Businesses in bridge’s path seek better deal

Chad Livengood/Crain’s Detroit Business – On a narrow and mostly deserted street in southwest Detroit’s Delray neighborhood, Gordy Ebsch has run a small machine shop since 1999, tailoring his services to nearby heavy industrial clients.

But the 20,000-square-foot building on South Post Street that houses Ebsch’s Delray Mechanical Corp. sits at the base of where the new Gordie Howe International Bridge is supposed to land in Michigan.

That puts Ebsch’s business in the crosshairs of the Michigan Department of Transportation, which is in the midst of a massive undertaking to buy up 634 parcels of residential and commercial land for the bridge, a plaza and connection to I-75.

For Ebsch, MDOT’s purchase offer for his building is not matching the cost of relocating his welding fabrication and custom machining business to another suitable production space in southwest Detroit near his clients in the cement, asphalt, aggregate, steel and railroad industries.

“It’s very difficult in Detroit to find property that matches what I have,” said Ebsch, who has operated his business in southwest Detroit since 1988. “There’s such a big gap here. I don’t know how it’s going to get solved.”

More likely than not, the gap between MDOT’s market-rate offer and the cost of Ebsch to uproot his small business will be decided by a Wayne County Circuit Court judge.

“We’re going to litigate that for the rest of our lives when they finally file it,” said Alan Ackerman, an eminent domain attorney who is representing Delray Mechanical and several other businesses in the pathway of the bridge.

MDOT’s land acquisition for the bridge — estimated to cost upward of $370 million — faces a big and final hurdle with the remaining viable businesses in Delray, a blight-ridden and isolated neighborhood that has been waiting for the bridge to come for more than a decade.

Ackerman declined to specify MDOT’s offer for Delray Mechanical but said it was less than $20 per square foot and Ebsch needs at least $75 per square foot to build new or rehab existing industrial space in Detroit.

Delray Mechanical Corp. sits at the base of where the proposed Gordie Howe International Bridge is supposed to land in Michigan.

“Their offer is a fraction of what they’re going to need to move anywhere,” Ackerman said. “And a fraction with a high denominator.”

Andrew Doctoroff, who is Gov. Rick Snyder’s top adviser for the bridge project, said the state is “very sensitive” to the impact the project is having on existing businesses in Delray.

“The governor for a whole host of reasons is very committed to making sure that the community is treated equitably and any adverse impacts are limited and fully mitigated,” he said.

As of last week, MDOT had purchased or taken control of 394 of the 634 parcels, 62 percent of the land needed for the project, said Matt DeLong, administrator of MDOT’s development services division.

MDOT has commenced condemnation proceedings against the owners of 30 commercial or industrial parcels and plans to file 30 more lawsuits within the next two weeks if property owners don’t accept the department’s purchase offers, DeLong said.

Condemnation is MDOT’s last resort to acquire land needed for a $4.5 billion bridge project that President Donald Trump and Canadian Prime Minister Justin Trudeau recently hailed as a “vital economic link between our two countries.”

“We think it’s very important for folks to appreciate that condemnation is a healthy part of the process, even though people think it’s adversarial,” Doctoroff said.

Inside the footprint of the bridge and customs and toll plaza, there are eight businesses of varying size still operating as most residents have relocated and MDOT’s contractors speed up housing demolitions this spring.

The most prominent business is a 42-acre Central Transport trucking terminal on Jefferson owned by Ambassador Bridge owner Manuel “Matty” Moroun, who has fought construction of a new publicly owned Detroit River crossing for more than a decade.

Up to one-third of Moroun’s 300-bay distribution center and a fueling station will likely have to be torn down to make way for the bridge landing and space for construction operations.

Moroun owns 21 mostly vacant parcels of land within the project’s boundaries, and the billionaire trucking mogul is using those properties to mount a multifaceted legal challenge to construction of the bridge.

Beyond biz

Businesses in Delray aren’t the only property owners butting heads with MDOT in court over the cost of relocating in Detroit.

Last October, MDOT used condemnation to take First Latin American Baptist Church at 6205 W. Fort St. after the church rejected the department’s $411,000 purchase offer, disagreeing with the appraisal.

