Warning - long post
Posted March 5, 2006
Five Rivers is drawing skepticism
Michigan leaders warn of similarities
By Jeff Bollier
of The Northwestern
GLADSTONE, Mich. There's a sign up announcing the future site of Five Rivers Resort.
On Little Bay De Noc, in Gladstone, Mich.
This city of 5,032, five miles north of Escanaba, is where developer Tom Doig first proposed Five Rivers Resort as a 115-unit hotel-condominium hybrid development that included a marina, lodge, tennis courts, swimming area and other amenities.
Though environmental issues doomed the $35 to $50 million Gladstone project in late 2003, city officials interviewed by The Northwestern last week expressed concern about the number of similarities between what Doig proposed in Gladstone and what is currently on the table in Oshkosh.
"I wouldn't want to be the guinea pig for this guy," Gladstone City Manager Brant Kucera said.
Kucera said the deal in Gladstone never progressed as far as it has in Oshkosh, so serious funding questions were never probed. However, he said city leaders were skeptical about the proposal, on matters from the amount of public money sought to the financial backers of the project.
It's been more than a year since Doig unveiled his revamped Five Rivers Resort in Oshkosh. While the city approved a nearly $16 million tax incremental financing district for the project, scrutiny of Doig's ability to find private financial backing has grown.
On Friday, Oshkosh Community Development Director Jackson Kinney recommended the city
extend the construction start deadline for Five Rivers from June 20 to Sept. 20 to allow the company time to secure additional private financing. The Oshkosh Common Council is expected to vote on the extension March 14.
That comes as the Winnebago County District Attorney is examining whether the council broke the law by convening a closed-door meeting to discuss the resort with Doig.
On Feb. 14, the city council voted 6-1 to approve the Five Rivers TIF. Later that night, six councilors entered a closed session meeting that began with a small protest from citizens arguing the public-private project no longer justified a closed-door meeting, and that an exemption from state Open Meetings law was illegal.
Two councilors, Meredith Scheuermann and Paul Esslinger, acknowledged last week they signed one-on-one confidentiality agreements with Doig last summer that prevents them from publicly discussing details of their first private meetings with the developer.
Doig on Friday said comparing the Oshkosh and Gladstone projects is like comparing apples and oranges. He said he was working with a different investment group in Gladstone and that state and community development agencies were very enthusiastic about the project before contamination issues came up.
"We had 32 acres of land on a premier piece of property on the bay, so we had double the land at a fraction of the cost," Doig said. "It's not a fair comparison to look at it and compare what funding is necessary in Oshkosh versus what was necessary in Gladstone. The land value was a fraction of the cost of where we're at right now downtown."
City of Gladstone documents reviewed by The Northwestern show Doig said he would bring $20 million of private investment to the project. Even at the low end of the overall project costs, he expected to secure $15 million in public assistance to make Five Rivers there a reality. E-mails between Doig and then-city manager Brian Horst also show the developer hoped public funds would kick-start the project instead of private funding.
"I hate to sound greedy but the truth of the matter is, more money means more and faster progress for the entire project," Doig wrote Horst in a Nov. 6 e-mail. "I think you can imagine that things could move a bit slowly if we were to base all construction on pre-sales (of condominium units). I think that with a little help from you and my marketing efforts, this entire plan could go together quicker than we both think."
In an interview Friday, Doig confirmed that both the Gladstone and the Oshkosh versions of Five Rivers look to public funding sources to start the project and for private investors to carry it through to completion.
On Doig's behalf, the city of Gladstone applied for a $1.7 million in funding from the Michigan Department of Environmental Quality to remediate the brownfield site. Doig also sought other public financing to help pay for a water line to the site and roads from agencies such as the Michigan Economic Development Corp. and the Delta County Economic Development Alliance.
Michigan Economic Development Corp. Upper Peninsula Account Manager Cathi Cole worked with Doig on the public funding that could be available to him for Five Rivers and said she did receive information about Doig's plans for private financing, but declined to release them.
"That's confidential," Cole said. "I don't have any of that information anymore and I really don't want to say."
Doig said the water contamination issues changed Five Rivers from a project that would take a few months to get started to one that would take a few years and that was too long for him. The land was used as a pig iron smelting site from 1905-25 and as a petroleum distribution center in the 1990s.
Gladstone Housing and Zoning Director Howard Haulotte said Cleveland Cliffs Iron Co. and current property owner Citgo, the two businesses that contributed to the site contamination, could never agree on who would pay for what portion of the cleanup effort and that ultimately kept the project from going forward before more-solid details about the project could be requested.
"The cleanup was always someone else's fault," Haulotte said.
In background provided for a public grant for the project, Doig said he had 15 years of residential and industrial real estate experience, but the Michigan proposal was his first commercial development project.
The Gladstone proposal came two years after he left the Cedarburg-headquartered Doig Corporation, Wisconsin's largest pneumatic distributor, where was president until 2001.
Haulotte said there was "a lot of surprise and puzzlement" from Gladstone's citizens and businesses when Doig proposed Five Rivers, but he said the town wasn't exactly holding its breath.
"There was some excitement, but not like you'd expect from a project this big if it was legitimate," Haulotte said. "They could never give us direct answers on anything."
Jeff Bollier: (920) 426-6688 or
jbollier@thenorthwestern.comhttp://www.thenorthwestern.com/apps/pbcs.dll/article?AID=/20060305/OSH03/603050391/1128
