I'm just passing along information in hopes that people who are interested in this decision will attend this meeting as well as email the current and new council members to voice their concerns regarding this matter.The Villages Community Development Corp.
11/19/09
CORRECTION, The Full Council Meeting is this Friday, November 20th at 10am
STOP THE REZONING of 7850 East Jefferson
WE NEED YOUR ACTION NOW & FRIDAY at 10am
Today the Detroit City Council Planning and Economic Development Committee (Reeves & Collins) voted against the concerns of Detroit Residents and the City Planning Professionals. They overruled the Detroit City Planning Commission's recommendation to deny the rezoning of 7850 East Jefferson for the 7.4 Million dollar luxury riverfront Pension Fund Building. The committee action today, pushes the rezoning to a final decision through a full City Council vote on Friday.
The full City Council vote will take place Friday 11/20/09 starting at 10am. This is the last and most important meeting to come to, We can win on this issue, please every make every effort to attend this meeting. We need a large group and we will be heard!
Meeting Details:
Full City Council Meeting
Friday the 20th of November 13th floor of the Coleman A. Young Municipal Center (City- County Building)Time: 10 am. Please be there by 10 am for public comment, public comment will come first at this meeting, this is our time to be heard!
Also Please call again and resend your emails to remind Council Members that there is significant community opposition to the proposal and the City Planning Commission has recommended against the rezoning. Ask them to Vote NO on the Rezoning
Please forward this email to supporters
For your convenience
Mayors office & City Councils physical addresses and phone numbers:
Mayor Bing
City of Detroit
Executive Office
Coleman A. Young Municipal Center
2 Woodward Ave., Ste. 1126
Detroit, MI 48226
Phone (313) 224-3400 Fax (313) 224-4433.
Detroit City Council
Coleman A. Young Municipal Center
2 Woodward Ave, Suite 1340
Detroit, MI 48226
Kenneth V. Cockrel Jr. (313) 224-4505
JoAnn Watson (313) 224-4535
Martha Reeves (313) 224-4510
Kwame Kenyatta (313) 224-1198
Barbara-Rose Collins (313) 224-1298
Brenda Jones (313) 224-1245
Alberta Tinsley-Talabi (313) 224-1645
Sheila M. Cockrel (313) 224-1337
Emails:
TO:
Kenneth.Cockrel@detroitmi.gov;
Collins_MB@cncl.ci.detroit.mi.us;
K-Kenyatta_MB@cncl.ci.detroit.mi.us;
m-reeves_MB@cncl.ci.detroit.mi.us;
S-Cockrel_mb@ckrl.ci.detroit.mi.us;
A_Talabi_mb@atwpo.ci.detroit.mi.us;
WatsonJ@cncl.ci.detroit.mi.us;
bjones_mb@cncl.ci.detroit.mi.us;
CC:
cc-cpc@ci.detroit.mi.us;
saunteel@saunteeljenkins.com;
gary@electgarybrown.com;
aspivey@spiveyfordetroit.com;
charles@charlespughproductions.com;
Statement: Opposition to changing the City of Detroit Master Plan and the rezoning of 7850 East Jefferson The following document outlines in detail reasons for opposing the petition to change the City of Detroit Master Plan and allowing the rezoning of 7850 East Jefferson from High Density Residential (R-6) to Planned Development (PD) for the proposed development of a low rise office building for the Detroit Pension Funds Administrative Offices. The Case has also been clearly made that the petition directly conflicts with the City of Detroit's Master Plan and does not meet minimum conditions of approval for rezoning per the Detroit Zoning Ordinance (Chapter 61 of the City Code).
