NLR aldermen vote to purchase railroad property

North Little Rock aldermen approved on Monday buying property containing a railroad spur in the middle of the city's downtown with the intent to market the surrounding city-owned property for private development.

The City Council voted 7-1 for the $425,000 purchase of the spur from Union Pacific Railroad. Alderman Bruce Foutch voted no.

The railroad spur right of way takes up a narrow, almost 1-acre strip of property that is the former site of a feed mill. The spur runs through a site between Main and Magnolia streets to its west and east and Bishop Lindsey Avenue and East Fourth Street to its north and south.

The city owns the northern portion of the area that the spur cuts through. The Mill LLC, headed by Harold Tenenbaum, owns the remainder.

Mayor Joe Smith said last week that the entire property would have a better chance of enticing developers to build a mix of offices and residences if the spur were not there. The city would be able to recoup its cost to buy the Union Pacific property by selling its northern half for development, Smith said.

The city would place its entire property on the market immediately upon closing on the purchase, Smith said.

"This is a little strip of land that divides our property in half," Smith told the City Council. "We'll have one big piece of property to sell [for development]."

The Mill LLC intends to buy from the city the part of the spur that crosses Tenenbaum's property, John Gaudin, the investment group's manager, said last week. The approved legislation states that the city's purchase is at $10.27 per square foot, and the small part of the spur property would then be sold "in good faith" at $10.50 per square foot. The size of that portion wasn't included in the legislation.

Foutch said his concern was to "not get rid of the premium portion of the property" if it's to be sold to Tenenbaum's group at a higher price per square foot. Smith told aldermen that he wasn't aware that the city would be making any profit on the resale of that portion of the land.

"That portion being sold is a more valuable part of the property," City Attorney Jason Carter said.

Danny Bradley, the mayor's chief of staff, told the City Council that all of the Union Pacific property is bounded by the portion owned by the city and the portion owned by Tenenbaum's group. Having the railroad spur "makes it almost impossible" to develop either property, Bradley said.

"Some of Mr. Tenenbaum's property is on both sides of the spur," Bradley said. "We want to sell the portion [to Tenenbaum] that splits the property that the city doesn't own."

The Mill LLC bought the former Prime Quality Feeds mill, 124 E. Fifth St., and nearby properties in 2008 for about $900,000. The feed mill was then demolished, and that property has remained vacant.

Metro on 01/26/2016

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