Peru-based developer Fernando Palazuelo is more than $90,000 delinquent on property taxes and late fees on the sprawling, abandoned Packard Plant that he purchased six months ago at a tax-foreclosure auction, placing him at risk of losing the enormous site under a property agreement with Wayne County.
Palazuelo paid $405,000 for the 35-acre site in December after two higher bidders failed to make good on their purchase prices, but he hasn’t paid for property taxes or made improvements on the property – two conditions of the property deed.
But Palazuelo told Motor City Muckraker that he has no intentions of halting a plan to convert the historic auto plant into residential, commercial, recreational and art space over the next decade. In fact, Palazuelo recently hired a contractor, architect and project manager and plans to soon erect new signs at the plant.
Palazuelo declined to discuss the tax issues until later today or Thursday when his Detroit-based attorney returns from Europe. But his project manager, Kari Smith, said Palazuelo intends to pay every penny he owes but must first clear up some errors in property records that indicate he owes more than he does.
In September, Palazuelo said he also plans to hold a Detroit Symphony Orchestra concert at the plant in September.
“We will start to bring workers into the plant next week,” Palazuelo said Tuesday. “We have been working with our contractors and engineers for the last 10 days. We are already negotiating with tier 1 auto suppliers to move in before the end of the year.”
But whether Palazuelo will retain the plant will be decided by County Treasurer Raymond Wojtowicz, who could not be reached for comment Tuesday.
When Palazuelo bought the plant, he signed a “reverter clause” that allows the county to reclaim the 42 parcels if he falls behind on taxes, fails to secure the property or doesn’t make progress on development or demolition.
County officials expressed concerns about Palazuelo’s ability to finance the $350 million project, which requires a lot of yet-to-be-determined partners and future tenants.
The Packard Plant, which became a proud symbol of Detroit’s industrial rise in the early 1900s when it began churning out luxury automobiles and decent wages for thousands of workers, has become one of the largest abandoned auto plants in the world, slipping into a lawless wasteland.
Just days after Palazuelo purchased the plant, the body of a strangled 21-year-old was found inside the cavernous ruins. For years, metal scavengers have been tearing down entire buildings. Photographers and urban explorers have been robbed, car-jacked and assaulted.
Under the property agreement, Palazuelo must secure the blocks-long complex on the east side. So far, he has hired a single 24-hour security unit that has managed to eliminate scrappers but is having a hard time stopping some trespassers and arsonists. A suspicious fire smoldered for two days last week because the building is too dangerous for firefighters to enter.
To combat trespassing, security recently began having cars towed from the property.
The previous owner told the city to “kiss my ass” over the unpaid taxes because of a long, ugly feud with Detroit officials.
Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.