Oil discovered at Water Street (UPDATE1)
(April 1, 2007) City officials will neither confirm nor deny the rumors. However, the results from Brownfield and other environmental tests leaked to YpsiNews.com indicate that substantial oil reserves have been discovered at the Water Street site.
After an exhaustive 6-month investigation and poring over thousands of documents, test results, consultant reports, and interviews with officials inside and outside Ypsilanti City Hall, YpsiNews.com has learned that substantial oil reserves have been discovered on the Water Street property. The 38-acre Brownfield site has been the subject of numerous public meetings because of the substantial pollution and underground contamination.
The discovery of commercially viable oil reserves on the Water Street property bodes well for the beleaguered project that has been struggling under ever increasing debt and no prospects for development. The city has been trying to convince residents that nothing was wrong with their original redevelopment plan to build over 800 condos despite the fact that the architects of the Water Street project had no experience building a housing development project of this scale.
City officials had their first hint of possible oil reserves in the summer of 2003 while digging exploratory environmental monitoring wells. These wells were paid for through an EPA grant to help the city identify and map the levels of contamination throughout the Water Street site. At first, the results were just thought to be signs of greater and greater contamination at the site. Despite repeated advice to stop digging, the city kept drilling.
Drilling continued through 2004 and the data was unmistakable, they had struck oil. This is not the first time oil has been found in Washtenaw County. For an interactive map of oil and gas wells in Michigan, visit the MDEQ website. However, this is likely the first time an oil reserve was man made.
It was difficult to keep the results from the developer or the community. To hide the continued work, City officials left buildings standing on the property to hide drilling and other equipment. When equipment needed to be located outside, city officials would tell citizens the developer was taking more samples.
However, the city needed to get rid of the developer hired in 2001 to build the condos. Despite delaying the project with endless meetings and more legal red tape, the developer, Biltless Developers of Troy, would not give up and go away.
Frustrated, the City simply fired the developer in December, 2004, claiming that they didn’t have the experience to develop the property. The city was technically correct; Biltless Developers had never drilled for oil.
However, not knowing about the discovery of oil, citizens continued to press for a new developer. City officials were stunned when the former mayor, who was not in on the secret, brought in a new developer on her own. Especially frightening was the fact that the second developer, Greed and Associates from Chicago, actually had the financial muscle to build 800-plus condos on site.
City officials needed to get rid of Greed and Associates, and quickly. Having fired the first developer, City officials felt that firing a second developer would draw too much attention, especially from state legislators already fuming at EMU over the President’s House debacle. The city was also cognizant of the ever increasing drumbeats from the public clamoring for progress.
Assistant City Manager Bob Blunder hatched a plan called operation “Hail Cherri”. City officials again launched into their stall with Greed and Associates with endless public meetings and town hall visioning sessions in the hope the developer would conclude that Water Street was hopeless and pull out.
But this time, the City upped the ante by pressing the “impending financial doom for the city” button. Despite having budget surpluses and an increasing rainy day fund, the City released a “financial solvency plan” that showed the city would be bankrupt in five years. The City even went so far as to schedule a Town Hall meeting about a City Income Tax and held a public hearing to put an Income Tax on the ballot. All of this was done to convince any developer looking at Water Street to give up.
The city later canceled the Town Hall meeting and tabled the vote on a City Income Tax. Yet the plan was working. When the City made a public effort to solicit new developers in the summer of 2005, not one bid was received.
Besides wanting to blow off of the newest developer, the city had to get rid of all the planners working on the project. The former planners knew nothing about the test results which showed oil and had no experience reading geologic maps.
The City needed to bring in new experts who had experience in working with oil and gas companies and civil engineers rather than historic preservationists and condo builders. So the city convinced the planners that leaving now would be best for their careers.
The city also needed to move oversight from the local Historic District Commission to the state. Local preservationist would have fought the city at every turn if they knew the plan was to drill for oil. So working with the state, local city officials convinced the local Historic District Commission to cede control of Water Street to the State Historic Preservation Office (SHPO).
However, many in the city didn’t understand that SHPO, in conjunction with the State Department of Environmental Quality (DEQ), overseas all oil permits in the state.
To make matters worse, the city planners, who were unaware of the oil, succeeded in getting a $350,000 state grant for Water Street. Frustrated city officials, still trying to move forward with the well drilling, now needed to deal with the grant. The City wasn’t about to give back the grant ─ it was taxpayer money, after all ─ and city officials were worried that returning the funds would anger local residents and make it appear that the City was giving up on Water Street.
Thanks to some fast work by City officials, a scheme was created by which the money would be diverted to an elevator construction project for the Riverside Arts Center (RAC). With the money safely tucked away at the RAC, City officials let loose their final plan.
Knowing there were continued leaks to the press from the planning department, consultants, and the builder, City officials transferred much of the work to outside legal firm Canner Millfield.
While the plan was risky, Canner Millfield was confident; after all they were billing $350 an hour. The state now controlled all permitting for the site. City officials had bypassed local plan review by City Planner XVIII Ethan Nought, the only city planner that didn’t quit.
In the final move, when Greed and Associates pulled out in December 2006 citing economic conditions, the city and Canner Millfield were also able to convince Greed to sign away any rights to the project. To reward his good work, Blunder got a job as Fronddale’s new city manager at an annual salary of $100,000.
City officials had been chastised by local critics, including former mayoral candidate Steve Pierce, for taking over four years and paying millions of dollars to purchase the property at above market prices.
YpsiNews.com has learned that much of the delay was due to the City’s insistence that mineral rights be included in all sales agreements. Learning of the discovery of oil, Pierce admitted he was impressed with the plan hatched by City officials. “The city took a heck of risk with public money purchasing both the pollution and mineral rights. But it looks like their gambit will pay off.”
Pierce, born in West Texas, spent years in oil patch communities and studied Geology in college. While he was pleased to see Water Street finally moving forward, he said the community may not be ready for the next phase of the project: drilling.
Drilling rigs are expected to arrive on site in early May and City officials say that for the first three years drilling will be a 24-hour operation. Pierce sees downtown booming with new restaurants, bars, and other adult establishments open 24 hours a day to cater to the workers at the Water Street Oil Company. Ann Arbor may have Google, but we have oil.
City officials dismissed any concerns over noise and smells, saying any inconvenience would be minor. Pierce, whose grandparents owned oil property in Lubbock, calls the smell of oil “money”. He said it will be like living with a sewage disposal plant on one side of you and a major airport on the other and having David Kircher for a landlord. Ypsilanti will be forever changed.
Pierce said he can stop complaining about Water Street and City Hall. “We no longer have a Water Street problem. The city played this beautifully. They don’t need me hounding them any more. The city has proven they knew all along what they were doing. I am very impressed.” Pierce says he won’t be coming to any future city council meetings. Instead he is going to spend more time playing with his dogs.
While Water Street has so far cost the city some $40 million, considering the 100’s of millions of dollars in now-expected oil revenues for the foreseeable future, no one at City Hall seems concerned that it is now impossible to build homes amidst producing oil wells.
City officials would not go on record. However, newly hired Planning Director Bambi Heart was seen at Hobbes restaurant downtown celebrating with officials from UP Petroleum. Also at Hobbes was current mayor Pauli Schwaibler, former mayor Gardener, and former Planning and DDA director Prim Broulet.
Gardener said, “Water Street Oil solves the City’s fiscal problems just like I said it would for the past 11 years.” Turns out she was right.
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