Operating Against the Law and Public Interest on Danaher Street

[XLFD]

Corruption in the City of Ludington can perhaps be best pointed out by looking at one seemingly innocuous block of Danaher Street.  In this block, a water tower was slated for painting in 2010, and was painted late in 2012, basically too late for a quality curing of the paint on the tower.  But the painting of this tower along with the painting of the other tower on Gaylord cost the citizens of Ludington (with no help from State or Federal funds) over $1.2 million and was done with no competitive bids at all, 10-20 years before painting needed to be considered. 

 

Just east of it is 808 East Danaher, an older building on property that for some reason theCity leaders want really badly, and doubled the taxes between 2009 and 2012, during a time when many had their property taxes decrease, including the house across the street whose property values almost were cut in half.  When the owners decided to vacate, the City pounced on a scheme to get the property for themselves without having to bid at auction by invoking their special power to do so-- as long as they are getting the property for a public purpose and state that.  They used this power, but never stated the public purpose for it, in fact they listed only a private purpose, thus going against the law clearly.

 

They made a deal with the adjacent neighbor, made clear in the memo our City Manager sent to the City Councilors, they voted to acquire it with this power without stating any public purpose, outlining a deal made with the neighboring property.  The deed was made out to the City even with these failings of legality, as is noted in state law MCL 211.78m.  This is what has been done, and is being looked at by our county prosecutor for its lawfulness.  Even though it clearly flies in the face of the intent of this legislation, I doubt whether he will have the courage to negate this shady deal. 

 

That shadiness is so much in evidence when you review the chain of E-mails between City Manager John Shay and the property owner of 802 E. Danaher Street, Joe Irelan.  The following were provided via responses to FOIA requests for communications between Joe and the City which included John Shay and City Assessor Carol Ann Foote.   These officials are likely too crooked to realize that making deals like this to avoid the property auction mandated by law for such properties is ethically and legally wrong. 

 

In early July, Joe proposes a deal so as to avoid having to go through the auction process to acquire the land legitimately, that is clear in his first E-mail.  City Manager John Shay should have said that was unethical, instead he proposes a deal that effectively flips half the land to Joe at a bargain price.  His next letter further qualifies this illicit scheme.  They meet in person on August 1, according to the E-mails, where they quibble over details of this secret deal over the next couple of days.

 

When the final price gets a little high after the bids come back for demolition in early September, Joe backs off a little and tries to make a new deal.  This is where the trail ends, and the current record reflects that Joe Irelan has not acquired this lot, even though he has moved his trailer and other effects onto that lot, and made some landscaping changes.

 

The following E-mails are chronological, red entries are John Shay's e-mails, green entries are Joe Irelan's, and italics are Assessor Carol Ann Foote's.  This is a fine example of how flagrant the City Manager is in side-stepping legal obstacles by ignoring them.

July 3, 2013

Mr. Shay

 

        My name is Joe Irelan and I live next door to the abandoned property at 808 E Danaher.  I have spoken with Gary Castonie and he informed me that he believes the city is interested in purchasing the property, or some of the property, which is scheduled to be auctioned off in August.  I am interested in the property as well, only the land if itself as I believe the house is worth nothing and should be knocked down, and my main concern is that the property isn’t purchased and turned into some sort of a row house or slum.  If the city is interested in the property and would be interested in working out some sort of deal with me to split the purchase price, and the land I would be interested in negotiating with them.  Please let me know.

 

Thanks

 

Joe Irelan

 

 

July 3, 2013 (later)

 

Dear Mr. Irelan: 

Thank you for your e-mail.  The City of Ludington is interested in purchasing this property and is open to splitting the cost of the purchase price and the demolition costs with you.  The total amount of back taxes as of today is $8,911.94.  This amount could change if Mason County has to have the grass cut again.  The City will soon be seeking bids to demolish the house.  Previous demolitions of similar houses cost about $8,000.  Using this example, the total acquisition/demolition cost would be $16,911.94, of which the City and you would each be responsible for $8,455.97.  The house currently sits on two lots, so the City would then convey to you the lot (60’ x 140’) closest to your house, and the City would keep the lot (60’ x 140’) closest to the water tower.  The actual figures may vary based on the actual demolition costs. 

All of this is contingent upon the Ludington City Council approving the purchase of this property.  I plan to seek the City Council’s approval at its meeting on Monday, July 22.  Please let me know if you are interested in proceeding in the manner I described above.  Thanks. 

