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13-story student housing project 'The Varsity' proposed to rival 411 Lofts in downtown Ann Arbor
The Ann Arbor Professional Building, which used to house a pharmacy, has stood at 425 E. Washington St. in downtown Ann Arbor for five decades. It's now the site of a proposed 13-story student housing ...
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Missing payments on a $2.9 million loan prompted Fifth Third bank to file a lawsuit this summer against local developer Michael Concannon over the former Ann Arbor Professional Building in downtown.
Concannon led the purchase of the East Washington Street property, which was combined with a house at 416 E. Huron St. into a single entity called Huron & Washington LLC.
The $3.2 million deal in 2007 was the first step toward Concannon’s plan to develop the ¾-acre parcel into an 18-story mixed-use student housing tower.
The former Ann Arbor Professional Building at 425 E. Washington St.
In the lawsuit, Fifth Third is seeking a default judgment on the failure to pay:
• $77,241 in property taxes on the East Washington Street building.
• $19,192 in property taxes on 416 E. Huron.
• Interest payments on the $2.9 million loan and a $250,000 line of credit.
In addition, according to court documents, an associated checking account was overdrawn by $15,840.
Total damages, according to the lawsuit, are $2,971,678.
Concannon is the defendant, but partners on the project include Paul Sieben, a Toledo-based architect, and Mel VanderBrug, an Oakland County developer, according to documents. Concannon declined to comment for this story.
The property - with an assessed value of $1.5 million, giving it an estimated market value of $3 million - is just east of the 4Eleven Lofts, the 350-bed student housing tower built by Joseph Freed & Associates.
"It's the perfect town-and-gown location," Concannon said in a 2008 article in the Ann Arbor News. "It's in the new city center area, located by Google and it's right on central campus, so you have an opportunity to attract both the student population and the third-party buyer population."
Concannon had planned an L-shaped, 500-bed tower with a mix of condos and apartments, along with underground parking.
Fifth Third, a regional bank based in Cincinnati, reported in an August regulatory filing it expects continued stress in its commercial construction loans, and its residential loans are experiencing high losses.
Many of those losses are believed to stem from loans made in Michigan. In the Ann Arbor area, the bank expanded both commercial and retail lending in 2004 through 2005.
A fair number of commercial borrowers are behind on their loans in this region, according to real estate experts, but relatively few are hitting the courts so far.
“Most of the banks these days are working hard to work out loans with their borrowers,” said Jeff Hauptman, who owns multiple commercial properties in Ann Arbor with The Oxford Cos.
“It’s only at the point when they see no progress that they get more aggressive and go legal.”
Banks want to work with borrowers, Hauptman added: “It costs them less money.”
He predicted that the local market will see more lawsuits filed by lenders against commercial borrowers.
“We’re going to see more of these types of lawsuits as borrowers have trouble paying their debt service,” Hauptman said. “Where you’re going to see that most is on loans where there’s personal recourse.”
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