The City Planning Commission will consider this topic on 10/15/09 at 4:30pm on the 13th floor of the CAYMC
Opposition includes:
· The Villages CDC
· The Indian Village Neighborhood Association
· West Village Neighborhood Association
· Detroit Towers Building Association
River Towers Building Assocation
. Shoreline East Building Association
· Hundreds of handed signed & online petitions from individual residents and stakeholders from a large cross section of the community who have a significant stake in the future and share a vibrant progressive vision of the Villages Community and the City of Detroit.
www.thevillagesofdetroit.org Sign Our PetitionThe Villages Communities Position:
The Villages Communities object to the Detroit Retirement Systems' request for a change in the City of Detroit Master Plan, and the rezoning of 7850 East Jefferson from (R-6) high-rise residential to (PD) Planned Development, and the proposal to build a small office building and parking lot on that site.
The proposed use is not good for our Community
It is not the highest and best use of the parcel for our Neighborhoods or the City of Detroit. The proposed structure would be another sterile gated office building in a vibrant riverfront residential neighborhood using the property during business hours only. Further, this project would generate little or no revenue (relative to residential development) for the City, which is unacceptable considering the relatively high value of Detroit's limited, developable riverfront property.
The Villages neighborhood is one of the few areas in Detroit that has stable and genuine population density, income growth, and the current ability to attract residents and new retail business. Once the Riverwalk connects to Downtown through The Villages, our neighborhoods residential and retail desirability will only increase.
The Proposal is not good for Detroit
The proposed development takes jobs and commercial tenants out of the Central Business District where office space occupancy is needed the most. We need to keep our city center strong - weakening our city center by allowing employees from the Central Business District to be moved to a residential neighborhood fails to make sense. The current vacancy rate in the Downtown area is about 30%. We, as a City, cannot advocate, encourage, legislate or enable in any way re-zoning that encourages the depopulation of Downtown Detroit. Development of the proposed locale will not contribute to creation of new full time jobs with the pension board.
The plan directly conflicts with the City of Detroit's Master Plan and does not meet minimum criteria for approval for rezoning per the Detroit Zoning Ordinance. A full (long/legal) explanation of why the plan directly conflicts with the Master Plan and does not meet the Minimum Criteria of the Zoning Ordinance is listed as an addendum to this document.
If this change to the Master Plan and rezoning is approved, it is a Vote against a dense Downtown; it is vote against Downtown businesses and building owners; it is a vote against the City of Detroit; it is a vote against every small Downtown business that depends on a high density of Downtown Detroit to stay in business, pay its bills and its employees; it is a vote against all owners of emptying buildings struggling to maintain their occupancy to keep from exiting the City. Voting "yes" on this plan for this site is a vote against the work of the DEGC, DDA, the DDP, the Riverfront Conservancy and every other organization working for a greater Downtown Detroit (which ultimately leads to a stronger tax base, and the ability to render services city wide).
It is the Villages CDC's belief, supported by Detroit City Council Resolution and City of Detroit Master Plan, that any use for 7850 East Jefferson site must include easement from Jefferson to the River and easement along the River. These acts of our City's legislative body, that incorporate future planning design to guide development-based improvements to Detroit, must not be watered-down at the whim of the first developer with money to come along and find the requirement inconvenient.
The City of Detroit has less than 13 miles of developable riverfront. Every possible inch of that riverfront should be utilized for the maximum benefit of the Public and the city, and in this case maximum benefit is high density residential, access to the water, and public riverfront use along the entire length of the Detroit River within the city.
The Villages Community is Thriving
The Villages is a thriving, growing area that is proven in its ability to attract private investment dollars. The Villages are not a part of Detroit that people talk about when they speak of a shrinking city. Although the city, state, and nation are in a recession, the Villages have recently been able to attract an investment of over $2 million from Shelburne Development, who are moving their headquarters from the City of Wayne into a properly zoned historic building. Tim Horton's just opened up. The senior section of the Historic Whittier Hotel is now leasing successfully. A Pizza Bistro is opening in the Hibbard Building, and according to recent Social Compact data, City of Detroit Master Plan Cluster 3, Indian Village area (including 7850 East Jefferson) has the higest concentration of income in Southeast Michigan.
