Saline City Council Must Consider Many Factors In Hotel Land Deal




Saline Mayor Brian Marl no doubt wants to back up talk that the City of Saline supports economic development within its boundaries, as the mayor looks to move ahead with a land deal that would bring a hotel to the city.

“The City of Saline for decades, which predates my tenure as both mayor and council member, has prided itself and articulated the narrative that we are a very pro-business community,” Marl said. “Well that has to be more than just empty rhetoric. On occasion you have to show something tangible that you have done to attract and incentivize business and investment in your community.”

If the city approves the land proposal by developers to put a Best Western Plus and expanded Ace Hardware on current city-owned property in the Sauk Trail Business Park across from Rentschler Farm on Michigan Avenue, the deal itself will be mostly about furthering business and investment in the community and putting the property back on the tax roll, but not one-time financial gain through the sale of the land.

Council Member Jack Ceo summed it up. “To me the nut of the whole matter is this: We’re being asked to forego some profit on the front end with the sale on a one-time revenue basis for what we hope would be a long-term benefit to the city through an attractive development that would not only help the overall business, but then provide an ongoing stream of revenue which we haven’t had from that property in many years,” he said.

A development group led by Saline residents James Junga, Mark Kuykendall and Jim Haeussler has offered the city $430,000 for about six and a half acres of land in the Sauk Trail Business Park, which would be a fair deal under current market conditions, except the developers want the DTE power lines on the property relocated at the city’s expense. DTE estimates the cost to move the power lines will be $225,000.

“The fact of the matter is there is no perfect proposal, but I think what’s in front of us is decent and good enough,” Marl said.

If city council pulls the trigger on the land agreement, its foreseeable the city will net less than $150,000 for the land, after all costs. “I think what has kind of thrown a wrench into the works here is the issue of the utility lines which can and always are an expensive proposition and will impact negotiations on the deal…The short answer is there is no clear answer on what makes sense from both a sellers and buyers standpoint,” said Tony Caprarese of Swisher Commercial, the city’s real estate representative.

“Ultimately, the city has to decide I think what is it worth to move the property, to get it developed, to get it back on the tax rolls and start to see some activity in that end of town,” Caprarese added.

The developers are working on two business plans for the Best Western Plus: both a 65 and 85-room development. If you consider the 65-room plan, the city anticipates the hotel would generate almost $228,000 in real property and $23,000 in personal property taxes annually, of which the city would get about a quarter of that tax revenue.

Further, longtime hotel operator Kuykendall expects the hotel to generate up to $2.6 million in annual revenue and hire between 25-35 people with a yearly payroll of about $600,000. People staying in the hotel would obviously spend money in other local businesses, too.

“A hotel has a significant impact on the economy,” Kuykendall said. “Saline does not have a hotel. A hotel brings people to town, they rent rooms, they eat in restaurants, they buy groceries, they go to pharmacies, they use gas stations, they use hardware stores, they use a number of different businesses. It’s just not the hotel that’s impacted. The city has a significant impact from a hotel existing in a community.”

John Olsen, the executive director at the Saline Area Chamber of Commerce, sees it the same way. “This could mean a lot to our downtown businesses to have this here,” Olsen said.

Marl, who has been part of the land negotiations with the developers since December 2015 for the hotel as well as has been in on talks for the new Ace Hardware for about two years prior to the hotel discussions, has publicly supported the proposal. “When a city wants to attract the type of investment and services that it deems appropriate, you do have to incentivize, and so I’m comfortable moving forward,” he said at a city council special meeting on Aug. 25, which was called specifically to discuss the proposed land deal.

Although some city council members have voiced concerns that the deal seems rushed, as the developers are looking to swing the deal and begin construction on the hotel this year before the winter weather sets in, Marl does not feel the same way.

“I certainly don’t think if you gauge the time from December 2015 to the present that that is indicative of a process that’s being rushed. I think we’ve been thoughtful and prudent,” Marl said.

However, Marl has been closer to the negotiations than some of his colleagues on city council. “Some people in the discussion, but not the majority of council have been in on the moving parts for a long time now,” Council Member Linda TerHaar said. “City council also needs to do due diligence as well.”

There are other issues the city council must consider, too, such as residual debt tied to the property, how exactly the taxes for the property will be captured, considering the property was rezoned from industrial to commercial earlier this year, and the fact the developers are assuming costs to improve the entrance and road within the business park.

“Will this be the only deal that will come across? I’m sure it won’t be, but it certainly is a very attractive proposition right now that I think deserves serious consideration by the city, providing both parties can come to agree,” Caprarese said.

City council is expected to again consider the property deal and real estate purchase agreement at its next regular meeting on Sept. 12.

 


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