John Shay

City Manager

July 5, 2013

Mr. Shay

    

           We are definitely interested in working something out.  There is a garage on the property as well, that would be on my lot if we were to split it.  Is the demolition of that building included in the bids?  If not should I contact someone to get bids for it's demolition, so we can split that cost as well?  I also wondered if we have to wait for the date of the auction to do this or if the city can purchase the property at anytime.  If I have to get some financing, I'll need a date to shoot for. 

Thank you

 

Joe Irelan

July 8, 2013  (CC:  Carol Ann Foote)

 

Mr. Irelan: 

The demolition bids would include both the house and the garage.  The cost of this would be split between the City and you.  Assuming that the Ludington City Council approves the purchase of the property, the City would purchase it by the end of July, which is prior to the public auction on August 7.  Once the City purchases the two lots, the City would then seek bids to demolish the house and garage. 

I hope this information is helpful.  Please contact me if you have any questions.

 

John Shay

City Manager

July 20, 2013 4:54 PM

Dear Mr. Shay

 

        I just wanted to touch base to let you know that we are still very interested in splitting the property at 808 E Danaher with the city, and that finances are ready at any time.  Also, at the risk of getting ahead of myself, I've done a little poking around outside the garage building, and I am thinking we may want to try to save it.  Please let me know if there is anything we can do on our end to help during this process. 

Thanks again, 

 

Joe Irelan

July 24, 2013  (CC:  Carol Ann Foote, Jackie Steckel)

 

Dear Mr. Irelan:

 

At its meeting on July 22, 2013, the Ludington City Council approved purchasing the two lots at 808 East Danaher Street.  The City will be seeking bids to demolish both the house and the garage.  If you wish to keep the existing garage, you must do two things: 

1. The City’s records list your garage as 624 square feet (SF) and the garage at 808 East Danaher as 784 SF for a total of 1,408 SF.  Since the combination of the two garages exceeds 1,200 SF, the City’s Zoning Ordinance requires you to obtain approval from the Planning Commission for a Special Land Use to have a garage or combination of garages exceeding 1,200 square feet.  The application fee is $200.  A public hearing is then scheduled after notifying all property owners within 300 feet of your request.  Following the public hearing, the Planning Commission would then act on your request.
2. You would have to combine your existing parcel with the parcel upon which the garage at 808 East Danaher is located.  There is a $50 fee associated with this request. 

Please let me know how you want to proceed, as the City would like to solicit demolish bids soon.  As I mentioned before, the City would expect you to pay for half of the acquisition and demolition costs in order to acquire the lot closest to your house.  If you would like, we can also meet at City Hall to discuss this in more detail.  Please contact my assistant, Jackie Steckel, to schedule a meeting.  Thanks. 

Please contact me if you have any questions.

 

John Shay

City Manager

July 25, 2013

Dear Mr. Shay

     Thank you for your email.  We would like to proceed in the manner you have described, although I do have a couple of small requests.  I have left a message with your assistant, and look forward to hearing back in order to schedule that meeting.  

Thanks again

 

Joe Irelan

 

 

Aug. 1, 2013 

Hi, Joe:

 It was a pleasure to meet with you today to discuss the purchase of the property at 808 East Danaher Street.  As we discussed, the City will seek bids, which contain separate costs to demolish both the house and the garage.  Once we receive the bids, you will need to send a check to the City of Ludington for 50% of the total cost to acquire the property and to demolish both the house and garage. 

You have submitted an application to apply for Special Land Use approval to keep the garage.  If the Planning Commission approves your request, the City will refund you an amount equal to 50% of the demolition cost of the garage and proceed with demolishing only the house.  If the Planning Commission denies your request, then the City will proceed with the demolition of both the house and garage. 

The City will also begin the process of splitting the two-lot parcel at 808 East Danaher and then combining one of the lots with your parcel and one of the lots with the City’s parcel.  There is no cost to you for the City to complete this. 

I will be back in touch once the demolition bids are received.  Please contact me if you have any questions.

 

John Shay

City Manager

Aug. 1, 2013  (later) 

Mr. Shay

 

Thanks for the email.  I have looked at the numbers and it seems to me I should be reimbursed 100% of the cost of the demolition of the garage, in the case that the planning commission allows me to keep it.  My half of the cost of the demolition of the garage as well as the city's half, as offset for paying for half of the demolition of the house.  I may have been confused about our agreement when we spoke, but I think if you look at the figures you'll see that this is what we talked about.

