions Federated may or may not take against the county," Snowden said. "They are city-controlled funds for what's going to be a city-owned deck, so it really has nothing to do with me."

Howard said protection from a potential lawsuit was his idea, not the brownfield authority's.

The brownfield authority has notified Federated of its intentions, Howard said, but they haven't heard anything from the company "for quite some time," Howard said.

Gregory Pierce, Federated's general counsel, declined comment.

Both Howard and Snowden said there is no lingering animosity from his pitching an alternative deck proposal in 2006 to city officials that cast a cloud over Federated's project.

Howard said the brownfield authority has "bent over backwards" to help Snowden's project, but moving funds approved for one project to another creates a unique situation.

"They'd love to facilitate development on the west end of downtown, they just don't want to be in the position of getting sued for trying to help somebody out," Howard said.

Snowden's offer created a stir in 2006 because state Sen. Jason Allen intervened with city officials on behalf of the Federated proposal, Snowden pulled back his plan and city officials didn't notify city commissioners of Snowden's alternate project. Traverse City voters soundly rejected the city's plan to bond up to $16 million to finance Federated's project at 145 W. Front Street. The brownfield authority reconfigured the financing to create a smaller parking deck, but by 2008 Federated notified the city it was dropping the project to focus on the property at 124 W. Front St. Federated demolished the former Grand Traverse Auto structure to make way for a proposed $20 million, three-story retail and office building. But the economy soured and the site remains vacant.

Snowden again approached the city about its interest in building a parking deck in 2008.

"It's taken a lot longer than I expected, but the city has to do what the city has to do," Snowden said.

City Manager Ben Bifoss said part of the problem has been figuring out how to finance the $12 million, 401-space project. But he's ready to outline a proposed development agreement to the city commission at a Sept. 13 study session.

The brownfield authority would capture all new school property taxes generated by Snowden's River West Development, and the Downtown Development Authority would take in the balance. But Snowden's project would generate about a third of the required revenue to pay off the bonds, Bifoss said. The rest would have eaten up all of the DDA's remaining tax revenues, leaving it no funding for other projects.

Bifoss said he's found some other financing sources that will allow the city to build the larger project without siphoning off all of the DDA's funds. He declined to discuss the financing plan until it's presented to the city commission.

Once the city commission commits to a plan, it will issue a notice of its intent to sell the bonds, giving residents 45 days to call for a vote on the project.

Snowden's private project would go first, and the city wouldn't sell the bonds until Snowden began construction, Bifoss said.

Snowden said once the city commits and he knows the size and scope of the city deck, he can proceed with final design for his project. He doesn't have a time line, but said the process will accelerate.

"The private sector moves a little faster than the public sector," he said.