Detroit News 1/30/2010, Pg A1
NEW BUFFALO: BOOM TO BUST
DEVELOPMENT CHANGES [DESTROYS] CHARACTER OF SMALL TOWN
BY FRANCIS X. DONNELLY | The Detroit News
This tiny beach town in the southwestern corner of Michigan is being squeezed by speculators of different stripes.
On the west, so many condos have sprouted along Lake Michigan that developers can’t fill them.
On the east, the new Four Winds Casino Resort draws 15,000 gamblers a day. The population of New Buffalo is 2,200.
The changes are bringing the type of development that residents had come here to escape.
“Ten years ago, I described it as the Hamptons of the Midwest,” said Mike Hosinski, a former furniture store owner who led a movement against construction of th e casino. “Now it’s the Atlantic City.”
The influx has raised tensions, espe cially between the blue-collar locals and well-heeled Chicagoans buying the con dos. The natives refer to their new neigh bors in a derogatory way that is not Friendly Illinois People.
Some locals celebrated the collapse of the housing market because it’s the only thing that has slowed the deluge.
But it also left the overdeveloped town with dozens of homes that have never been lived in and whose high prices pre vent the middle-class from moving in.
Nora Duffy, a real estate agent who is chairwoman of the Zoning Board of Ap peals, defended the city against criticism that, unlike neighboring communities, it failed to control development.
“Could we have gone slower? Yes,” she said. “But no one saw the (housing mar ket) bubble coming.”
When Native Americans began oper ating casinos in the 1970s, they referred to
(More online: Explore an interactive satellite map of New Buffalo at detnews.com/metro)
them as the "new buffalo" because of the promise of prosperity.
So it seems only fitting that eventually an Indian casino would come to a place called New Buffalo.
The town was named by a schooner captain from the Buffalo, N.Y., area who discovered it in 1834 when his ship ran aground just south of here.
The area became a popular summer getaway in the first half of the 20th century. After World War II, however, highways and airliners allowed people to vacation farther from home.
New Buffalo was forgotten, barely glimpsed as motorists sped by on Interstate 94. In the 1970s, its seedy bars and bait shops were popular only with Indiana kids, who liked Michigan's lower drinking age. The town is two miles from the state bor der.
One of those Indiana kids was Harry Pagels, who later became a steel mill worker for 30 years and now tends bar at New Buffalo's most popular watering hole, Casey's Bar and Grill.
"The town was nothing but bars when I was a kid," he said. "There were shacks along the water. Now it's million-dollar homes."
New Buffalo was rediscovered a decade ago. Chicagoans flush with money from the go-go economy of the '90s were looking for ways to spend it and the area's bountiful sand dunes offered some of the prettiest beaches along Lake Michigan.
More than 500 condos, houses and townhomes have been built since 2005, according to property tax records. The town had 1,426 housing units in 2000, according to the Census.
Homes that couldn't fit on the crowded land sit upon pilings on the water.
The average price of homes in the region jumped from $189,996 in 1999 to $481,688 in 2007 before falling to $354,308 last year, according to a review of figures by Re Max Harbor County, a real estate firm in nearby Union Pier.
Larger homes along the water sell for millions of dollars, including one last year for $4.9 million.
Who's to blame?
Exhibit A in the overdevelopment of New Buffalo lies smack dab in the middle of its two-blocklong downtown.
Village Square was a $71-million development that was going to revitalize the business district. Covering nearly a square block, its four buildings would hold 61 condos and assorted shops.
Seven years later, half a building sits on the dormant construction site. A plastic window cover flaps mockingly in the wind.
With taxes unpaid fo r three years, the property is headed toward foreclosure, said city officials. Developer Jimmy Gierczyk of Homewood, Ill., couldn't be reached for comment.
At Casey's, across the street from Village Square, a real estate broker and a newspaper owner argued last week over who was responsible for the eyesore.
"They left us high and dry," Mary Beth Moriarty, publisher of the New Buffalo Times, said about the developer. "They were pirates. They should be ashamed of themselves."
"Or should the city be ashamed for not having bonds when it gave building permits?" said the broker, Dan Coffey, referring to money a developer pays a municipality to guarantee a project's completion.
"I blame real estate agents for saying property would be worth three times more than it is now," Moriarty said.
Casino changes landscape
When the Four Winds Casino Resort opened one mile east of town in 2007, it was like an enclosed city had popped up overnight.
The resort has a 165-room hotel, four restaurants and a room of slot machines that is a footballfield- and-a-half long. Its square mile of land is nearly half the size of New Buffalo.
Other businesses in New Buffalo are losing customers and workers to the casino, whose 1,800 workers make it the third largest employer in Berrien County.
It's also attracting crime.
Calls for police, fire and ambulances in southwestern Berrien jumped 55 percent after the casino opened, from 6,716 incidents in 2005 to 10,393 in 2008, the last year figures are available, according to the county.
But Matt Harkness, general manager of Four Winds, pointed out the casino contributes 2 perc ent of its revenue from slot machines to local municipalities. The communities said they have received $5 million so far.
"I believe it has been a positive impact," Harkness said.
Like an invaded land, New Buffalo shows other signs of foreign occupancy.
Despite its small size, it has eight real estate agencies. Besides Duffy, the real estate agent who is chairwoman of the zoning appeals board, a real estate agent serves as secretary of the New Buffalo Township Planning Commission.
Amtrak brought Chicago even closer to New Buffalo in October by doubling the number of nonstop routes between the cities to four. The 71-mile route can be traversed in 50 minutes. A Detroit train stops there daily.
Beach entrance fees and hotel rates have risen. The summer weekend rate at Harbor Grand Hotel has jumped from $175 in 1998 to $319 this year.
Popular landmarks are disappearing.
The kitschy Jackson's Fruit Market, located at the intersection of the two major roads running into New Buffalo, lost its lease to a proposed office and retail development. But the financing dried up and the site has been vacant for two years.
Each summer tourists and Chicago residents converge on the tiny burg, bringing traffic to a standstill. A survey of residents and businesses by the city Business Improvement District last year cited the gridlock and lack of summer parking as major headaches.
To avoid the cars, some residents rarely venture from their homes until the visitors leave at the end of the season.
"The town was on its way to being one of the most successful lakefront communities," said Hosinski, the retired furniture store owner.
"But they didn't have a plan. People were building condos like crazy. It was a great idea that got sidetracked. They had an opportunity that they squandered."
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