2013-05-09 / News

Island Residents Ask City Not to Use Bike Licenses as Payment in Option Deal

By Stephanie Fortino

The citizens of Mackinac Island are against the use of bicycle licenses as payment for the development rights of a section of the Main Dock property at the head of the Arnold Transit Company dock. The public consensus emerged during a hearing Wednesday, May 1, regarding the proposed option agreement between the City of Mackinac Island and Main Dock Inn, co-owned by Melanie Libby and Ira Green. Those assembled in Community Hall did believe the city should do whatever it can to prevent development, as long as payment does not include bicycle licenses. City Council has until Wednesday, May 15, to decide whether to exercise the option agreement, a date that could be extended if the developers agree, according to Mayor Margaret Doud.

The option would allow the city to purchase development rights in front of the dock above 16 feet. City council decided to host a public hearing on the matter after the annual bicycle redetermination hearing Wednesday, April 24. At that meeting, council members heard from numerous bicycle shop owners who voiced strong objections against the use of licenses as payment. It was then decided that input from Island residents, in addition to bike shop owners, should be gathered before a decision is made by the city.

In summarizing the issue, city attorney Tom Evashevski told the group that Melanie Libby and Ira Green, owners of a company called Main Dock 7271, purchased the property from Arnold Transit president James Wynn, closing the deal in early January. The month before, the two developers had presented plans of their proposed Main Dock Inn to the Mackinac Island Planning Commission, unveiling a threestory hotel that spanned the entirety of the property at the head of the Arnold Dock, a design that was approved by city architect Rick Neumann. When concerns about the project, and its obstruction of the harbor view, were raised, Ms. Libby and Mr. Green offered the city the option to purchase a deed restriction to limit development of the air space.

City council signed the option agreement April 9, articulating the different avenues the city has to make payment: either the city can pay $2 million, the suggested value of the air space, or grant 100 additional rental bicycle licenses to Mackinac Cycle, co-owned by Ms. Libby and Carl Redder, which is operated on the purchased property. The agreement also stipulates that the city transfer 25 bicycle licenses from the Lake View Hotel location to the Main Street location of Mackinac Island Bike Shop, owned by Mr. Green.

Moreover, the option states that the city council must approve the proposed alternative plan for a hotel as much as it can, Mr. Evashevski said. The Historic District Commission ultimately decides whether the project can go forward, as it is located in the Market and Main Historic District. The developers are also in the process of arguing a financial hardship case with the HDC to allow for the demolition of two buildings, Selma’s Fudge building, deemed a relevant historical building in the district, and the one that formerly housed Indian Drum, deemed not historically significant. The hardship case is predicated on the developers’ arguments that they paid top dollar for the lots, based on their right to fully develop them, but the city’s subsequent adoption of the historical district now restricts those anticipated development rights.

Rather than pay for the development rights with 100 rental license, the city can pay $2 million, although other stipulations still must be met. Also, if the bicycle licenses are used as payment, it could still pay $2 million if it subsequently reduces the value of those licenses.

To be devalued, first, the existing rental bike licenses at those lots cannot be revoked or reduced without just cause, such as ordinance violation.

Secondly, the value of bike licenses must not be diluted, defined as issuing more than 13 licenses, distributed proportionally among all licensees in the downtown area, or 15 licenses outside the downtown area, in a two-year period.

Third, the Main Dock Inn must receive the water and sewer permits it needs for construction.

Whether the city decides to exercise the option agreement ultimately boils down to “how important nondevelopment of this area is,” said Mr. Evashevski.

Mr. Evashevski said the option to use rental bicycle licenses as payment is a unique opportunity: “There is an offer on the table to severely limit development for all time of that location without requiring the city or the taxpayers to pay anything. But you have to figure and decide how important it is to issue or not issue those bike licenses. That’s the major exchange that’s being proposed.”

Mr. Evashevski reminded council, “You do have to understand that if you don’t go forward with [exercising the option], or all of the conditions are not met so we can’t go forward with it, at least it’s their intent to continue on with their development” of the initial three-story hotel. “That’s got to be kept in mind as you make your decision and do deliberations.”

Ms. Libby presented site plans of their original design to remind everyone of her original vision for the property at the head of the Arnold Line dock. She also added that every other downtown commercial ferry entrance to the Island, Shepler’s and Star Line, had a covered area.

She viewed the original project as an impressive and prideful gateway for visitors getting off the Arnold ferries.

“That was, to be very forthcoming, a project that I looked at as perhaps becoming a legacy, an entrance to the Island that the Island could be proud of. And I understand that isn’t how everyone saw that [project]. So we went back and said, ‘What is a compromise that we could come to with the city that would maybe be a better place for everyone?’”

But limiting development would come at a cost to the developers, and they sought a way to gain back some of the investment they would lose without the original, larger hotel.

“There isn’t any way getting around that that air space had a cost to it,” she said.

The cost of $2 million for 100 bike licenses ($20,000 each), she said, is much greater cost than other licenses purchased recently, but, “it is a compromise that we are glad to do,” Ms. Libby said, of the developers’ offer to accept bike licenses in lieu of cash.

As an alternative to issuing bike licenses, Ms. Libby also suggested that the city could sell bonds to finance the $2 million.

Mr. Green suggested that the city could have the property re-appraised to ensure the suggested value of the air space is accurate.

He said the exchange rate of 100 new licenses to Mackinac Cycle in lieu of $2 million was a much higher cost than anyone else had paid for licenses before.

