Allen Park paid $25 million for old Visteon site, but expert says it's worth only a fraction

ALLEN PARK (WXYZ) - The set's gone dark at Unity Studios in Allen Park, but now the Action News Investigators are shedding light on whether or not taxpayers were taken for a ride in their hopes to bring Hollywood to Michigan.

While Jennifer Carbanaro is wrapping up the lunch rush at her busy restaurant in downtown Allen Park, she and her customers want to know why Hollywood producer Jimmy Lifton called it “a wrap” on the much-hyped Unity Studios.

“I thought famous people were going to be walking in here! And having lunch, and we’d have a wall of fame, and pictures, you know, but it didn’t happen. I think we were all conned,” said Carbanaro.

When Lifton packed up his movie sets and left town back in September, he took his promises of economic development and jobs with him. And now the people of Allen Park are demanding answers about how much the city paid for the old Visteon property to house Lifton’s Unity Studios, and other tenants.

The sprawling site is some 800,000 square feet, more than 100 acres. And the price? Allen Park residents paid $24.8 million when they bought it from businessman Sam Danou.

“So you still think you got a good deal,” Action News Investigator Heather Catallo asked of Allen Park Mayor Gary Burtka. His response: "Yes, we did get a good deal.”

But did they? Our investigation is raising questions about whether or not the city drastically overpaid for the property they’ll be paying off for the next 30 years.

Despite the size of the purchase, Allen Park officials admit they never had the property or building appraised. Experts we talked to called that highly unusual, especially for a purchase this large. Most people would never dream of buying a home without having it appraised, but Mayor Burtka disagrees.

“When you buy your house, you wouldn’t necessarily get it appraised. If you feel you had enough information and you felt you got a good deal,” said Burtka.

And then there’s the timing of the deal. The city agreed on the purchase price back in October of 2008, right as the nation's economy began to collapse, and property values fell throughout the region. But when they finally completed the sale more than a year later, they never adjusted the price.

“Why didn’t you use that to get a better deal for the citizens of Allen Park,” asked Catallo.

“We were already in discussions and we believe we got the best deal we could for the citizens of Allen Park,” said Burtka.

Matt Farrell is co-founder of real estate consulting firm CORE Partners and currently serves as the president of the commercial board of Real Estate for the State of Michigan.

“Unfortunately, someone got sold a bill of goods,” said Farrell.

We asked Farrell to conduct an independent review of Allen Park’s $25 million purchase.

Based on market conditions, other industrial and hi-tech properties on the market, and the approximately 40% commercial vacancy rate in Allen Park, Farrell determined the property should have cost millions less.

“I would view this property, at the point of time of the sale, could have been as low as $5.2-$5.5, could be as high as $7.5 to $8 Million,” said Farrell.

That’s only a fraction of the almost $25 million that Allen Park paid for the property.

“There’s always going to be different opinions, you can go out today on any topic, on the street and ask people different points of view, and you’re going to get different answers,” said Burtka.

“This isn’t just someone on the street," said Catallo.

"This is the head of the board of commercial real estate for the state of Michigan. This is what this person does day in and day out, they look at commercial real estate, and they’re saying the market value of this property was drastically lower than what this city paid for it,” she said.

“Well we’re also telling you that we had attorneys, assessors and people give us a totally different opinion that says the property is more valuable,” said Burtka.

Several business owners told the Investigators, they’re worried that such a high price on the property that’s now known as the Allen Park Studio Center could raise their taxes.

“It definitely means that a taxing authority can use that property as a bench mark to then justify its position on other comparable properties,” said Farrell.

The mayor insists the city made the right call by sticking with their $25 million purchase price, because the cost of letting the property fall into foreclosure would have led to blight, and that would have lowered property values.

But because the property was about to go into foreclosure, real estate experts say the city could have used that as leverage to get a better price for the taxpayers.

“Why wouldn’t they use some of that to negotiate a better price? The hype! It was the hype! Famous people! Unity Studios! They’re going to film movies,” said Carbanaro.

Jennifer Carbanaro is also a member of the Allen Park Downtown Development Authority. While she is worried the city maybe didn’t do all of its homework on the purchase – she says everyone had the right intentions.

“So when someone tells you, hey, so we bought it for $25 million, we’re going to make $100 million in two years, what do we care? The taxpayers, everyone’s gonna benefit here! You know, sometimes you have to take risks. That’s what being an investor is all about, so sometimes you get bitten,” said Carbanaro.

Allen Park may yet become Michigan’s Hollywood. The city just signed a deal with the TV show the Wannabes to lease the old Unity Studios space, and their other tenants are expanding. But just imagine how much more the city could be profiting on those rent payments if they’d gotten that property for as low as $5 million.

If you have a tip for the Action News Investigative Team, contact us at tips@wxyz.com or at (248) 827-9466.