Packard Plant: #2 Delivers $100k Deposit, Rest Due on Monday

He came up with the deposit, $100,000.  As a side note, he technically was an hour and 45 minutes after the 3 pm deadline on Friday, but Wayne County stayed open late and took the deposit.  Now Chicago developer Bill Hults has to send in the rest of the money by Monday.   Then find about $850 million somewhere.

This is all surprising because Hults could have had the property for about $1 million instead of the current $2 million just two months ago.   But his coming up with the deposit may be a step back for the property and it's future.  Talk around town is that Hults is in over his head and will not be able to put the whole thing together.

If Hults doesn't have the full amount on Monday, he just wasted $100k Friday.

Having struck a deal ahead of the auction, Hults had a clear path to picking up the property without competition two months ago and was not able to follow through, despite repeated assurances.  Now he delivered a substantial wad of cash that he will not be getting back.  So what gives? According to Wayne County Chief Deputy Treasurer Dave Szymanski, Hults is getting the balance of the money from another real estate transaction (not identified what it is) that apparently took place on Friday.  Maybe Tony Soprano is now a partner.

This could go one of several ways.  


The best way for Detroit would be for Hults to have enough backing, have a viable plan, and turn it into something useful.  A big chunk of industrial land in Detroit near a railroad track and freeway with clear title is a rare thing, and the right project could in fact come along, if not already than soon.  Hults pays the $2 million (and Wayne County gets it in their budget for this year), secures the property from squatters and vandals, pays the $100k or so a year in taxes, and quickly turns it into something good.  

Hults, who runs Durkin Joyce LLC, figures he needs about $750-$850 million total and can break ground in about six months.  He provided details to Crain's Detroit Business. 

Hults has ambitious plans for the site, which is often targeted by arsonists, vandals, graffiti taggers and scrappers. He wants to turn the plant into a mixed-use development featuring a 120-room hotel, 750-plus loft residences, 1,500 single-family homes, and dining, commercial and light industrial space. 

A good result alternative is for Hults to drop out, the County keeps the $100k, #3 bidder Fernando Palazuelo gets it for about $400k, and he develops it into something.  This guy has a track record of doing big projects like this in Peru and we are more confident in his backing.  Yes, it's less money up front, but it is more important that something happens to the property and jobs and economic activity come in.

One bad alternative is that Hults has the $2 million by Monday, but that it is all based on the high finance equivalent of loan sharking and Hults can't make it work with that burden.  Then the property sits for five years or so, the lenders foreclose on Hults when he starts missing deadlines,  and eventually goes back to tax foreclosure.  This presumes that Hults is actually over-matched by a project of this magnitude and is getting this far on a wing and a prayer.  Given some of the gossip floating around, this is very, very likely.

Another negative scenario has Hults coming up with the first money, but then the financing for cleanup fails to happen and he loses the place back to Wayne County in six months or so.  Okay, let's be realistic and say that he probably will get extra time if he asks.  Still not good.

Time will tell how this plays out, but we are still rooting for the guy from Peru as the best hope for the future. The fact that he thinks he can make a go of it gives us hope.