By Stephen Underwood

The St. Ignace City Council, in its Monday, February 21, meeting approved a lease with Mackinac Tall Ship Company owner Bob Schafer that will allow him to build boats and operate schooner cruises from the Railroad Dock, providing he meets a variety of conditions,

One of those conditions is that he produce a $50,000 surety bond, a figure and condition that was revised three times and was the key 11th-hour point of contention before the document was approved Monday night. A surety bond protects the city from costs that could be incurred if the project is abandoned and the city has to pay to move the five proposed temporary buildings from the dock and clean up the area.

Last October, in a letter of intent, the city asked Mr. Schafer for a performance bond for his project, but, after Council decided earlier this month to waive the letter of intent and move right to a lease, the Real Estate Committee on February 9 changed that to a $100,000 surety bond.

Mr. Schafer, contending that he doesn’t have the assets for a bond that size, worked with City Attorney Prentiss M. Brown Jr. and City Manager Gary Heckman during the past week to delete the surety bond requirement, add to the language of the termination part of the lease, to “produce individuals ... to commit in writing to Lessor to perform the restoration stated above.”

Meeting before the council session to review the final lease, Real Estate Committee members Mayor Bruce Dodson and Councilman Ollie Boynton (the third member, Paul Grondin, was absent) balked at the new clause and were unable to come to a consensus of how much they’d consider lowering the bond amount. When it looked as if the committee would not back off requiring him to have a bond of at least $50,000, Mr. Schafer said he might just purchase a ship, forget the idea of constructing ships, and run a day sail business with one small building.

When the council meeting began, Councilman Boynton immediately moved to get the lease tabled.

“It’s not going to hurt us to wait and see what the planning commission does,” he said, referring to a planned February 23 meeting to resolve zoning and other land issues with Mr. Schafer. “I don’t think we’re throwing up road blocks and I see no reason for him not to put up a $50,000 bond.”

The motion was turned down, however, by a 4-2 vote, with Willie LaLonde voting with Mr. Boynton. Debate continued, with Councilman Don Gustafson also unwilling to adopt the new clause. Mayor Dodson came up with a bond figure of $25,000, based on cost calculations he made, which Mr. Schafer also supported.

“The only thing I’m looking at is tying up assets,” Mr. Schafer said. “We can build buildings for that. I’m trying to noodle this down as far as possible.”

Other council members were more comfortable with the larger amount and a motion to approve the lease with a $50,000 bond passed by a 5-1 count, with Councilman Grondin absent and Councilman Boynton voting against, stating he’d like “to see what the Planning Commission comes up with” on February 23. At that meeting, Mr. Schafer is expected to show that his project can conform to St. Ignace zoning and parking laws and all laws, rules, and regulations applicable to the Department of Natural Resources, Michigan Department of Environmental Quality (DEQ), and U.S. Army Corps of Engineers.

The five-year lease allows Mr. Schafer to build temporary supporting structures for the construction of ships, the buildings to be no higher than 20 feet and with a combined coverage of 2,032 square feet, including an information center, a shed in which to build small boats, and buildings to house a saw, a planer, and tools. Mayor Dodson said the DEQ will work with the city on a way to keep the buildings up as long as needed to construct at least one tall ship.

Mr. Schafer’s rent for the space will be $2,000 a year, although the city will postpone any payments for 18 months. Before the project begins, he must obtain permission from the Planning Commission, get written approval from DEQ, and present a project plan to the city, including available financing and a time table for fulfillment of the project.

At one point, Mr. Schafer was questioned by Councilman LaLonde as to Mr. Schafer’s statements last year that he had investors lined up, but now wants a lease rather than a letter of intent to attract investors.

“The investors I’ve talked to in the community want to see a signed lease,” Mr. Schafer replied. “Outside the community, it’s not fair to go to investors without it.”

Other actions taken by council in the meeting was passing the new zoning ordinance, which the planning commission has worked on for many months, and moving to hold a public meeting regarding the ninth phase of its Lake Huron boardwalk. The city would like to apply to the Michigan Natural Resources Trust Fund and the DEQ Coastal Management Program for grants to expand the boardwalk along the shoreline from the marina to the end of the rail dock in 2006. The total of the expansion would be 1,155 feet and reach out to the lighthouse the city purchased and plans to erect this summer.