“I believe the value we’re talking is four times more than anyone’s ever paid for a license on this Island,” he said, also saying this offer is meant to be compromise.

“We’re not here to get crucified,” he said. “That’s just not reasonable. We’re here to make an offer to try and make this work. And if we can’t, I promise there’s no hard feelings. We’ll go our own way and do our own stuff and we’ll just leave it alone.”

Resident David Linn asked if there would continue to be access to the Arnold Line Dock, to which Mr. Wynn replied that the ferry company and Main Dock 7271 have a permanent easement agreement to ensure access to the dock.

Silver Birches owner Liz Ware voiced her concern that exercising this option could set a precedent for similar deals in the future, but Mr. Evashevski said it would be unlikely that a similar situation would come up.

Mayor Doud also expressed council’s surprise at the prospect of a hotel on the property in question.

She said, “Well I don’t think any of us that are sitting up here at this council a year ago thought that we would be faced with the possibility of a hotel at the head of the Arnold dock. And I think that’s another issue. I don’t think anyone thought that. Nobody saw that coming. And I think that is another issue that we have been faced with.”

Citizen Candy Smith spoke negatively of Mr. Green’s intentions, lamenting the loss of the park located on the Main Dock property that now houses the Mackinac Cycle rental bicycle business.

“It seems to me like all he’s doing is trying to destroy our Island, I guess I’ll put it that way,” she said.

Many of the concerns voiced at the hearing were about council’s previous decisions to deny additional licenses to other businesses, citing the possibility of increased congestion.

Peter Deckert of Ryba’s Bicycle Rental reminded council members that Ryba’s was not allowed to move 25 licenses at their Pancake House location, virtually next door to Mackinac Cycle.

“How are we going to put another 100, another 125, down there?” he asked. “I just don’t know what guidelines everybody’s following here that makes sense.”

Sally Deckert added, “It does seem like you pick and choose.”

Mr. Evashevski responded, “There’s no doubt that congestion in the downtown has been expressed as a concern…But there are probably distinctions in each site, but that’s probably not a major reason for the issuance. So your point’s well taken.”

Citizen Neal Liddicoat said, “I think you could certainly argue that there are aspects of this deal that certainly stink from the perspective of other bike license owners. But when I look at the big picture I conclude that we just need to hold our collective noses and approve the deal.”

In response to a question from Alderman Dan Musser, Ms. Libby said she would be willing to consider the payment of $2 million over a period of time, but asked the council to decide what they want to do soon.

“I don’t want to lose the rest of that agreement in negotiating the license part of it,” she said.

Noted Kay Hoppenrath: “I think that you should do anything to keep that area open. And I was not aware of the possibility of purchasing the air rights, but that would be the way to go in my opinion. Bond, millage, whatever…by all means, whatever you do, that needs to be kept open. We’ve lost enough of the grace of the downtown area.”

Mr. Dorman said that, as a citizen, he’d hate to see more licenses downtown because of the associated increased congestion, and would rather council investigate a bond as a way to purchase the development rights.

Nancy May agreed “wholeheartedly,” as did Mackinac Wheels owner Jim Fisher, who suggested that in spite of the original hotel’s imposing structure, it could be an economic boost to the area, providing jobs and additional accommodations.

The transfer of 25 licenses would not increase congestion immediately, he said, as not all rentals will be used at once, suggesting that council approve the 25 license transfer to Mr. Green’s downtown lot as well as the Grodecki request to move 25 licenses to Ryba’s Bikes’ Main Street shop. The Grodeckis have been denied a similar request as Mr. Green’s for numerous years.

Ms. Ware said, “I’d rather see a bond issue. Pay for it and be done.”

Melanie Alford Hagenbaugh asked council if they had thought about ways to reroute traffic to reduce congestion if council does decide to issue 100 more licenses to Mackinac Cycle.

Alderman Jason St. Onge said her comment did not pertain to the hearing’s intended purpose, but Paula Starkweather disagreed. Deciding to exercise the option by issuing and transferring more licenses means more traffic and congestion, Ms. Starkweather said, and council must think about traffic patterns when making their decision.

“You have to think the next step,” she said. “What are you going to do with traffic flow? It needs to be addressed. If you don’t give them the 125 [licenses], it still needs to be addressed.”

Councilwoman Anneke Myers said congestion to her isn’t entirely a bad thing.

“I’m personally a huge fan of congestion in downtown Mackinac Island. It means that we’re doing the business that we used to do,” she said.

Ms. Starkweather conceded this was “very true.”

Mr. Dorman provided another perspective on the issue: “Those 100 licenses will be here forever. A bond issue where we buy the property without giving out licenses will affect us for 10 years. And as a resident, I can handle 10 years; I can’t handle 50 years of additional 100 bike licenses downtown.”

Mr. Green countered Mr. Dorman’s statements by stating that all of those 100 new licenses will not be going out into Island streets at the same time. He said either route is agreeable to him and Ms. Libby, but “Just think about it,” he said. “This is a lot of money for nothing. That’s what I think.”

City treasurer Rick Linn gave his perspective to help citizens understand about how much a bond would cost them individually.

“Each mill that we float on the taxes raises about $200,000 a year,” he said. He suggested that citizens could look at their solid waste tax to figure out how much that bond would cost them personally.

In a show of hands, the general consensus was that the original Main Dock Inn design was not favored, that the city should purchase the development rights above 16 feet, and that bicycle licenses should not be used as a form of payment.

Mr. St. Onge said the city must decide how it will pay the $2 million suggested value of the air space to Ms. Libby and Mr. Green’s company, Main Dock 7271.

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