By on December 13, 2013

Wayne County Chief Deputy Treasurer David Szymanski said that on Thursday, Peruvian developer Fernando Palazuelo made the final payment of the $405,000 he bid for the sprawling, decrepit, Albert Kahn designed Packard Plant on East Grand Blvd in Detroit. Palazuelo was the third highest bidder, but when Texas doctor Jill Van Horn’s winning $6 million bid vaporized and Chicago developer Bill Hults only came up with 10% of his $2 million bid, the county accepted Palazuelo’s price. Palazuelo, who is originally from Spain, claims to have had a successful track record of redeveloping distressed properties in Lima, Peru.

Now that the the moneys have been deposited with an escrow agent, the developer has access to the 3.5 million sq ft property for an environmental assessment that actually began last week and will be completed by the end of the year, Szymanski said. Once that assessment is done, the funds will be released to the county from the escrow account and the deed will be recorded. Palazuelo will then be able to apply for a brownfield credit to help pay for site remediation. The county owned the property due to a property tax foreclosure on the previous owner.

Palazuelo’s plans for the 40 acre site include attracting automotive parts suppliers to the parts of the complex that have not yet deteriorated as well as the construction of a go-kart track. The developer’s sons were competitive kart racers when they were younger. He also says that he plans to personally live on the property, hoping to have an apartment completed by April, once the area is secured.

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36 Comments on “Peruvian Developer Pays For Detroit’s Packard Plant. Says He’ll Live On Site....”


  • avatar
    Omnifan

    “…once the property is secured….” Key operative words in a neighborhood which will take many years of improvements to be called “secure.”

    Good luck, sir.

    • 0 avatar
      bball40dtw

      I hope he means secured as a financial or real estate term, as it will be difficult to secure the perimeter of a 40 acre site that crosses public roads. People still seem to get in the Michigan Central Train Depot.

    • 0 avatar
      CoreyDL

      Is that area a relative disaster/very unsafe?

      • 0 avatar
        Kevin Jaeger

        I really wish the guy luck but I’m afraid he has no idea what he’s getting himself into. That area is a disaster and the lot would have negative value if it were merely empty.

        He is about to learn about the level of crime and corruption that has driven legitimate business out of Detroit. When he brings in the demolition equipment, only to find it gets constantly stolen and vandalized, then gets fined for being behind schedule on his cleanup commitments, etc, etc, etc.

        It would be nice to see Detroit eventually turn around but I doubt this will be the start of it.

      • 0 avatar
        bball40dtw

        It’s been a rough neighborhood for decades. My parents talk about that neighborhood being terrible even in the 60s and 70s.

  • avatar
    thelaine

    I bid 12 million but I could only come up with 2 postage stamps, a stick of gum, and an old condom.

    • 0 avatar
      th009

      New or used? (For each of the above …)

      • 0 avatar
        thelaine

        All in mint condition! Figured they were easily worth an old Packard plant. Damn that Pala..whatever from… Bolivia or wherever the hell. Stole the place from right under my nose. The old “actual cash” trick. Sneaky foreigner.

        Me and Jill Van Horn just never thought they would ask to see the money. Detroit’s not known for its accounting integrity, from what I understand. We damn near got away with it. We were going to turn it into a medical marijuana dispensary and worlds busiest taco stand. It would have been huge.

  • avatar
    SCE to AUX

    This guy must be getting investment advice from the people who bought Saab and Fisker.

  • avatar
    cartunez

    Detroit has a chance as long as they keep government extremely small and virtually powerless.

    • 0 avatar
      bball40dtw

      Except for the fact that Detroit needs the local, state, and federal goverment to fix the crime issue, maintain/fix infastructure, and provide a direction/plan for the city.

      • 0 avatar
        thelaine

        The first two are not controversial. The third is where they have screwed the pooch and always will.

        • 0 avatar
          bball40dtw

          I don’t disagree. Detroit needs a competant leader that can make tough decisions and has a vision for the city (or at least embraces someone else’s vision).

          If the infastructure was fixed and Detroit became a safe place once again, they rest might take care of itself.

      • 0 avatar
        aycaramba

        Not necessarily.