Perhaps most exciting is that Community Foundation of Southeast Michigan has asked the Villages CDC to lead the master planning for the extension of the Detroit River walk east of Gabriel Richard Park. Not only is this a testament to the commitment of the Villages CDC to the City of Detroit, but a commentary to the thorough, professional, and measured manner in which the organization approaches comprehensive community development.
The success of the Villages does not give us voting privilege, but it does require a significant level of attention when looking at the future of Detroit as one of the city's areas of greatest tax revenue generation. Given the current tax revenue generated in the Villages and the area's current ability to attract new investment, it is crucial that the planning of this area be reflected upon when assessing the financial future of the City of Detroit. Within the Villages, basic planning principals dictate that the most valuable land will be along the waterfront, with the highest and best land use being as indicated in the master plan, high density residential.
Our community vision includes an extended Riverwalk; a connected greenways plan;, neighborhood oriented retail development in commercial sections, Green-oriented, light industrial in the Island View warehouse; district and high density residential development on the Riverfront with lower density residential development across Jefferson in the neighborhoods, allowing direct public access to the riverfront. These are not just dreams; these are plans that are being actively developed within this community today, and are all in accordance with the City of Detroit's Master Plan.
The Master Plan and when it should be changed
The City of Detroit's Master Plan was developed in partnership with City of Detroit, Elected Officials, paid City of Detroit staff, and many years of extensive meetings and input from the community.
The Master Plan should only be changed in unique situations when a project is presented that provides an opportunity for significant area improvement that would benefit the City of Detroit and the community adjacent to the project. The project must be unique in a way that could not be duplicated in another part of the city that is zoned for that specific use, or a neighborhood where it would have an even greater impact on the city (City of Zoning Ord.Sec 61-3-96, 3).
It should not be necessary for the residents of the City of Detroit to defend the City of Detroit's Master Plan; it should be up to the petitioner to prove beyond a reasonable doubt that the project is in the best interest of the City of Detroit and its surrounding community, in the case, the Villages Community.
The petition to change the City of Detroit Master Plan to allow the rezoning of 7850 East Jefferson does not meet that minimum standard.
The Petitioners from the Pension Funds of Detroit are not able to present an acceptable argument as to why this project is good for the community or why it should be approved. The Petitioners' arguments in support of the project revolve around what is good for the need of the retirement systems, which have nothing to do with the community and are not exclusive to the land at 7850 East Jefferson.
The Petitioners case is not based on the criteria for approval stated in the Detroit Zoning Ordinance, nor the policies stated in the City of Detroit's Master Plan. The arguments presented by the Petitioner are based on benefits to the Petitioner, not on benefits to the City of Detroit, or the Community surrounding the proposed project. The following summarizes how these arguments are flawed:
The Detroit Retirement Systems' representatives who are from Milestone Real Estate, Royal Oak, have continued to try to make their case why the site is good for the Retirement Systems. However their arguments have failed to make any basic, plausible case for why is it good for the community (unless you include the idea that this development will replace the currently blighted, nuisance property that this group has owned since January 2008). The only thing that is clear is that per the Police and Fire Fighters pension fund's minutes, Milestone Real Estate stands to make $210,000 if this project is approved. Their motivation is not for the community, nor the pension funds; it is for its paycheck.
The 7.4 million dollar parking lot
The Retirement Systems first argument, centers on the necessity for a $7.4 million riverfront parking lot for retirees. The Detroit Retirement Systems representatives made much of the necessity to provide easy access for retirees who visit the offices. However, there seems to be no concern for city employees who may not find the location convenient to their workplace. There is no acceptable reason why a retiree must visit the pension offices, but a visit is essential in order for an employee to retire. A lot of discussion centered on retirees who come monthly to pick up their pension checks. No explanation was offered as to why this high-value riverfront land is necessary to provide convenience to a small fraction of all the retirees.
