In a recent article I was curious how many of you really cared about what happens in North East. After attending the meeting at Granite Ridge with Ehrenfeld and Culmen International, it’s pretty clear quite a few of you do and that’s a great start, but caring, by itself, isn’t enough. Many of you care, but believe the decision to bring an influx facility to North East has already been made and nothing else can be done except to watch it happen. Maybe, maybe not. Jonathan Ehrenfeld clearly stated no decision has been made and whether or not you believe him, if you think it’s a “done deal,” you’ll walk away exactly when the North East community needs you and everyone else to come together with a better plan to confront the issue.
What’s the problem?
The former Saint Mary’s/Mercyhurst property, now Granite Ridge, is a focal point in our community, a beautiful campus with a long history and tradition. Whether you’re new to North East, a member of a multi-generational family or somewhere in between, you know it’s there and over many years it’s been an integral part of our identity as a community.
When Mercyhurst pulled out and put the property up for sale, everyone sat back, waiting for a savior to step in and buy it, bringing something wonderful to North East, respecting our community and traditions and making a positive impact in the process. What happened, instead, was Jonathan Ehrenfeld, a real estate investor who saw the property from a different perspective. He saw how beautiful is, that it hadn’t sold quickly and Mercyhurst seemed very motivated to unload it. It looked like there MUST be some easy money here especially when a potential purchase for so much less than the assessment made it almost impossible to pass up. Many of us assumed he had a deliberate and well formed plan, but I’m not sure he did. It may have been as simple as looking so appealing and cheap it just had to work somehow, no real effort would be necessary, just get control then rent it out and collect the money, but shortly thereafter, reality set in.
The low hanging fruit was obvious, rent out the dorms as apartments and after that, … nothing. To make it appealing to anyone else there would have to be an investment and Ehrenfeld seemed to prefer the idea of being an absentee landlord, lease out the space and let the tenant invest in any improvements as necessary. When no one stepped up and Bill Unger and a few others ran out of ideas, Ehrenfeld was faced with maintenance and repairs plus property taxes and only apartment rentals for income. Now what?
Evaluating his options
Not being a resident of North East, not knowing the history and traditions of our community, not looking at ideas that would have a positive impact here, Ehrenfeld instead began looking for any idea that might make money, regardless of community impact, that is, if he thought about community impact at all. And why would he? He’s an out of town real estate investor.
Exactly how the stars aligned bringing Ehrenfeld in contact with Culmen International, whether it was as described in the Granite Ridge meeting that Culmen was looking for potential locations for an influx facility and stumbled across the Mercyhurst sale listing after it had already sold, or whether there was something else involved, is neither clear nor important. The simple fact is Culmen saw a location that met their needs and Ehrenfeld saw, in one fell swoop, a campus-wide answer to his money problems. Culmen certainly has no connection to North East or concerns about effects it would have here and Jonathan Ehrenfeld, who may, at some level care, at a higher level is more concerned about return on his investment and covering his costs. Government contracts for things like influx care facilities are big dollars for everyone involved, so the result is Ehrenfeld and Culmen win, North East loses, … big.
Big problems need big solutions
The problem this presents to North East is huge, an expansive facility encircled by a high, opaque, security fence and serving as a juvenile detention center in our downtown is a property value, tourism and small business killer. It threatens the very survival of our community.
Three ways this issue is resolved
The first potential resolution is this point reported on GoErie:
…the federal government could immediately strike Granite Ridge from consideration if it requires as part of its forthcoming request-for-proposal that influx care facilities be located within 250 miles of the southern border. Berkon said this provision was included in a draft RFP. The final RFP is expected to be released in June. Awards could be made in September.
This falls into the cross your fingers and hope category. If that requirement is present we’re clear, at least in the short term, but it could change at any time and the threat returns.
The next potential resolution is Jonathan Ehrenfeld himself. He considers the reactions and concerns from the community and takes into account what the consequences would be for North East and decides to remove Granite Ridge from consideration. He may think about what effect it would have on his reputation from going ahead in the face of strong community resistance. His determination to do it anyway, overriding and disregarding our concerns would likely have a chilling effect on his ability to do business elsewhere when during any community’s due diligence they found out what kind of actions he is willing to take. What he does and how he does it will definitely be widely reported.
Ehrenfeld has a dilemma. He already has a tarnished reputation in North East by proposing this immigrant facility and if he doesn’t do it, his money problems remain. Since many will be reluctant to do business with him even if he doesn’t go ahead, he has no easy way out.
It’s hard to believe Ehrenfeld really wants to be known as a community destroyer instead of someone who brings true economic benefits as a result of his efforts. To justify long term destruction in our community by citing the need for short term economic benefits for his business is something that’s hard to balance on any scale. I have to think he’s a better man than one who would do that.
Nevertheless, this, too, is a cross your fingers and hope resolution.
Buy it back
The third resolution is one where we take action. We buy Granite Ridge back from Ehrenfeld. Yeah, right. Who’s we? That’s just crazy, … but is it?
Think about it. To begin, this solves Ehrenfeld’s money issues. He can’t figure out how to make money with the property, so by selling it, those issues go away in one transaction. No maintenance or repairs, no property taxes to pay, no community up in arms, he walks away and looks for other opportunities. It even shores up his reputation as someone who respects the community. It’s a big win for him.
For North East, the problem is solved on a permanent basis, no more hoping for the perfect buyer who loves and cares for North East. Who fits that description better than those of us who already live here? Any time that property comes up for sale, the potential buyer could be someone else who is looking for a quick profit without concern for North East. Let’s take care of that right now.
Buying the property as a single parcel brings it entirely back under our control, however, it could be subdivided afterwards and sold to buyers who could then develop a much smaller piece. This isn’t quick and easy to do because some of the infrastructure on the property would need to be split for that to work, not impossible, but work that needs to be done.
Some uses for sections of the property could be determined up front and the necessary investment and improvements put in place, like the school to apartment conversion done near Pittsburgh. Those apartments could even be leased before the work was finished, guaranteeing an income to justify the investment.
The kind of work necessary to do much of the reconstruction and remodeling would be skilled labor and much of it could done by local contractors plus continuing maintenance work would also provide jobs for local individuals.
The property would likely remain a money loser for a while as all of the pieces were repurposed, but as each one came online the property would then become cash flow positive.
It would not be surprising if volunteers could be found to help organize some of the work necessary to make this buy back happen and to keep this property in the hands of people who want to see it developed for the benefit of the entire North East community.
But wait, who is going to buy it?
North East is fortunate to have many individuals who would like to take part in an investment like this through some sort of REIT (Real Estate Investment Trust), but there are also some individuals who could play a very large part in that investment. Anyone who has been sitting back somewhat unconcerned should, at this point, realize the magnitude of the threat North East faces with a destruction of property values, tourism and small businesses. If anyone is looking for a legacy of contribution, this is the perfect place. Foundations that make investments and then operate from the proceeds can look at this as the investment with proceeds to come as the individual parts come online.
This idea needs to be developed more fully, but it is definitely doable.
Another buyer may be out there already, not a good one
Also, keep in mind that Culmen International was looking to buy the property when they saw the listing after it had already been sold. They could step in and solve Ehrenfeld’s problems, too. That would seal our fate. If they buy, they likely won’t sell. If the North East community is going to act, is has to be soon.
If anyone has any ideas of who might want to be a part of this, or further ideas about how to proceed, please let me know with a comment or contact me directly. Any thoughts through the contact form will be strictly confidential.
So, what does everyone think?