More property, more problems.

While the University has plans to purchase the $12.8 million Edwards Brothers property on South State Street, the city of Ann Arbor holds the power to use its right of first refusal to block the University’s purchase of of the 16.7 acres of land. However, the city would then be compelled to purchase the property, and most likely, search for a private entity to buy the land.

Although the city does not have a specific need for the extra property, many city council members see its purchase as important to maintain Ann Arbor’s quality of life and prevent the property from falling off the tax rolls.

Conversely, the University holds that its growth is in the best interests of students and faculty at the University, as well as the city of Ann Arbor.

The Michigan Department of Treasury reports that Ann Arbor’s tax base has grown by 36 percent since 2001, while comparable communities in Michigan experienced a decline of 4.9 percent. The difference is in part due to the University’s presence and growth in Ann Arbor, according to Jim Kosteva, the University’s director of community relations. The growth translates into about $23 million of additional annual tax revenue for the city.

“You shouldn’t look at the purchase of a property by the University in isolation,” Kosteva said. “The city may be experiencing a short term loss of some of those tax revenues, Kosteva said, but through most of the efforts of the University, there has been a demonstrable long-term gain in taxable value in the city.”

The University has created more than 9,000 jobs since 2001, and without the University, property value in Ann Arbor would likely have suffered tremendous losses in 2008 and the years that followed.

“During the recession, University communities were better insulated against property value declining,” Kosteva added.

Speculation has already begun as to how the University will be using this property, or if the city will purchase the property and look for private investors and new business to buy the land later on. Edwards Brothers, Inc. — the fifth-largest book and journal manufacturer in the country — currently owns the property, and the building that stands on it will likely be demolished.

“We don’t have any specific plans for the site,” Kosteva said, “With that being said, it is also apparent that it is in the immediate proximity of major portions of the Ross Athletic Campus as well as the South State commuter lot, so I think that there is a reasonable assumption that if the University were successful in acquiring it, part of the utilization of this property would be to support the Ross Athletic Campus.”

University spokesman Rick Fitzgerald said in December that the property could expand the Athletic Department facilities, as it sits in a prime location for University expansion.

“When strategic pieces of property like this become available, it makes good sense for the University to pursue properties that would be in such strategic locations,” Fitzgerald said.

City Administrator Steve Powers is in the process of assessing the city’s strategic options for the Edwards Brothers property, and the Ann Arbor City Council is expected to make a final decision in February. City Council members have already begun looking for other prospective buyers, though there is no indication what other parties might be interested.

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