City abandons Library Lot deal with Chicago developer, moves to settle citizen lawsuit

Tuesday, January 8, 2019 - 6:41pm

Ann Arbor City Council passed a resolution Monday night directing the city attorney to settle a lawsuit with a citizens group over the sale of a plot of land adjacent to the Ann Arbor District Library.

Ann Arbor City Council passed a resolution Monday night directing the city attorney to settle a lawsuit with a citizens group over the sale of a plot of land adjacent to the Ann Arbor District Library. Buy this photo
Alexandria Pompei/Daily

Ann Arbor City Council passed a resolution Monday night directing the city attorney to settle a lawsuit with a citizens group over the sale of a plot of land adjacent to the Ann Arbor District Library. Local attorney Tom Wieder filed a complaint in August in Washtenaw County Circuit Court on behalf of the Ann Arbor Central Park Ballot Committee in response to the sale of the lot to Chicago developer Core Spaces.

Proposal A passed by a narrow margin in November after months of debate and opposition from Mayor Christopher Taylor. It amends the city charter, nullifying a vote by City Council in April 2017 to sell the lot to Core Spaces, which had planned to build a 17-story high rise with office and retail space, a hotel, apartments and an outdoor plaza.

Following the passage of Proposal A, which mandated the city maintain ownership of the Library Lot in perpetuity and develop it as an urban park and civic center commons, Ann Arbor officially called off the $10 million agreement in late December.

Will Hathaway, a member of the Ann Arbor Central Park Ballot Committee, commended the city for moving to settle the citizens group’s lawsuit.

“This action will help disentangle (the city) from the idea of selling Library Lot development rights to a private corporation,” Hathaway said. “It is time to look forward to the idea of an urban park and civic center on the library block. Creating a consensus vision will take some work and time. All of us want a resulting public space of which we will be proud.”

City Councilmember Jane Lumm, I-Ward 2, said she was glad the resolution to wind down the lawsuit was on the agenda.

“Whenever there is litigation against the city, especially when it strains from our citizens, our hope is that the litigation is ultimately settled in an amicable agreement,” Lumm said. “The passage of Proposal A in November is a clear statement from residents that the sale of the Library Lot development rights to Core Spaces is not what the majority of residents wanted for the property.”

City Administrator Howard Lazarus informed the developers that the city was abandoning the deal in a letter on Dec. 31.

“The charter amendment prevents or impairs the city from carrying out the sale of the development rights on the Library Lot,” Lazarus wrote. “Because this situation is obviously one that cannot be cured, the agreement with Core Spaces is terminated. We will arrange for the return of the deposit paid as part of this transaction and await your direction on where and how to send it.”

The letter directed Core Spaces to send any further correspondence to him and City Attorney Stephen Postema. In a statement issued Jan. 2, Andrew Wiedner, chief acquisitions officer of Core Spaces, criticized Ann Arbor’s decision to dismantle the agreement.

“We strongly disagree with the city’s position as stated in the letter,” Wiedner said. “We are evaluating our options and will be responding in more detail shortly.”

At a City Council meeting Dec. 17, Core Spaces attorney I.W. Winston cautioned the city to take steps to avoid provoking legal action.

“I do think that there is an opportunity to have discussions and I would hope to have those in a different form in the future to see whether the issues that separate us can be resolved without high stakes and very expensive litigation,” Winston said.

Had the Core Spaces deal gone through, $5 million of the proceeds would have been allocated to the city’s affordable housing trust fund. Monday night at City Hall, Ann Arbor resident Robert Gordon pointed out that the collapse of the sale meant the city lost money that would have benefitted people struggling to afford the city’s high cost of living.

“We have a significant challenge ahead of us,” Gordon said. “It’s one thing to have good faith disagreements about the use of property in downtown Ann Arbor. It’s quite another to ignore the needs of the lower income people of Ann Arbor. Let’s look out for them. That’s a big part of your job.”

Aside from legal costs, the city is still facing nearly $250,000 in fees for its failed deal with Core Spaces. Tom Crawford, the city’s chief financial officer, told MLive Ann Arbor would have to pay about $220,000 in fees to a real estate broker that helped the city solicit different development proposals for the site in 2015.

The Library Lot has been the subject of another legal challenge prior to the Ann Arbor Central Park Ballot Committee’s complaint.

In June, former Councilmember Sumi Kailasapathy, D-Ward 1, and Councilmember Anne Bannister, D-Ward 1, sued the city, Taylor and City Clerk Jacqueline Beaudry for a breach of protocol in the process of selling the Library Lot. The lawsuit alleged that when Taylor and Beaudry signed the contract with Core Spaces, the document finalizing the sale was not presented to City Council. That was supposedly in violation of the city charter, which requires that a minimum of eight councilmembers approve sales worth more than $25,000.

During a hearing in early September, Judge David Swartz of the Washtenaw County Circuit Court heard arguments in the case and said he would issue a written opinion, but has not done so yet.

Lumm said she hoped the city would find a way to settle all the legal issues pertaining to the Library Lot quickly, noting that the Ballot Committee's lawsuit was more or less a moot point after Proposal A’s passage.

“The purpose of the litigation obviously was to stop that sale, and that now being done, an agreement and court order confirming that the sale to Core will not take place is the simple, natural way to close the book on the issue,” Lumm said. “Hopefully we will also be able to close the book on the other related litigation soon.”