        I’m willing to bet that there are lots of options for Detroit, including:

        1. Start de-annexing. Time to start abandoning parts of the city. Cut the utilities (at least water, street lights, maybe gas). Provide some assistance packages to help voluntarily relocate people in the affected areas. Significantly reducing the size of the city’s footprint would allow it to concentrate its limited resources more effectively.

        2. Consider privatization wherever possible. Utiliites, refuse pickup, street maintenance. No real reason that those can’t be handled just as competently by a private company. Heck, even consider fire and police services. That’s a little more “out there” (and scarily close to the Robocop scenario), but worth consideration.

        You mention that the government needs to also help provide a direction/plan for the city. You can’t tell me that over the last 40-50 years there have been no plans articulated for the future direction of Detroit. A couple of wonderful ideas that come readily to mind are the construction of the downtown People Mover, and now the latest spectacle, the M-1 streetcar project. Let’s see…projected to cost $500 million (with really means it’ll cost between $700 million and $1 billion) when completed. I wonder how many cops and firefighters and repaired street lights that would buy?

        No, I’m not sure Detroit needs any more direction/planning from its local government.

        And that brings me to my final idea. This is the hardest one to solve, but also the only one that will provide lasting change:

        3. A competent electorate. Why was Detroit mismanaged for the last 50 years? Because the voters allowed it to happen. No other reason. Sure, you can point the economy, crime, socioeconomic inequality. But the real reason is that the government has been inept. And the voters allowed it to happen. And it will happen again if the voters allow it to be so. Even if the county, state, and federal governments open up unlimited streams of cash. Never underestimate the ability of crooks to steal money faster than it comes in.

        So there you go. Aycaramba’s plan for rebuilding Detroit. A few details left to work out, but hey, that’s never stopped Detroit before.

        And bball, as I re-read this, I imagine it comes off a bit as me attacking your comment or Detroit as a whole. But actually, I’m a fan of the city. I see great potential, and I get really angry when I see it being wasted by incompetent government and incompetent citizens. I want nothing more than for Detroit to rise up and regain its footing. But there is much to fix, and I don’t honestly know if it can be done.

        • 0 avatar
          bball40dtw

          I agree with all of your points, in one way or another. I want a mayor of Detroit that backs people’s good ideas. He or she doesn’t have to lord over the city, but, for goodness sake, can someone support efforts to make the neighborhoods better? If someone is going to do something positive, lets give them the resources to do so. What that looks like, I’m not sure. An example is urban farming. Its not going to save the world, but let people grow stuff on city land that isn’t being used. It took one group almost two years to get approval from the city to do that very thing. It should be approved in days. We should throw a bunch of (low risk) stuff at the wall and see what sticks.

          Edit: I don’t want it to sound like I want Detroit to become a centerally planned economy paradise. I just want someone running the darn city that has some sense.

          • 0 avatar
            aycaramba

            Now all you need are a several hundred thousand more people with the same attitude and Detroit will be on its way to a new beginning!

          • 0 avatar
            bball40dtw

            My friend that lives in Indian Village, a very nice historic neighborhood on Detroit’s eastside, had his home broken into while his wife was home with their kids. I love Detroit and know that can happen anywhere, but I’m not ready to move into the city with a family.

  • avatar
    Onus

    Guy sounds like he go the property for a steal. Doesn’t really matter what he does at this point.

    • 0 avatar
      Toad

      He got the land for $10k per acre and it came with a free building. If he decides to tear the structure down the scrap steel from demolition may be worth what he paid for the place.

      For that price I’m surprised Matty Moroun didn’t pick it up.

    • 0 avatar
      bball40dtw

      He overpaid. There is plenty of open land on the other side of 94 and else where on the East side. The Packard Plant is not a profitable scrapping endeavor. Estimates to tear it down are around $10 million. Thats conservative. There could also be $1-10 million in enviromental cleanup costs on that site.

      It is a reinforced concrete structure. A more modern building would have much more steel to scrap in the structure. Rebar and concrete aren’t worth crap compared to I-beams. 90% of what’s left to be salvaged is concrete and 10% steel. Its a disaster.

