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Judge: Demolish Packard Plant 'immediately'; backup plan set up if owner fails

Detroit — Packard Plant owner Fernando Palazuelo has been ordered to immediately raze the deteriorating industrial site and foot the cost after missing a trial date.

Wayne County Circuit Judge Brian Sullivan made the ruling last Thursday after Palazuelo, a Peruvian developer, missed a March 24 trial date as the city of Detroit sought the demolition because it considers the location a "public nuisance." 

Structures on the two 2-acre sites on Detroit's east side have become "dangerous" and significantly threaten "the public's health, safety and welfare," Sullivan said in the default judgment.

Palazuelo is being "held personally liable for the abatement of the public nuisance," the judge said in his order. 

Explore the Packard Plant through our Michigan Marvels coverage.

The demolition is expected to cost millions of dollars. It has been ordered to start within 42 days of the judgment or by early June after getting the needed demolition permits within 21 days. The razing and cleanup of the two sites is required to be completed in 90 days or by the end of June, Sullivan ruled.

Acting Detroit corporation counsel Chuck Raimi, the city of Detroit's acting corporation counsel Chuck Raimi applauded the judge's order/

"Judge Sullivan's order brings us a step closer to finally addressing the dangerous and blighted portions of the Packard Plant Mr. Palazuelo has done virtually nothing with since he bought it out of foreclosure in 2013, other than amass more than a million dollars worth of unpaid drainage bills, property taxes and blight tickets," Raimi said in a statement. 

Raimi said Palazuelo has until April 21 to pull permits for demolition of his portions of the plant, which represent more than 40 individual parcels. 

The former Packard Plant, 1580 E. Grand Blvd., Detroit, Wednesday, April 6, 2022.

The development came after Palazuelo and his local firm Arte Expresse Detroit LLC had been trying last year to sell the property for $5 million.

More: Detroit's former Packard plant could have new owner by year's end

The real estate services firm Newark is still employed by Palazuelo to sell the Packard Plant property, said Larry Emmons, senior managing director in Newmark's Southfield office. He told The Detroit News last year that Palazuelo expected to have a buyer lined up by the end of 2021, but it didn't materialize.

Emmons suggested Wednesday that Palazuelo would not pay for the entire cost of the razings. Sullivan said Palazuelo would be held in contempt of court and subject to sanctions if he doesn't comply with the order.

"Demolition is the first step in making the site shovel ready," Emmons said Wednesday. "It is likely that the cost for the demolition will come from a mix of private and public funds. We are working through these issues with two very interested developers."

Emmons wouldn't name the interested parties. 

But he said the judge's timeframe to demolish the structures in the next three months "may be somewhat aggressive."

More than a year has passed since Palazuelo scrapped his initial plans for the site. Palazuelo, who said he was financing the project himself, bought the complex from Wayne County for $405,000 at a tax foreclosure auction more than eight years ago.

In 2017, Palazuelo broke ground on a plan to redevelop the Packard into a mixed-use site. The four-phase development plan was expected to be a boon for the city, cost $350 million and take up to 15 years to complete. But it never materialized.

There has been clean-up and tours of the site in the following years, but little development progress. The site suffered further disrepair when the pedestrian bridge over Grand Boulevard collapsed in early 2019. 

Palazuelo and his local firm lost tax incentives tied to the Packard plant development plan in October 2021 after the Detroit City Council voted to end a brownfield redevelopment plan because of the lack of progress.

More:Packard Plant owner charms east side

If Palazuelo fails to start the demolition, Sullivan has empowered the city of Detroit to enter the two properties and "engage qualified contractors to perform all demolition and other necessary actions to abate the nuisance."

The city of Detroit's Raimi said the city would consider doing the demolition itself if Palazuelo fails to do so.

"The city fully intends to rid the community of this massive blighted complex once and for all. For it's part, the city already has demolished more than 100,000 square feet of the portions of the plant it owns and will be demolishing the remaining portions it doesn't plan to save for redevelopment later this year."

The judge said Palazuelo would still be expected to pay for all of the city of Detroit's demolition costs even if he fails to pursue the razing of the structures himself. The city also would receive a lien on the property sites for the demolition costs and could use that later to foreclose on the properties. 

Raimi said the city would consider getting reimbursement from Palazuelo and his company for demolition and clearing costs.

When the Packard plant ended production in 1956 dozens of smaller businesses worked out of part of the plant until the late 1990s. Then the city foreclosed on the property, and the facility began to be torn apart by scrappers and vandals.

It was eventually sold at auction to Palazuelo. In 2008, Palazuelo had filed for bankruptcy after the Great Recession devastated the real-estate market.