 

Originally we discussed splitting the price of the property and the demolition of the house, and then taking half of the price of the bid for the demo of the garage off of my payment for the demolition of the house.  But since we are paying up front for the demolition of the garage, I should be reimbursed both the money I put towards that and the money the city put towards that.  Confusing!!  I think I have it straight though.  Let me know what you think. 

Thanks

 

Joe Irelan

Aug. 2, 2013  (CC:  Carol Ann Foote)

Hi, Joe:

 

Thanks for your e-mail.  Our overall agreement is that you and the City would each pay 50% of the cost to acquire the property and the cost to demolish the house and garage.  Perhaps if I provide an example using “fictitious” figures may help us both understand this. 

Cost to purchase house: $9,000

Cost to demolish house: $6,000

Cost to demolish garage: $2,000

Total Cost: $17,000 

In this example, upon receipt of the demolition bids, you would pay the City $8,500, which is 50% of the total cost to acquire and demolish the house and garage. 

If the Planning Commission approves your request to keep the garage, then the total cost to acquire and demolish the house is $15,000 ($9,000 to acquire house + $6,000 to demolish house).  Your 50% share would then be $7,500.  Since you would have already paid the City $8,500, the City would issue a refund to you in the amount of $1,000. 

Please keep in mind that you would be paying upfront for half of the cost of demolishing the garage.  You are not paying upfront for all of the cost to demolish the garage.  I hope this information helps.  Please contact me if you have any questions.

 

John Shay

City Manager

 

Aug. 2, 2013 (later):

Hello John 

 

My request yesterday was that the amount of money the city would save by not having to pay for half of the demolition cost of the garage be taken off my cost of the purchase price and demolition cost of the house.  Using your number examples that would mean that the 1000 dollars that the city would save by not demolishing the garage would come off of my $7500.00 contribution to the purchase price and demolition cost of the house.  That would mean my contribution would $6500.00 instead of $7500.00.  If I were to pay up front $8500.00 that would entitle me to a refund of $2000.00 or the entire cost of the demolition of the garage, in the case that the planning commission approves that. 

In your example, the only money I would be getting back would be the money I spent to demolish a garage that is not being demolished. 

Thanks

 

Joe Irelan

Aug. 2, 2013  (later)

Joe:

 

I now understand what you are requesting.  I recall from our previous communications that the idea was to split all costs evenly.  If the Planning Commission allows the garage to remain, isn’t the fairest idea is for both the City and you to receive 50% of the savings from not having to demolish the garage?  After all, both the City and you would be receiving the same amount of property.  In reviewing your proposal, I am sure that the City Council would question why the City would pay more than 50% of all costs in order to keep a garage that you (and not the City) want. 

I hope you understand the City’s position.  Please contact me if you have any questions.

 

John Shay

City Manager

Aug 2, 2013 (later)

John

Fair enough.  I thought we had agreed to something else when I left city hall the other day.  My thinking was that if I paid for half of the demolition of the house, and saved the city some money by not demolishing the garage, I might be entitled to a discount on the house demolition, considering it's not my house.  Either way we can move forward as you wish. 

 

Joe 

Aug. 2, 2013 (later)

Thanks, Joe.  We will be in touch with you once we open the demolition bids on August 21 at 2:00 p.m.

 

John Shay

City Manager

 

Aug. 14, 2013  (CC: John Shay) [Attached .pdf file unavailable]

Dear Mr. Irelan, 

Per your request, I have attached a confirmation of the parcel combination. 

Please let me know if you need anything else.

 

Carol Foote

Aug 23, 2013

Dear Mr. Shay

 

I just wanted to touch base about the property next door.  I think you said the bids would be opened on the 21st, and I just wanted to know if we have come up with a number yet. 