We have been told that the retirement systems receive up to 100 visitors a day, but we have also been told by other sources that most of the visitors are current employees setting up their retirements. Most of these current employees work downtown. The number of retirees picking up checks is never given at any meetings; but we can create a fair estimate. There are approximately 11,500 retirees and beneficiaries receiving pension benefits. We can estimate that about 100 physically pick up their checks every month, less than one tenth of one percent of those receiving pensions. However, to the pension fund trustees the $7.4 million cost of providing a convenient location for those who want to pick up checks is essential. That cost gets spread across all 11,500 whose pension money is in trust. Pension money is in the trust not only for the roughly 100 retirees and beneficiaries that possibly pick up their check on a monthly basis, but also for full-time city employees who have made contributions to the funds for their eventual benefit.
At the City Planning Commission public meeting hosted at The Iroquois Avenue Christ Lutheran Church on September 18, 2009, the Chairperson of the General Retirement Pension Funds Systems stated that the pension boards couldn't refuse to have retirees come to the office for checks. Why not? Social Security offers a mailed check or direct deposit and no other option. On the presumption that many or most city retirees are also receiving Social Security (or will in the future), it would appear that retirees are capable of dealing with mailed checks or direct deposit or will have to learn. Most pensioners who have retired from the City never find cause to go to the pension board offices again, if a pensioner has a problem, it can all be rectified by phone and mail.
Therefore, even if it was a good idea to spend $7.4 million on a few employees to pick up their checks, it does not establish a need to build on $1.8 million riverfront land- the City's most valuable land asset
If we don't build nobody will
The Chairperson went on to make the Detroit classic threat: "if this isn't approved the land will remain vacant and nothing will happen." That is, of course, an empty threat. Even in this recession the Villages area is a desirable area to buy and develop as demonstrated by how aggressively the Pension funds are trying to develop 7850 East Jefferson, in addition to the previously mentioned developments and improvements being made during this recession.
The Chairperson also made the telling admission that the Police and Fire Pension Board bought this land not for the present project, but as an investment. Only later did the two boards turn to this parcel as the site of the new offices. The Pension Boards cannot have it both ways. If the land was bought for investment and it was a good investment, then it won't lay vacant if this rezoning is denied. Otherwise, the Pension Boards are telling us that they both made a bad investment or, perhaps, that if they do not get their way, they will refuse to develop just to SHOW those people. Which, of course, would be a violation of their fiduciary responsibility to the employees and retirees whose money they are spending.
Note: the Police and Fire Fighter Pension Funds board of directors meetings, seem to contradict the Chairperson's Statement. The Meeting Minutes seem to indicate the intent all along was to purchase the property to build the Detroit Retirement Systems offices. It is not clear what the Petitioners' intention was. (Source: Pension Boards Minutes January-April 2008)
It has been vacant for years and nobody has developed it.
Previous to the pension fund purchasing the property the land was owned by a private investment trust. This is the type of trust with more money than sense that can and will hold land for decades looking to hit the jackpot with a wealthy buyer. Now that the Pension funds purchased the property, it is in the hands of an owner with a clear responsibility to make a profit; the land will either be sold again or be developed into an appropriate use.
Also, a residential property owner who attended the September 18, 2009 meeting posed the question, "How did the pension funds come to acquire the property?" He stated that he had been trying to purchase the property for years, but the owner was unwilling to sell.
Bus access
For retirees who must take the bus, the East Jefferson location works well only for those who live on the East Jefferson line. As one resident commented, most retirees taking the bus to East Jefferson will end up transferring downtown. Would a downtown location perhaps be more convenient for them? Convenient parking is not an issue for them, even if it is for staff.
Precedent
The retirement systems have claimed that this building's use should be acceptable based upon the existence and position of the UAW Solidarity House (a non-conforming R-6) and St John Riverview Hospital (commercial). What they fail to disclose is that St John's, after recently purchasing many city blocks and homes in addition to convincing developers to build additional office buildings on the site, is now largely vacant. The action virtually land-locked the surrounding community. Now, the massive site houses only an urgent care facility, a few doctors' offices, and a small nursing school subsidized in order to use that location.
