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May 3, 2012

Deal to extend River View property option not in place

Mainland Properties was under belief option-to-buy was good for another year

NEW ALBANY — Apparently unbeknownst to the developer, the New Albany Redevelopment Commission will reconsider its options on three pieces of property that has been planned for the multimillion dollar River View project for almost two years.

In June 2010, Mainland Properties head Jack Bobo purchased for $1,000 an option on the lots with the intent that would be used for River View, which is designed to be a multiuse development with retail, office and residential space adjacent to the Floyd County branch of the YMCA of Southern Indiana, near the Ohio River. The option-to-buy was extended for a second year, but the contract expired May 1, according to New Albany Economic Development Director David Duggins.

Extending the option had been a point of discussion recently among city officials, as New Albany City Councilman and redevelopment Commissioner Kevin Zurschmiede questioned whether $1,000 was a fair price to charge to lease the property.

Since the contract expired, Duggins said the matter will have to come back before the redevelopment commission for consideration. The commission likely will accept new proposals for the property, he said.

“We hope that Mr. Bobo and his group will participate in that process,” Duggins said Thursday.

But River View project manager Anita Massey said Mainland Properties was under the belief that it had the right to extend the option-to-buy agreement until May 1, 2013, after recently submitting another $1,000 check to the city for another year. She said communication between the city and developer indicated the extension was already approved, and added Mainland Properties recently funded geotechnical exploration work at the site.

“This is the first I’ve heard [of] it,” Massey said of needing further approval of the lease, and on discussions of possibly increasing the price for the option.

Duggins said upon review by staff legal counsel, the option agreement required approval from the developer and the city in order to be extended another year. The commission didn’t agree to the extension by May 1, so thus a new deal must be hashed out by the redevelopment commission, Duggins said.

River View is estimated to cost $43 million in private funds, and is designed to include a $12 million parking garage and plaza that would be footed with proceeds from public tax-increment financing revenue garnered from the development.

“They should be paying more than $1,000 for a one-year option,” Zurschmiede said.

At a minimum, Mainland Properties should be charged 1 percent of the sales price for the lots, he continued.

In 2010, the redevelopment commission attempted to sell the lots for $1.1 million, and Mainland Properties was the only potential buyer to make an offer for the land. Massey said the city set the terms of the option agreement, not Mainland Properties, and that the developer’s offer was to eventually buy the property “as is” without any publicly funded remediation work.

Zurschmiede said he just wants to see a deal in place for the option that would reflect more standard real estate rates. The project appears to be moving along, Zurschmiede said, but he would like more information from the developer.

“I personally would like to see a timeline if we’re going to enter into another one-year option,” he said. “I would like to set some expectations of what would happen that year, or at least by the end of that year.”

Duggins stressed that Mainland Properties can still pursue another option on the lots. The commission can consider any offer it receives and award an option or the sale of the property to a suitor based on merit.

Massey said Mainland Properties is diligently working to obtain financing for River View, which is now expected to be built in phases.

“Things are clicking along just fine and we’re not foreseeing any issues, any problems whatsoever,” she said.

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