Hangar42 a land contract with a tinge of why me
The sale of part of the former Lear factory on Alpine Avenue to an LLC now called West Michigan Film, headed by Joe Peters, was conducted with a land contract, according to the former owner of the property, Jack Buchanan Jr.
It’s another element of a murky, high-profile transaction that only adds further intrigue to a lightening-rod controversy. Its blazing spotlight has poured conspiracy-hungry media types, agenda-driven politicos and generally closed-mouthed Lansing bureaucrats into a steaming bowl of “who’s on first?”
Peters has turned the property into a film studio called Hangar42 and has applied for the 25 percent infrastructure tax credit offered by the state of Michigan to people who make investments that help grow a movie industry in the erstwhile automotive state.
Buchanan noted in a chat with the Business Journal last week that the land contract approach was the only way to secure a sale due to market conditions prohibiting traditional bank financing. He noted some other film studio projects in the state that were in line to receive film-incentive approval have not progressed, due to the lack of financing.
Buchanan said he is the victim of a vendetta, because the Mackinac Center, legislators hell-bent on eliminating state tax incentives and some news media outlets, in particular, have focused on the fact that the vacant factory was for sale last summer for just under $10 million.
Buchanan said he realized in the fall that it was worth more as a movie production studio and had been aggressively marketing it in that fashion. In November, the Peters group entered into a formal agreement with the state of Michigan, entailing an infrastructure tax credit after the investment had been made in a movie studio. Buchanan said the sale of the former factory was effective “several months ago,” and the sale price was $40 million.
A news release Feb. 4 on behalf of Hangar42 Studios stated that local investors “have invested $45 million to purchase and renovate” the property.
Peters issued another news release in May stating that an “MAI-certified appraisal completed earlier this year appraised the property’s value at $45.5 million, which is $5 million more than we negotiated.”
The property should have been re-listed with its newer value as a potential film studio last fall, Buchanan contends, but — due to a variety of squishy factors — the listing was never changed and provided sufficient ammo for the smoking gun theorists.
Buchanan made available to the Business Journal some self-funded appraisals/market comparisons and estimates conducted this spring that put the property value as a film studio between $45 million and $94 million, with the understanding that the broker/consultants and appraisers would not be publicly identified due to the feared backlash from the same critics Buchanan claims are targeting him.
The appraisal information, and other details about the project that led to the apparent initial approval of the project’s incentives, have been shared with the state film office, he said, but that office has refused to release any specifics regarding Hangar42 based on proprietary protections written into the state law.
Buchanan said the sale of the property based on higher-value anticipated use (such as a film studio), rather than as a lower-priced warehouse or similar facility, is a common practice in commercial real estate circles and should not be viewed as a means to artificially inflate numbers to secure a higher state incentive package.
Buchanan, who said he is not a partner in the West Michigan Film group, also acknowledged that some vendors who conducted renovation work at the Lear plant site for him as a condition of the property sale have yet to be paid. One of those vendors claims he was inaccurately quoted in the media regarding the nature of his concerns about being paid eventually by Buchanan.
Meanwhile, the state film office has not cut a check to anybody for the incentives, and acerbic public comments from retiring film office director Janet Lockwood indicate the project is far from receiving final clearance. Stay tuned.
LEDs drive Light Corp.
Bryne Electrical Specialists (see story on page 1) isn’t the only area firm capitalizing on LED-lighting technology. Light Corp., a Grand Haven-based manufacturer and distributor of florescent and LED lighting for various types of workplaces, displayed an array of its LED office products at NeoCon 2010 last week in Chicago, further highlighting the rapid march of the energy-efficient LED into new markets.
Kanepi Innovations, which like Light Corp. is one of several business units within Shape Corp. of Grand Haven, also was at NeoCon. Kanepi is involved in wireless controls technology. The remote control capability allows a facility manager to monitor a building’s energy consumption from anywhere in the world and adjust the amount of energy used. Kanepi wireless controls are on the overhead fluorescent lights Light Corp. installed early this year in Hangar42, the controversial film studio mentioned above.
The new lights in Hangar42 “will end up saving them a lot of money and a lot of electricity,” said Brad Davis, president of Light Corp. The controls can adjust the light fixtures individually, if desired, rather than all at once.
Davis told the Business Journal recently that each light fixture has its own radio frequency for wireless control, which could be particularly useful in a movie studio where lights need to quickly be adjusted up or down for different scenes.
Wireless controls saved running many miles of wires in Hangar42, according to Davis. “This is our first movie studio,” he said.
Light Corp. has also installed energy-efficient lighting in convention centers, factories and the schools in Grand Haven. Davis said the company has about 130 employees producing light fixtures.
Still losing homes
The latest foreclosure data from RealtyTrac.com reports 5,323 homes have gone through foreclosure in Kent County since the housing market went into its deep subprime-mortgage decline, and the then-lackluster economy followed that bottomless plunge a few months later.
In May, 869 homes in the county went through the repossession process. One in every 271 houses in the county received a foreclosure filing last month.
That number places the county at a medium-high point on RealtyTrac’s foreclosure scale. The website defines “high” as 1 in every 158 housing units and “low” as 1 in every 1,031.
The city of Grand Rapids has had 3,295 homes foreclosed over the past few years, 62 percent of the county’s total. One of every 283 homes in the city received a foreclosure filing in May, when 538 homes went through the process. The 49507, 49504 and 49548 zip codes had the highest number of foreclosures last month at 102, 88 and 65, respectively.
So far, the average foreclosure sales price has been $60,150 for a home in Grand Rapids and $70,243 throughout the county.
Up, up and away
Gerald R. Ford International Airport’s Bruce Schedlbauer, marketing and communications manager, said everyone around him was flying high last week. The reason? Quite a few more passengers have made their way through the concourse so far this year in comparison to last year.
He noted that through the first five months of the year, passenger activity was up by 15.5 percent over last year. In May alone, Schedlbauer said, activity soared by more than 26 percent compared to May 2009.
He said airport officials credited the increase to new airlines, new destinations, lower fares and more seats available than a year ago.