In very recent years the CPC and other agencies saw fit to retain the UAW solidarity house's non-conforming use by keeping the building zoned high-rise residential. The existence of this building has not spurned any economic growth within the community (especially given its gated, set back position on its site), now there seems to be even less activity at the site, with less cars parking in the UAW's riverfront parking lot. Neither property sets a good precedent for office use on the riverfront.
Shared Parking & Residential on the far end of the site
At the September 18, 2009 meeting several residents made the very pertinent point that we need residential mass in order to support better retail and services in the neighborhood. A small apartment building at the back end of that lot does not equal high-density residential development, which the community and the Master Plan show to be the best use for the land.
The pension funds heavily promoted possibility of a residential building at the river end of 7850 East Jefferson. A community member put it best. "It is a straw man proposal designed to quiet those who advocate residential use and gain support for the project. The proposed residential building area within the parcel is too small for any significant development even if the parking problem could be resolved. The pension board conveniently left out the riverfront easement in their conceptual drawing that showed an idea of what a residential building might look like". Adding the easement would highlight the limited amount of developable space.
What is more disturbing is that the pension Board Representatives admitted for the first time that they would like to sell the land that is being set aside for future development. If they want to sell the land, why are they pushing so hard for to change the zoning on the whole site, what will be built if they sell it?
The idea for residential development inclusion, made little if any attempt to realistically address the most basic of plan requirements: location, size, parking... A petitioner's representative had the wherewithal to suggest the idea of alternative use - the pension staff using the spaces during the day while the apartment residents are at work. This is patently ridiculous. Would that mean retirees would have to move their cars during the day? What about residents on evenings or afternoons, what about alternative work schedules and vacation, and sick-days? To the extent that this should even warrant discussion, to our knowledge this type of parking has never been approved in the City of Detroit, and there is no precedent for it working elsewhere.
Is there support for the project?
Thus far, the only community residential support for the project at the City Planning Commission Public meeting came from select residents from River Towers. This is not unreasonable at all. The River Tower residents are legitimately concerned with the overgrown condition of the lot next to their home. They are fearful for their safety, relaying stories of drug deals, predators lurking on the lot, lack of light, etc. Any community concerns with the condition of that lot since January 2008, are the direct responsibility of the property owner - the Petitioner.
For almost two years the Pension Boards have owned the property and have not removed the dangerous situation created by the overgrown condition of the property. It is shocking that the City of Detroit's General Pension Fund and Detroit fire Fighters and Police Pension boards are acting like slumlords, perpetuating a nuisance site that attracts criminals and crime. What is equally disturbing is that the petitioner seems to be using the over gown lot as a negotiating tool to push this project through. The petitioner has been telling the seniors surrounding the building that this project will bring them safety and security because the will lot will be cleared, completely omitting the fact that of who is responsible for the condition of the parcel. Just east of the parcel is another vacant parcel that was once the site of a large house, no one is complaining about the vacant land being a source of crime because it is property maintained by its owners, development or no development.
The Plan Does Not Make Financial Sense
The retirement systems have made a decision that the most cost effective thing to do is to build their own single use building, yet they have not presented facts to back that up, and there is plenty of evidence to refute that claim. Including the availability of long term low cost leases, 30% vacancy in the Central Business District, and additional holding costs that have not been discussed. Plus how can we believe their financial arguments when the Petitioner purports that the most cost effective solution begins with the acquisition of land that is among the city's most expensive.
A new building is better than an existing building
Retired Wayne County Judge Mary Waterstone told the attendees of the September 18, 2009 meeting that the county retirement system recently informed its members that their offices at 28 W. Adams had been renegotiated at a lower rate. The owner of 28 W. Adams is the City of Detroit Police and Fire Pension System. Boards' Chairperson told Judge Waterstone that 28 W. Adams was not a possibility for the Detroit retirement systems because it is full. This contradicts the Pension Fund representative's arguments at the community meeting where they tried to convince the neighborhood that investment in older downtown buildings is not financially feasible. So this raises another question, is 28 W. Adams a bad investment even though it's full? If it's full why did the Police and Fire pension system reduce the county pension system's rent?