The congregation is in the process of moving into a smaller church building at 2004 Scotten Ave. that has less classroom space and doesn’t have a gym like the Fort Street church, Pastor Kevin Casillas said.

“We’re not going to have what we currently have, facility-wise and capacity-wise,” Casillas said. “We don’t feel we’re being made whole.”

Ackerman, who also is representing the church, said that case will go to trial later this year.

Down the street from the 110-year-old church, the Detroit Friends Meeting are now going through a condemnation proceeding with MDOT over their building at 6227 W. Fort St. after the state offered the group of Quakers $105,000 for their property.

“For us to move someplace comparable is going to cost more money than what they’re offering,” said Peter Dale of Livonia, the 22-member Quaker congregation’s recording clerk.

The Detroit Friends Meeting building and Baptist church on Fort Street lie in the path of flyover bridges that will connect I-75 to the Gordie Howe plaza and Detroit River bridge.

Dale said the small group of Quakers was ready to move a decade ago when state officials first approached it about needing its land for the infrastructure project.

The Quakers had visions of moving into a space on John R Street, Cass Avenue or even Woodward Avenue — years before Midtown’s development boom sent real estate prices soaring.

“With all of this delay, our location has now become totally unaffordable,” Dale said. “We’re not trying to hold up the state — we just want to get something that’s functional now. But things are just expensive now.”

Changing costs

The $370 million in land acquisition costs in Delray is a moving target, MDOT officials say, and could change depending on the outcome of buying up the remaining property.

MDOT officials declined to comment on specific parcels that are clearly in the path of publicly disclosed plans for the bridge, which the Canadian government has pledged to finance through a public-private partnership.

State officials also would not address questions about whether land from the LaFarge North America cement plant and McCoig Concrete mixing plant on the Detroit River would be sought for the bridge. Design plans show the bridge passing over the air space of both properties en route to Moroun’s trucking terminal property along Jefferson Avenue.

Ackerman is representing most of the businesses located inside a 2-square-mile area where the bridge’s customs plaza and toll lanes will be located.

His clients include Peerless Metal Powders Inc. on South Military Street; Edward W. Duffy Co., a mechanical tubing and piping supplier on West Jefferson Avenue; Rye Gentry Trucking Inc. on Jefferson; and John Johnson Co., an automotive and industrial textiles manufacturer on Waterman Street.

The other owners declined to comment, said Ackerman, who is managing partner of Ackerman Ackerman & Dynkowski PC in Bloomfield Hills.

Ackerman also is representing Fort Iron & Metal, which operates a sprawling indoor scrap metal and salt storage facility between South Livernois and South Crawford streets.

That facility has 60-foot ceilings to accommodate raw materials storage, Ackerman said, making it difficult for the owner to find a comparable move-in-ready facility in Detroit.

“The offers that are coming are inhibiting the ability to move,” Ackerman said. “These people want to be in business.”

Under state law, MDOT’s purchase offers to commercial and industrial property owners are based on comparable sales. The department also reimburses business owners for reasonable and necessary moving expenses and pays up to $25,000 for a company to re-establish its operations elsewhere.

“If your property is worth $500,000 … in Delray, that’s how much you’re going to get paid,” DeLong said. “If it costs you $700,000 to buy a property somewhere else, we’re still only going to pay you $500,000.”

“That’s what the statute says and we follow the statute,” DeLong added.

Ackerman is not working for Moroun, who has hired former Attorney General Mike Cox to wage his legal battles.

Because of Moroun’s litigation fighting condemnation of his trucking terminal and 21 other parcels within the bridge footprint, MDOT officials are guarded about specific acquisitions, declining to discuss why certain business properties have received purchase offers and others have not.

Ackerman’s practice has focused solely on condemnation since 1973. He has been involved in some of the state’s largest eminent domain cases, including General Motors’ leveling of the Poletown neighborhood for construction of the Detroit-Hamtramck plant in the early 1980s.

In Delray, Ackerman said MDOT’s purchasing strategy is “more cold, calculating” than he’s ever seen before.

“If they want to protect people and make them whole, it can be done,” Ackerman said. “I don’t get a sense right now that they give a hoot. I’m hoping I’m wrong.”