Officials angle for McLouth steel site in Trenton

Jennifer Chambers
The Detroit News

Trenton — Wayne County officials are attempting to lure a developer to a foreclosed, 188-acre industrial property along the Detroit River that it doesn’t yet own.

The waterfront property on West Jefferson, which includes three rail lines and sits close to an international border, freeways and major airport, is the former McLouth Steel site. Despite being the third government entity in line to have a shot at buying it, Wayne County development officials have issued a “request for qualification” to test the waters.

Observers say the site has development potential with its deep water port but is loaded with environmental concerns.

Under foreclosure rules, the right-of-first-refusal process begins with the state, which declined on Sunday to buy the land for $4.65 million, its fair market value plus back taxes.

The city of Trenton could buy the property for fair market value and back taxes, less city taxes. If Trenton declines, Wayne County has the chance to buy the property for fair market value, less the county taxes. If no one wants it, it goes to auction.

Trenton’s city manager said the city wants the property developed and doesn’t care which entity or developer does it so long as it isn’t a land speculator.

“We prefer it not to go to auction or a speculator to buy it. We’re working with all entities to get something done. It has potential. It has impediments,” City Manager Jim Wagner said.

With the new Gordie Howe International Bridge planned nearby, three international railways traversing through the property and 1,600 feet of waterfront dock-age with a water depth of 28 feet, Wagner said there is no question to the property has attractive qualities.

On Tuesday, Wagner said he has met with an interested party and the city has discussed buying the land. But no decision has been made.

“We are getting a lot of calls,” Wagner said. “We are really look for the taxes, the jobs, the environment and appearance and it’s doable. Not a pie-in-the-sky plan. We are looking for something who will do something and some kind of guarantee.”

Wagner said there are concerns in the city that Grosse Pointe billionaire Manuel “Matty” Moroun could buy the land and sit on it. Moroun owns about 75 acres of property north of the site.

“That’s why the group of us all want to see this property developed,” Wagner said.

Mickey Blashfield, a spokesman for Moroun, said he had no comment on whether his employer was interested in buying the property.

Wasting no time, Wayne County on April 27 issued its request for the site, which was the seventh largest steel mill in the nation and largest employers in the area with as many as 6,000 people working at the factory in peak production years. The McLouth Steel Co. had not operated on the site since the late 1990s.

Bids to Wayne County are due May 31 and site visits have been offered this week by the Wayne County’s Economic Development office for interested parties.

The move by the county came after the Wayne County Treasurer’s Office foreclosed on the land on March 31 for $3.7 million in unpaid taxes.

“Our hope is to get ahead of the game. If someone is interested and responds, we will be able to hit the ground running,” said Khalil Rahal, Wayne County’s Economic Development director .

Rahal said the county issued the RFQ to be one step ahead in the process and have a few ideas ready if the county gets to buy the property. Rahal said his office has received calls of interest in the property, but he declined to be specific on any pitches or ideas.

An RFQ allows the county to determine if a company has ability to address multiple areas of concern, from providing jobs to environmental clean-up before the company can issue a request for proposal, or an RFP, for development plans.

Rahal called the site unique for its location along the waterfront, three railroad crossings and its 1-million-square-foot plant.

“Ideally, we want to see the property back in productive use that can be a catalyst for other development, investment and jobs. It’s almost 200 acres and has great logistical assets that make it an attractive site for industrial and or logistics development. But we’re open to ideas,” Rahal said.

Rahal acknowledges it has environmental issues to contend with that are not fully determined. Wagner said it is known that arsenic and mercury are present but the levels are not known.

“The truth is we don’t know the extent. We think one of the highest and best use is industrial,” he said.

Wagner is hopeful and realistic about the future of the site. He says there has been discussions by the city and residents on the property and its future for the last 24 years.

“This day was eventually coming. The city is exploring any and all options. We are looking at the best option to get it redeveloped, whether it’s the state, city or county,” Wagner said.

Wagner said he has no problem with the county putting out its RFQ this early in the process.

“They asked us if we were going to exercise our right. It hasn’t come to us yet. We couldn’t stop the county from doing what they want to ...,” Wagner said. “I have no problems with what the county did. The time frame is very compressed.”

The Michigan Department of Quality did some testing on the site in the fall, Wagner said, and the U.S. Environmental Protection Agency has to make a recommendation on the site.

Wagner said he was told the DEQ report was still being prepared and he did not know what it contained.

A 2014 expanded site inspection report done by the Michigan Department Environmental Quality at the request of the Environmental Protection Agency said contaminated soils at the site consist of slag fill material containing metals, arsenic, lead, cadmium, chromium, copper, iron, selenium and zinc, as well as documented spills with contaminated soils containing PCBs.

There is also concern of air migration of contaminants at the site, the report says. MDEQ spokeswoman Melody Kindraka said the report has been sent to the EPA.

“We are expecting it to be finalized and released by the end of the month,” Kindraka said.

Bruce Babiarz, a spokesman for the Wayne County Treasurer’s Office, said the parcel is in final foreclosure proceedings with nearly $3.7 million owed for back taxes dating to 2007. County records show a series of forfeitures and redemptions on the property dating to at least 2005.

The property’s owners — DSC, LLC and Trenton Land Holdings — had defaulted on multiple back tax payments over several years, Babiarz said.

Trenton Marine Terminals operates a sugar warehouse storage facility on the property for Bay City-based AmCane Sugar.

To keep that operation going, the Wayne County Treasurer and the county’s corporation counsel entered into a limited licensing agreement with Trenton Marine Terminals and the sugar company to allow the property portion to be used for off-loading and storage of raw sugar.

Babiarz said the action was taken to ensure revenues from the operation are paid to the county and to keep a business enterprise active while the property’s future use is determined.

If none of the government entities chooses to purchase, the property will be placed for sale at public auction, Babiarz said, likely this fall. All proceeds, minus local taxes, go to Wayne County treasurer for disbursement to Wayne County.

“It’s still under due diligence review by the state,” Babiarz said. “The (county) treasurer would like to see it developed and returned to tax rolls.”

The McLouth Steel Co. had not operated on the site since the late 1990s. The factory was purchased and operated by Detroit Steel Co. until it ceased operations and local operators purchased the plant land. McLouth Steel was founded in Detroit in 1934, Babiarz said.

In 1948, it bought a mile-long riverside property in Trenton, part of $100-million expansion. McLouth Steel, which had plants in Trenton and Gibraltar, filed for bankruptcy twice — in 1981 and 1995. It was later sold to Detroit Steel.

In 2006, a proposal to turn the property into a residential-commercial site called the Bay Village of Trenton failed. A proposal to renovate the site for more than $200 million and produce steel again there also failed, Babiarz said.