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Published: Friday, 10/24/2003

E. Toledo buy ends a losing land deal

BY JOE MAHR
BLADE STAFF WRITER

It was an agonizing decision in January for the Toledo-Lucas County Port Authority: Give up $7 million in future revenue, or be blamed for stalling a major river redevelopment.

At the time, city officials told the port authority that the land deal was their only option to keep the Marina District alive. So agency board members agreed to sacrifice the cash.

But it turns out the city was wrong. That option wouldn't have worked anyway. Instead, the port authority shopped around for another deal - one that not only erased the $7 million loss for the port authority, but offered the public agency a potential $1 million profit.

In action that effectively ends the January deal, the port authority board voted unanimously yesterday to buy other land: 50 acres of East Toledo riverfront between I-280 and Lake Erie. The land, owned by Beazer East, Inc., used to house the eastern half of the old Interlake pig iron and coke plant before it closed in 1978.

The agency hopes it can use part of the new land for a new home for the construction firm George Gradel Co., which must be moved from its present home upriver in order to complete the Marina District project. Gradel has not yet signed off on the idea, although company spokesman Alan Raven said the Beazer property is among those being considered.

The port authority plans to spend $900,000 for the Beazer property, get grants to clean up the land, and resell the rest of the land not used for Gradel - at a profit of up to $1 million, said Jim Mettler, the port authority's property development director.

Yesterday's action is another step in the three-year ordeal to redevelop the East Toledo riverfront between I-280 and the Martin Luther King, Jr., Bridge.

In January, to keep the project on schedule, the city began negotiating a complicated land-swap plan to get Gradel to move. John Loftus, the city's assistant chief operating officer at the time, said a sliver of the Beazer property could be used to house part of Gradel. The other part, he said, had to come from adjoining land owned by the port authority.

But it wouldn't be simple. The port authority had leased the land to Heidtman Steel, which in turn had subleased most of it to E.S. Wagner. To get both firms to agree to make room for Gradel, the port authority had to promise each lower lease payments and a shorter lease. Wagner also was set to be given the land once its lease expired - a total future loss the port authority pegged at $7 million.

Mr. Loftus acted as a middleman negotiating the deal with all the firms, with updates given to port authority staff. In two closed-door meetings over three days, city officials stumped the deal to a reluctant port authority board.

For three months, Mr. Mettler said, the port authority was waiting for the city to make final arrangements. The agency then began questioning if there were other options, such as buying the whole Beazer property. That's when the agency discovered that Mr. Loftus was misinformed on what Beazer was willing to do, according to an internal port authority memo obtained by The Blade.

“Upon contacting ... Beazer East the port authority was informed that what the port had been told earlier by Mr. Loftus was the exact opposite of Beazer East's intentions,” Mr. Mettler wrote in August to his boss, James Hartung, president of the port authority.

Mr. Mettler said Beazer told him it wouldn't sell just a sliver of its land and - instead - would consider selling only its entire parcel. In effect, that killed the original deal, he said, so the port authority began negotiating with Beazer to buy the entire parcel.

That led to yesterday's vote by the agency board offering the latest place to move Gradel.

Mr. Loftus could not be reached for comment yesterday.

In August, Mayor Jack Ford hired Steven Best to oversee the city's real estate department and the Marina District project.

Mr. Best yesterday confirmed that the city is working with the port authority on the new Beazer plan. Mr. Best attributed the earlier confusion over Beazer's role to the complicated nature of the original deal.

“The issue - it was very complex when you had all this subleasing going on, and I think there was miscommunication,” Mr. Best said.

Mr. Mettler said yesterday that the mayor's office “has been nothing but helpful” since the port authority began negotiating with Beazer.

In other business, the board voted unanimously to thank Jerry Chabler for his service on the board. Mr. Chabler, one of the board's most outspoken members, resigned Oct. 1.

Last month, as Mr. Chabler was giving his last speech to the board, two board members objected to the critical tone, which eventually led to a back-and-forth exchange that led the board to adjourn the meeting before Mr. Chabler had finished talking.

Mr. Chabler returned yesterday to receive the customary award, and said that he would work to pass the agency's 2004 levy because of how crucial it is for economic development.



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