City of Ypsilanti, Stewart Beal reach deal on Thompson Block
The City of Ypsilanti and developer Stewart Beal have reached a deal on how to proceed with initial renovations on the Thompson Block building, the first sign of real progress since legal maneuvering began four months ago.
Per the agreement, all exterior walls will be stabilized, all shoring will be removed from the Cross and River street right-of-ways, and the windows and doors will be secured and boarded up within one year.
Washtenaw County Circuit Court Judge Donald Shelton ordered the full City Council and Beal into a facilitation session Monday. That move followed several months of facilitation between attorneys on both sides that failed to yield any progress.
The deal provides a “reasonable timeline for restoring the Thompson Block to the way it was before the fire,” said Beal, whose Historic Equities Fund 1 LLC owns the building. The building was under renovation last fall when it was severely damaged by an arson fire.
The agreement was signed by all the council members present, Beal and attorneys for both sides. Council Member Brian Robb was on vacation and did not attend.
The lawsuit filed by the city is expected to be dismissed by Sept. 13.
Per the new agreement, bracing propping up the west wall that was recently moved from River Street to the sidewalk will be completely removed from the right-of-way by Aug. 17, 2011. As previously agreed, all shoring will be removed from Cross Street by April 25, 2011.
“People will not know the fire occurred,” Beal said. “The faÃ§ade will totally be reconstructed behind the faÃ§ade, there will still be the same problems that we are working on.”
The agreement gives Beal three years to complete the exterior envelope of the building, which Assistant City Attorney Karl Barr said includes a roof, stable walls and all openings sealed with at least temporary doors and windows. He said it essentially means the building will be “impervious to the elements” and removes its status as a nuisance.
The agreement also requires Beal to obtain $2 million in insurance within 10 days of signing the contract to protect the city. Within 30 days, the east section of the south wall, which an independent engineer recently deemed is in danger of sending masonry into Cross Street if it topples, will be stabilized. It currently doesn't have any support or bracing.
In early April, the City Council rejected a deal developed between Beal and City Manager Ed Koryzno that provided a shorter timeline to secure the building and make progress than the current agreement provides.
For example, it gave Beal six months to remove all shoring from the city’s right-of-way, which would have meant an Oct. 4 deadline. Beal now has a year to complete that task. He said litigation consumed most of the construction season, and the current timeline is reasonable.
The prior agreement also required Beal to hire an independent engineer to determine the structure’s stability, which the city recently did instead.
As with the current agreement, the April agreement called for Beal to provide $2 million in insurance to protect the city. It also required Beal to furnish a $60,000 performance bond in case the conditions weren't met.
The current agreement has no performance bond. Instead, failure to meet any of the conditions or timelines will put the two sides back in facilitation and possibly cause the lawsuit to be reinstated.
Mayor Paul Schreiber, who voted for the previous agreement, said he's satisfied with that protection for the city.
“Everybody’s goal is to see the Thompson Block renovated and restored, and after hearing the Beal team, that’s their goal,” he said. “This agreement will give them every chance to do that and provides the city some protection.”
The April agreement also called for renovations to begin within six months, with either Beal’s firm or another company. Beal said he has no immediate plans for renovations beyond stabilizing the building.
The largest issue has been funding. Beal said investors previously interested in the project backed away once litigation began, but said he now has a Sept. 18 meeting with the same group. He declined to name the group, but said they bring a tenant and are involved with several successful breweries in the area.
Beal has estimated a total renovation at $4 million. He has obtained $1.8 million in State Historic Preservation Office tax credits to rehabilitate the 148-year-old structure. Those credits are only provided upon completion of the project, so Beal must raise $4 million in capital.
Beal said he's optimistic over the direction of the effort.
“This is a victory for historic preservation, this is a victory for Thompson Block and this is a victory for the Beal Group because now we can get back to work and focus on the project that we always wanted to do,” he said.
Barr said a settlement, by its nature, isn't perfect for either side and requires compromise, but allows the issue to move forward.
“To reach a settlement, there is a little bit that’s ambiguous, but we move forward with the hopes and promises that things will happen,” he said.
Tom Perkins is a freelance writer for AnnArbor.com. Reach the news at firstname.lastname@example.org or 734-623-2530.