Despite its new owner’s promises to build a brewery, office space, a hotel and more, Detroit’s infamous Packard Plant is once again subject to foreclosure by Wayne County in 2019, according to notices published in the Detroit Legal News last month.
That’s due, at least in part, to unpaid bills to the Detroit Water and Sewerage Department. But the amount shows up as tax liability.
Although we haven’t been able to confirm the total owed for the water and sewage bills, adding up records found on Loveland’s property website shows that Arte Express owes $302,434 as of August 2018. That’s across a variety of properties that make up the north and south sides of the sprawling Packard facility.
The Detroit Water And Sewerage Department said they wouldn’t be able to confirm the total amount owed across the numerous properties that make up the plant by the end of today. We’ve identified 42 parcels owned by Arte Express at the Packard Plant, with 41 subject to foreclosure on March 31, 2019.
This includes the administration building that the pedestrian bridge fell from earlier this week at 1580 East Grand Boulevard. That parcel is listed as owing $5,587.99.
Peruvian developer Fernando Palazuelo and his Arte Express company purchased the complex out of foreclosure in 2013 for $405,000.
When reached for comment, Arte Express spokesman and Clark Hill real estate lawyer Joe Kopietz said that the outstanding debt is from water issues and there is no danger of the buildings being foreclosed on.
“We intend to take care of those” outstanding debts,” Kopietz said, adding that “in regards the taxes, the taxes were fully paid. However, this relates to certain additional stormwater drainage charges that we’re looking to fund and get discharged. No worry about it going into the foreclosure process.”
In a follow-up, we asked if they are tied to the new stormwater drainage programs the city has instituted. In the summer of last year, the city’s water department changed how they calculate drainage fees using the amount of impermeable surfaces — like roofs and parking lots — on a property to figure out how much you owe instead of a flat fee.
“Yes, because the delinquent water bills, which weren’t quite necessarily received, or we had notice of necessarily before the period they ended up being added to the tax bills, do show up and that’s why it is even noted as being in the foreclosure process now,” Kopietz said.
Kopietz said Arte Express fully intends to pay the outstanding balance to keep the properties out of foreclosure. It also seems as if there’s a dispute between Arte Express and the Detroit Water and Sewerage Department as to how much is actually owed.
Daily Detroit sought clarification from both the Detroit Water and Sewerage Department and Wayne County’s Tax Office Thursday, and provided addresses for parcels known to be owned by Arte Express. In response, DWSD’s public affairs manager sent the following statement via email:
“The Detroit Water and Sewerage Department is aggressively working to resolve the outstanding balance owed by Arte Express. As we do with other similar cases for nonresidential customers, if the past due balance continues to be non-collectable, we will pursue other civil legal action.”
One of those actions can be rolling the amount owed to DWSD onto the property tax bill to attempt to collect it.
Detroit’s water department has received national attention in recent years for their shutoffs, especially residential ones.
It takes awhile for debts owed to make a property hit the foreclosure auction. The subject-to-foreclosure notice relates to taxes and debts from 2016 or before.
According to the public foreclosure documents, if no arrangements have been made, the title goes to the control of the Wayne County Treasurer and may end up in auction. The date for that listed on the public notice is March 31, 2019.
However, any such auction may be complicated by the fact Wayne County issued Arte Express a $300,000 loan and an $80,000 grant to fund the administration building redevelopment.
Palazuelo has touted an audacious redevelopment plan for the hulking and heavily blighted Packard Plant, pledging to spend up to $500 million over four phases in a process that he has said could take 15 years. The first phase of the project broke ground in May 2017.
In August 2018, The Detroit News reported that developers held a private party to celebrate progress on cleaning up the four-story administration building, having ripped up the floor, cleared out asbestos and saved historical items salvaged from the ruins. Redeveloping the building was estimated to cost $23 million — all of it financed by Palazuelo.
The site is planned to become a mixed-use development with office and commercial space, restaurants and a gallery and event space.
At the time, Palazuelo also told The News crews were working on a 20,000 square-foot Packard Plant Brewing operation in another building down the street. It’s been touted as featuring a kitchen, dining area and open-air patio, with an opening date targeted for 2019.
When we talked to Kopietz on Thursday, he was unable to provide any updates on redevelopment progress or timelines.
The podcast version above includes commentary at the end.