Bloomington city council to weigh: Should Johnson’s Creamery developer pay to get alley vacation OK’d?

At its regular meeting next Wednesday (June 1), Bloomington’s city council will be considering a request from Peerless Development to vacate an east-west alley that cuts across the parcel where the Johnson’s Creamery building sits.

The alley vacation is needed in order for Peerless to move ahead with a development on the northern part of the parcel. The housing development is supposed to include 51 apartments right next to the B-Line Trail. Bloomington’s plan commission approved the site plan for the new development in October 2021.

But that approval was contingent on getting a greenlight from the city council for the vacation of the east-west alley—because part of the proposed new building would sit partly in the right-of-way.

Based on deliberations at the city council’s committee-of-the-whole meeting on Wednesday this week, the alley vacation could depend on the willingness of Peerless to pay the city $250,000 or more for the creation of a piece of public art.

The artwork would commemorate the creamery’s 140-foot historic smokestack, which Peerless has been ordered by the city to demolish down to 60 feet—because of its structurally unsafe lean.

On Wednesday, Peerless founder Michael Cordaro told the council he couldn’t agree to the payment for the artwork, adding that he’d been presented with the proposal by deputy mayor Don Griffin just about 24 hours earlier.

Based on discussion at Wednesday’s committee meeting, one scenario that could unfold is that no agreement is reached on an art-for-alley deal, the council rejects the request next Wednesday, and Peerless sells the project to a different owner.

If that happens, then under Indiana state law, the future development of the lot would stall for at least two years.

Under IC 36-7-3-15, if a vacation proceeding is “terminated,” then another one can’t be initiated for another two years, no matter who owns the real estate.

It’s the same law that now puts Bloomington’s redevelopment commission (RDC) in somewhat of a quandary, given the city council’s denial of the RDC’s Hopewell neighborhood alley vacation request in early April.

Responding to a B Square question, city council administrator/attorney Stephen Lucas said procedural mechanisms are being explored to undo the council’s early-April denial, so that the question is at least open and not “terminated.”

If the question of the Hopewell alley vacation were reopened, then there would be a chance for the council to get the concessions it wants on future planning for the area, without forcing a two-year delay.

For the Johnson’s Creamery project, two of five councilmembers at Wednesday’s committee meeting (Susan Sandberg and Sue Sgambelluri) said they would oppose the alley vacation. That’s because at Wednesday’s meeting, Peerless founder Michael Cordaro eventually gave a “hard no” as his response to the proposed art-for-alley deal.

The other three councilmembers (Jim Sims, Dave Rollo, and Ron Smith) were less certain about it, and declined to vote either way on the committee’s straw poll.

The proposal that Peerless make a one-time payment of $250,000 to $300,000 for the city to create and maintain the piece of art was pitched to the city council on Wednesday by the city’s corporation counsel, Beth Cate.

Cate told the council that demanding such a payment was “warranted,” because of the commercial benefit that Peerless would get from its development. She showed the council a prepared slide that stated Peerless would be receiving at least $800,000 in annual rent from the 51 apartments.

Cate told the council that the amount the city wants Peerless to pay is in line with public art projects connected with other developments, like The Graduate Hotel on Kirkwood, which her slide pegged at $400,000 to $500,000. Based on Herald-Times reporting from 2017, the amount paid by the Graduate Hotel developer for public art was around $350,000. The payment was somewhat controversial, because the payment was negotiated outside the ordinary approval process, after the plan commission OK’d the project on a 5–3 vote.

The idea that there’s even a right-of-way to be vacated is a bit of a sore point for Peerless.

The status of the real estate as public right-of-way was not evident when Peerless started its approval process with Bloomington’s plan commission. In fact, the first site plan submitted by Peerless, which was approved in July 2020, used the same strip of land now analyzed as right-of-way. There was no condition on the July 2020 site plan approval that an alley be vacated.

Even though there’s not any visible delineation of the strip as an alley, and the iconic 140-foot smokestack occupies the eastern end of the strip, it is now analyzed as public-right-of-way, because no record of its vacation has been found.

The fact that part of the parcel should be analyzed as public right-of-way emerged only when Peerless returned to the Bloomington plan commission with a revised site plan in October 2021.

