By LINDA LOBECK
IRON MOUNTAIN - The assessed value for a piece of property along North U.S. 2 in Iron Mountain is nearly $300,000 less than what the city paid for it back in 2007.
A car passes the former Khoury Manufacturing property along North U.S. 2 in Iron Mountain. The assessed value of the 10.724-acre site is $575,851, nearly $300,000 less than what the city paid for it back in 2007, city council members learned Monday. Theresa Peterson/Daily News Photo
The Tax Increment Finance Authority (TIFA) had purchased the former Khoury Manufacturing property at 1010 N. Stephenson Ave. (U.S. 2) for $875,000.
As a part of the city's real estate policy, the property was recently assessed prior to the city being able to issue a request for proposals (RFPs) to sell it.
The assessed value today is $575,851, city council members learned Monday night.
With TIFA retired in July, the property went into the city's possession. The city council then started action to try and sell the 10.724 acres that has been sitting idle the past five years.
City officials had previously noted that the purchase of the property may have been an overpayment in 2007, and not equal to what the property was worth.
In May 2008, Iron Mountain native Steve Mariucci had addressed the council and TIFA about plans he was investigating for using the property to build an events center and restaurant in the first phase. Unfortunately, the project did not go forward and the property has been sitting as a "non-performing asset," City Manager Jordan Stanchina said at the Aug. 6 council meeting.
In his report at Monday's meeting, Stanchina noted that the council had previously discussed selling the property as soon as the deed was transferred from TIFA to the city.
"The city owns 607 feet of highway frontage that generates no tax revenue. It would be appropriate to issue a Request for Proposals (RFP) and solicit potential developer interest," he added.
Prior to issuing the RFP, the finance committee will be meeting to discuss the asking price along with a return on investment (ROI) for a sale price that may be lower than the asking price.
In addition, Stanchina noted that the former Khoury property is a Brownfield site and the city had the appropriate environmental assessments completed. This will protect the city from contamination liability and the assessments are available for review by potential purchasers.
Stanchina added that he had also talked with the city attorney about how they can hold someone to a ROI so they follow through with what they have proposed for the property. Stanchina told the council members that the city attorney felt confident that something like that can be put into an agreement with a developer.
Mayor Bruce Rosen said the property could be split up, although Stanchina pointed out the property is an unusual shape. He noted there was a parcel or square section on Grant/Blaine that has a house and garage owned by a resident and not by the city.
"We need to keep our options open with this. We should have some flexibility. From my perspective, it may not work to sell the whole thing at once," Rosen said.
Stanchina said that once he meets with the finance committee concerning the RFP, the information will be shared with the entire council for approval before it is sent out to developers.
Within the city's Real Estate Policy, there is a step that allows for a sale at less than fair market value for a parcel of property. "The city may only consider disposing of real estate for less than the fair market value if the transaction involves a specific economic development project within the city that will have a significant financial benefit to the city by way of an increase in tax base, job growth of any such proposal," the policy states.
In addition, the city policy notes that written proposals must be on a form that the city has, and will be evaluated and scored by the city to determine if the proposed transaction qualifies for consideration.
In other action, the council:
- Opened three bids for the water and sewer installation work in the 25 Location. Bids were $311,274 from Oberstar Inc. of Marquette; $370,456.80 from Bacco Construction Co. of Iron Mountain; and $411,380.25 from Advance Construction of Green Bay, Wis. The engineering estimate for the work was $340,000, according to Stanchina. The council referred the bids back to staff and the infrastructure committee for review.
- Approved going into closed session to discuss collective bargaining strategy with the city's labor attorney, John Gretzinger.
Linda Lobeck's email address is email@example.com.