      • 0 avatar
        redmondjp

        I agree; I’ve been following the story of this plant for years now.

        He’ll need an armed security force 24-7 to keep anything of value from disappearing. Single-family home landlords can’t even keep wiring and appliances in an empty Detroit rental overnight unless they sleep there with a gun and their mean dog.

        I really wish the guy well, but I don’t think he has the slightest concept of what he is getting into.

        There are homeless scrappers so desperate that they are excavating former industrial sites to sift through the soil in search of random pieces of metal and slag – there was an excellent video of them at one of the Detroit newspaper websites recently.

        • 0 avatar
          thelaine

          It ain’t just Detroit.

          http://www.theeastsiderla.com/2013/12/forget-about-copper-wiring-metal-thieves-steal-entire-historic-lamppost/

          The theft of the 1920s era lamppost was discovered by workers on Tuesday as they looked into why some of the lights on the bridge had gone out, according to an email alert from Leo Rey, an officer with the LAPD’s Northeast Division. The investigation revealed that not only had thieves cut open a high-voltage power system but also made off with the lamppost located about midway across the approximately 1,200-foot-long span at the top of a stairway.

          • 0 avatar
            bball40dtw

            I need to pitch a reality TV show called American Scrappers. I’ll ask the guy in the 1990 Toyota Previa that trys to steal my recyclables every week if I can follow him around with a video camera.

          • 0 avatar
            thelaine

            No doubt in my mind it would be a hit.

          • 0 avatar
            Japanese Buick

            Here’s one in Fayetteville, NC. http://www.wral.com/vandals-destroy-latest-plan-to-redevelop-fayetteville-hotel/13202890/

            Quote:

            Copper thieves destroyed the building’s plumbing, wiring and ventilation system, which would add more than $2 million to the renovation cost, he said. “What was perfectly feasible before the damage was done was not feasible after the damage was done,” he said.

        • 0 avatar
          bball40dtw

          Both DetNews and the Freep have excellent online content about the Packard Plant. The sad truth is the building has very little value, and the property has even less. It didn’t even have any value 50 years ago.

          My grandfather’s bar was about eight blocks away from Packard. He sold it about 15 years ago because he was sick of people killing his dogs, robbing him, and the neighborhood’s overall decline. Besides the elderly and those in group homes, the kind of people that would shoot a 65 year old bar owner are all that’s left in that neighborhood. Its like The Omega Man when the sun goes down.

        • 0 avatar
          thelaine

          Another reason why those mid-sized pickup trucks just don’t get the job done.

  • avatar
    schmitt trigger

    You know that you live on a hellhole when a third world country realtor finds a property attractively priced.

  • avatar
    dtremit

    I have a suspicion that this has something to do with the path to US permanent residency that can be had for investing $500,000 in economically depressed areas.

  • avatar
    50merc

    For years I’ve wanted to see the historic but decrepit Packard plant. My guess is there’s no need to rush to Detroit. Demolishing that thing will cost more than the vacant ground will be worth.

  • avatar
    juror58

    What’s he going to do with Allan Hill?

    http://www.nytimes.com/2013/02/07/garden/making-a-home-in-an-old-packard-plant.html?_r=0

    • 0 avatar
      rudiger

      Here’s the video:

      http://vimeo.com/39346092

      From the looks of things, Allan Hill may live in a part of the plant that was not purchased by Palazuelo. If he does, well, I guess he may have to move if the new owner is ever able to actually do something with the property.

      It’s quite interesting, particularly for anyone who wants to see the plant as it is today. I’d even go so far as to say the short video might be worthy of a separate article on TTAC.

  • avatar
    NN

    Detroit needs drastic solutions if it’s ever going to turn around. Like, for example, declaring it a special economic zone (similar to what was done to Shenzhen, China in 1980 when it was a swamp)and allowing immigrants access to extremely fast, efficient and inexpensive residency/citizenship, combined with right-to-work laws. Watch the world’s oppressed yet driven pour into the city, take advantage of cheap properties, and rebuild it from the ground up. The city is bankrupt and has very little to no viable options otherwise.


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