A myriad of problems, including financial struggles, city fire code violations and a lack of pre-planning, brought the curtain down on the City of Morrow's troubled "Olde Towne Morrow" commercial development, city officials said on Friday.
A "State of the Morrow Downtown Development Authority" PowerPoint presentation from December 2010 shows millions of taxpayers' dollars were spent to build "Olde Towne Morrow," but it also shows revenues totaled less than $10,000 over a 13-month period of operation.
The development is a mixture of new commercial structures and old homes that were brought to the city, from across the state, to Morrow in 2007 and 2008. The homes were renovated to serve as shops and restaurants.
The presentation, whose existence was brought to the Clayton News Daily's attention this week, also includes six pages of problems with the development of "Olde Towne Morrow." Those issues range from a lack of studies and analyses of the local market demand, and the feasibility of the development, to sprinkler systems that do not comply with the city's fire code.
City officials said they shut down "Olde Towne Morrow" this past December, so they could try to figure out a way to turn it into a success.
"I would say it has not accomplished what was sought," said Morrow Mayor Jim Millirons.
Although officials would not officially point fingers of blame at anyone for the way "Olde Towne Morrow" has turned out, Millirons said City Councilman John Lampl had overseen the development of the project. Lampl was Morrow's city manager while it was built, and was then the city's economic development director in late 2009, and early 2010, before he was elected to the Morrow City Council.
Repeated attempts to reach Lampl for comment on Friday were unsuccessful.
One of the biggest problems detailed in the "State of the Morrow Downtown Development Authority" PowerPoint presentation is the wide gulf that exists between the cost to build and operate "Olde Towne Morrow," and the amount of revenue it has generated for the city.
The presentation shows that Morrow spent $12.38 million to build the development, while the city's economic development department spent another $637,934 to operate the property between the time it opened and the date of the presentation. The total amount of revenue "Olde Towne Morrow" brought in over a 13-month period was just $9,921, according to the presentation.
City officials said a major flaw in the establishment of "Olde Towne Morrow" was the lack of market and feasibility studies done before it was built, and the lack of a business plan. Morrow's current Planning and Economic Development Director Michael McLaughlin said the need for such plans and studies is a basic rule in real estate development.
"This is someone's vision, and vision is great, but only if it is based on solid data generated a market analysis," he said. McLaughlin said tenants in "Olde Towne Morrow" also had not been required to sign leasing agreements, or to pay rent on a regular basis, before he was hired last year.
McLaughlin also said the city did not have soil tests done on the property where "Olde Towne Morrow" was built, before construction began. He said such tests are required lending institutions, such as banks, when they lend someone money to build a building, but they are not required when the city uses taxpayers' money instead.
Still, he said, having soil testing done, even when construction is paid for with taxpayers' dollars, is "very standard operating procedure" to minimize the liability of the property owner. "That is your first order of business," he said. "That's been the standard operating procedure for decades."
McLaughlin said construction materials have been found buried in the soil. He said the main threat posed deteriorating construction materials would be shifting soil that causes buildings to sink and foundations to crack.
The final straw that finally led to "Olde Towne's" closing, however, was the fact that none of the buildings had the sprinkler system Morrow's fire code requires for commercial buildings, according to McLaughlin.
He said every structure at the development, including those that were built from scratch, had a system that used the plastic Polyvinyl chloride (PVC) pipes allowed for residential structures, rather than the cast iron pipes city code requires for commercial structures. McLaughlin said it could cost anywhere between $40,000 and $80,000, per house and storefront, to have the correct sprinkler system installed.
McLaughlin pointed out that Lampl was in a position to know what Morrow's commercial fire code mandated for "Olde Towne Morrow," because he was the city manager when the code was adopted in 2007. The city's economic development director said it was "just unfathomable" that the city's fire code was not followed.
"We knew what the code states, and we knew what kind of sprinkler system we required, and we didn't install what we require all other businesses to install," McLaughlin said.
Morrow's current city manager, Jeff Eady, said an internal report from high-ranking officials in the city's fire department shows department officials did not support the installation of the PVC sprinkler system. "The fire department was vehemently opposed to that sprinkler system, and voiced their concerns," Eady said. "But, they are employees of the city, and they had to do as they were told."
The way "Olde Towne Morrow" was developed the city may have caught state, and local attention, according to city officials. Millirons said state, and local investigators are looking into the commercial development. Georgia Bureau of Investigation Spokesman John Bankhead deferred comment about the issue to Clayton County District Attorney Tracy Graham Lawson, who, in turn, declined to comment.
For now, Morrow officials have to figure out what to do with "Olde Towne Morrow," and they add that the issue cannot be solved until a market analysis and a feasibility study, currently underway, have been completed. Then, they said, they can move forward, and shape it into whatever their studies tell them it should be.
"It's a management nightmare," Eady said. "It's challenging, and you deal with it every single day. It's not every other day, or every third day. Every single day, there's issues to deal with that pertain to Olde Towne Morrow."
When Eady was later asked if the development had been a wise investment the city, he replied: "If I had been in the position I'm in now, back then, I would have spent it [the money spent to build "Olde Towne Morrow"] on something else." He pointed out, however, that "hindsight is 20/20."
City officials are optimistic that "Old Towne Morrow" can be salvaged and turned into something that is profitable. McLaughlin said there have been several other cities in the U.S. that have faced worse development problems.
"Every problem has a solution, and the good thing about real estate development is that every problem you can possibly imagine has already occurred somewhere else, so there are plenty of solutions to choose from," he said. "We just need to find the solution that works for us."