One question that lingers is, will the property be worth $9.6 million dollars when completed? The answer we have gotten seems to be no, but if you look at longer term projection, the answer is maybe. If the Project is worth the money long term because of the value of the land, it undermines their case from two perspectives. First, they claim they are not planning to sell their building so appreciation does not matter which makes it a foolish move to build on the 1.8 million dollar property. Secondly, if they expect the property to appreciate it directly contradicts their argument that there will not be not any demand for the property and nothing will be built at 7850 East Jefferson.
The Pension Board Representatives elected to reference the County's project at the Guardian Building as an example of high costs for the purchase and renovation of an older building. The Guardian Building is perhaps 10 times the size of the Retirement systems building and is widely considered one of the most significant historic buildings in the city. It makes about as much sense to compare the proposed Detroit Retirement Systems headquarters to an Indian Village home than the Guardian Building, It might make even more sense because Indian Village Homes are closer in size scale.
Taxable or not Taxable: Desirable and valuable property in city on a project that will not generate acceptable tax revenue for the city?
Property in the city with the most taxable potential in terms of property, business and income taxes cannot be used for projects that are not expected to generate significant tax revenue for this city.
The Chair Person of the Pension Board on 9/18/09 stated without further explanation, that no property taxes are being paid presently on 7850 East Jefferson.
The petitioner for this zoning change is PFRS/GRS Jefferson Avenue Corporation. Documents on file at the Michigan Bureau of Commercial Services, Corporation Division, indicate that this is a Michigan for-profit corporation established in January, 2008. The most recent annual report gives the officers and directors as Jeffrey M. Pegg, Susan R. Glaser, Marty Bandemer, and Sheila W. Kneeshaw. Two of these are Fire and Police Retirement System trustees, and two are trustees for the General Retirement System. It is important to note that Susan R. Glaser is Vice Char/Secretary of the City Planning Commission. The articles of incorporation and later filings make it clear that the sole function of the corporation is to develop and operate 7850 East Jefferson, and to remit the net income to the pensions system. If it is true, as stated, that no property taxes are currently being paid, then something strange is going on that needs to be identified and addressed.
The city assessor's office claims that 7850 East Jefferson is a taxable property, however the property is only assessed at about $300,000 with about a $27,000 tax liability. If this property was assessed based on purchase price the state equalized value would be $900,000 and the tax liability would be $72,000 per year. Whether or not they are still paying taxes, it seems like something was overlooked when their property was reassessed.
The representatives of the pension board also said that the completed development would pay property taxes. Perhaps they're planning to use their PFRS/GRS Jefferson Avenue Corporation for-profit corporation to develop the project and rent it to the pension system; that entity would be subject to property tax. That would also make this project truly an investment by the pension system, since their financial role would be as investors and/or lenders.
But if that's the plan, it runs directly counter to the Chairpersons statement that this project would eliminate the pension system's need to pay rent. Indeed, given the high cost of the land and the substantial cost of a new semi-green building, the rent might be higher than at present if there's to be a proper return on the employees' and retirees' money.
Also we have been notified that the Brownfield authority at the DEGC has received notification that the Petitioner is going to apply for Brownfield tax credits or rebates that will significantly reduce the amount of taxes the will be responsible for on this project, significantly minimizing the financial impact to the city.