At Wednesday’s meeting, Cordaro described his surprise at learning there was public right-of-way to be vacated, as one of several points of frustration about the process.

“All the way up until our planning commission meeting, we had no clue that this alley had not already been vacated,” Cordaro said. He continued, “It was our understanding from the information that we got from our title company, our surveyors, that this alley had been vacated in the 90s…when they were doing the redevelopment into the office building.”

Cordaro added, “So we came into this completely blindsided, not knowing that this was an issue.”

Cordaro also said the strip of land likely had not been used by the public in 100 years.

Responding to that point, councilmember Sue Sgambelluri said the public right-of-way is a city asset, and she had been elected by Bloomington residents to “think intentionally about how those assets are used.” She concluded, “The notion that [the alley] hasn’t been used lately, isn’t very compelling to me.”

But the way the public land is currently used is the first of the criteria the council is supposed to apply when it evaluates the merits of a vacation request. The criteria for vacating public rights-of-way are ensconced in a resolution, approved by the city council in 1987. [Res 87-02] From that resolution, the criteria are:

1. Current Status – Access to Property: the current utilization of the right-of-way in question – as a means of providing vehicular or pedestrian access to private property, churches, schools, or other public places, for public utility or drainage purposes, or for other public purpose.
2. Necessity for Growth of the City:
a. Future Status – the future potential for public utilization, possible future need for the right-of-way due to future changes in land use;
b. Proposed Private Ownership Utilization – the proposed utilization of parcel in question if it reverts to private ownership, potential for increased benefit to the City under private ownership (does the proposed use contribute to the orderly growth of the City);
c. Compliance with regulations – the effect of vacation upon compliance with all applicable regulations: subdivision, zoning, access control, off-street parking (does the vacation present a non-compliance problem or hinder future compliance upon anticipated development or change of use?);
d. Relation to Plans – the relationship of vacation with the Master Plan, Thoroughfare Plan, Neighborhood Plans, or any special studies that might apply

Among those criteria, it’s (2b) that Cate cited on Wednesday as justifying the proposed $250-300,000 contribution towards commemorative art as a condition on granting the alley vacation.

The wording of (2b) includes ”potential for increased benefit to the City under private ownership.” Cate described the payment for commemorative art like this: “It’s basically an amount of money that would be paid in order to assist in realizing a public benefit in exchange for the right of way vacation.”

During Wednesday’s deliberations, Sandberg and Sgambelluri cited the lack of any income-restricted (aka affordable) units as a lack of benefit provided to the city.

Councilmembers Jim Sims and Dave Rollo wanted a better understanding of the way the administration had made the art-for-alley proposal to Peerless.

Cordaro said deputy mayor Don Griffin had contacted Peerless the day before around 4:30 or 5 p.m. to give Peerless a heads up about the $250,000 request. Up to that point, Coardaro said, the number that the city had talked about for a budget had been $150,000. Even that lower figure caused Peerless some “sticker shock,” Cordaro said.

One of the points Cordaro made during Wednesday’s meeting was that his objection was grounded in the cost, not an objection to seeing the smokestack commemorated.

Cordaro said, “We do not have any extra money for our project. As it is, it’s $3 million over budget.” That doesn’t take into account the $350,000 to partially demolish the smokestack, Cordaro said.

Cordaro added that the order from the city to demolish the smokestack down to 60 feet also means a loss of $2,000 worth of monthly income from AT&T, which has communications equipment mounted at the top of the smokestack.

“We are so far underwater on this project,” Cordaro said. He added, “We’re sitting here struggling to figure out: How are we going to even pay for this demolition of the smokestack?”

The county’s online property records show the property was purchased in late 2019 for $3.445 million.

Based on the deliberations of the five councilmembers at Wednesday’s committee meeting, in order to win approval next week, the alley vacation could need yes votes from all four of those who were absent—and it could still fail. Absent councilmembers were: Steve Volan, Matt Flaherty, Kate Rosenbarger, and Isabel Piedmont-Smith.

The city council’s regular meeting on June 1 starts at 6:30 p.m.

One thought on “Bloomington city council to weigh: Should Johnson’s Creamery developer pay to get alley vacation OK’d?

  1. Is this not extortion? This administration is completely pay to play. Hint , the under the table deal for the Graduate. The wording in section 2B does not say anything about dollar figures.

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