The cost of $390,000/year to the City of Detroit
Pension Funds representatives stated that they pay $390,000 in rent at the CAYMC, We later learned that the Retirement Systems subleases space directly from the City of Detroit. The City of Detroit leases space from the CAYMC Joint Building Authority. If the Detroit Retirement Systems moves out, the $390,000 in rent for empty space will still need to be paid by the City of Detroit. This is money the City will not be able to use for Fire, Police, garbage and other city services. The taxpayers of the City of Detroit are going to be left to cover the rent.Because this project could cause the City to lose income, in our present financial situation it would be devastating. By not following its Master Plan, the City would aid in an act that provides a luxury location for fifty pension staffers while sacrificing police protection or trash pickup. For those still employed by the city, it means risking a layoff so the pension employees can have their brown bag lunches at the rivers edge. It's this simple: if the planners were right when they developed the master plan, if the panel of zoning experts were right when they completely rewrote the zoning ordinance only a few years ago, and if City Council was right when they voted to adopt the updated master plan, then this project is wrong.
Renting or Owning: Fiduciary responsibility to make a profit for the Pension Funds
The Pension Board representatives claim that this project will be a low cost alterative to renting. This claim is full of inaccuracies as well.
If this development is going to be structured as a real investment, then the pension boards will pay rent just as they do now. The value or income of the investment will be part of the funding of the pensions. By the same token, the pension board's costs won't decline; they should increase. If the pension system directly invests in this project and owns its own office without paying rent, the value of land and building will not be counted as part of the funding for retirees pensions. That takes eight or nine million out of the pension fund and puts it into a capital asset that has value but no investment income to return to fund the pensions.
The Chairperson made a statement that this project would relieve the pension systems from paying rent. If this is a for-profit project intended to create net income for the pension systems, where does the net income come, if the pension systems are not paying rent? If this is an investment of money in trust to create income for the pension funds there must be income in the form of rent.
The question becomes; how high would the rent be? The pension funds have never shared any detail the answer to this question. We can only base the answer on the national average, and the information we know about the project. We know the pension board has a very high per-square-foot cost for the land based on the $1.8 million purchase price. We know they have very substantial costs for a 7.4 million dollar new semi-green building (though not as green as the LEED certified silver CAYMC they are moving out of). We know their new space will be almost twice the size of their current 17,000 SF of space in the CAYMC, though they are not adding any employees (PLEASE NOTE: There is space available in the CAYMC for the additional space). Coupled with the additional costs such as overhead, security guards, heat, light, and property taxes, the costs increase.
If this is to be a true investment that creates a decent return on the employees and retirees money, the pension system will not only pay rent, but a very substantial rent on some of the most valuable land in the city or they'll be violating their fiduciary responsibility as trustees of other people's money.
Will this new building save money or al least break even
As was previously stated, the pension board currently pays about $390,000/year in rent at the CAYMC. The representatives of the pension funds have stated that the project will save pensioners money over time. They have never been able to offer any proof that the pension fund will save money or at least break even over the long run with this new building. One fairly simple way to evaluate this project is to look at it with price-to-rent ratios. For example, if a house costs $120,000 and it can be rented for $12,000 a year ($1000/month), that's a price-to-rent ratio of 10.
The following link provides some information related to commercial real estate:
http://real.wharton.upenn.edu/~gyourko/Working%20Papers/Understanding%20Commercial%20Real%20Estate.pdfBasically, it states that nationwide, commercial real estate price-to-rent ratios averaged around 11 in 2003, and averaged around 14 in 2008 (most likely higher due to the real estate bubble). According to the recent Crain's article, the estimated construction costs for 7850 E Jefferson are $7.2 million, and the land would cost $1.8 million, for a total price of $9 million. Compared against their current rent payments of $390,000 a year, that would be a price-to-rent ratio of 23 (9,000,000/390, 000), which is much higher than the national average of 14. This suggests that the building will ultimately cost the pension fund considerably more than if they continued renting. To cover the costs, the for-profit corporation would have to charge quite a bit more than $390,000/year to pay items such as taxes, insurance, maintenance, repairs.
Conclusion
After reviewing the information available, the City's own Master Plan, and the appropriate City Zoning ordinances, there is nothing in the petitioner's proposal that warrants a change to the Master Plan or rezoning of this site. It is incumbent upon the City Council to uphold the city planning commission's recommendation to deny the rezoning of 7850 East Jefferson
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