Thanks

 

Joe Irelan

Aug 23, 2013 (later)  (CC:  Carol Ann Foote)

Hi, Joe:

 

The City received the following bids for the demolition of the house and garage at 808 East Danaher Street: 

Smalley Construction: House = $9,250.00; Garage = $2,000.00; Total = $11,250.00

Precision Grading: House = $10,448.00; Garage = $3,000.00; Total = $13,448.00

After Hours Excavating = $12,774.00; Garage = $1,689.00; Total = $14,463.00 

The lowest bidder, Smalley Construction, informed the City that its bid did not include the following costs: 

DTE Energy’s charge to cap off old gas main = $720.00

Cost to inspect house for presence of asbestos = $1,000.00

Cost to remove any asbestos = To Be Determined after inspection 

Thus, Smalley’s total bid is $12,970.00 plus the cost of removing any asbestos, if any.  Thus, your 50% share of the cost (assuming that there is no additional cost to remove asbestos) would be $6,485.00.  As we previously discussed, the City will refund you 50% of the cost to demolish the garage if the Planning Commission grants your Special Land Use request to keep the garage. 

Please issue a check payable to the City of Ludington in the amount of $6,485.00, and the City will make arrangements to proceed with the demolition of the house and possibly the garage following the Planning Commission meeting on September 3. 

Please contact me if you have any questions.

 

John Shay

City Manager

Aug 23, 2013 (later) 

Hi John,

 

Those numbers are a far cry from the $8000.00 estimate we talked about.  To be honest I figured $10,000.00 to be a high bid and that was to take care of both buildings.  I would like to see the bids itemized if possible.  I will need to figure a way to get costs down in order to continue. 

Thanks

 

Joe Irelan

Aug 26, 2013  (CC:  John Shay)  [three attachments unavailable]

Mr. Irelan,

I have attached the three demolition bids.

Carol Ann Foote

 

 

Aug 26, 2013 (later)

Dear Mr. Shay

 

The bids didn't really answer my questions.  Last week one of the contractors who bid the job was at the property.  After I stopped him from breaking out any more windows in the garage I am trying to keep we started discussing the demolition. He made reference to "cutting the road to cap off the water and sewer services"  and I wondered why we would pay a contractor to do this and not just have the city do it.  The utilities are owned by the city I think.  Also, if I do send a check to the city for $6500.00 dollars what do I get.  The deed to the property?  A receipt?  I realize I am probably being a pain in your ass, but this is actually a lot of money to me, and I want to feel comfortable with spending it.  

Thanks

 

Joe Irelan

Aug 27, 2013  (CC:  Carol Ann Foote)

Hi, Joe:

 

You are not being a pain.  I understand your questions on this important issue. 

The City itself would cap off the water and sewer services in order to save money.  We are asking the low bidder, Smalley Construction, how much its bid would decrease if the City performs this work.  However, the City cannot cap off a gas service.  DTE Energy does this for about $720. 

The City is also seeking another proposal to perform the asbestos inspection to see if it would be less than the $1,000 proposed by the low bidder, Smalley Construction.  I will update you when the City receives that proposal. 

In exchange for your payment, you would receive a deed to the property that you would be receiving. 

I hope this information helps.  Please do not hesitate to contact me if you have further questions.

 

John Shay

City Manager

 

Sept. 3, 2013  (CC:  John Shay)

Good Morning,

 

This is just a reminder that the special land use request for the garage will go for public hearing tonight at 7:00 p.m. 

Have a good day,

Carol Ann Foote

 

Sept. 4, 2013  (CC:  Carol Ann Foote)

Hi, Joe:

 

As you are aware, at its meeting last night, the Planning Commission approved your Special Land Use request to keep the garage located at 808 East Danaher Street.  Based on this, the City will be accepting the low bid from Smalley Construction.  The total cost to acquire and demolish the house is as follows: 

Acquisition Cost:                                   $8,911.94

House Demolition:                                 $9,250.00

Asbestos Inspection:                             $1,000.00

Cut & cap gas service:                          $720.00

Deduction for water/sewer service:         ($500.00) 

Total:                                                    $19,381.94 

This total does not include any additional cost to collect, transport and dispose of any hazardous-type materials, such as asbestos. 

Please send a check payable to the City of Ludington in the amount of $9,690.97, which represents 50% of the above total.  I will let you know when we receive the actual costs to collect, transport and dispose of any hazardous materials.  Once all of the demolition work is completed and the City has received your payment of half of the costs, the City will then provide you with a deed to your half of the property at 808 East Danaher Street. 

Please contact me if you have any questions.

 

John Shay

City Manager

Sept. 4, 2013 (later)

Hello John

 

Thanks for your email and for your patience with me through this process.  I am not really comfortable with agreeing to pay an amount of money that I don't know, ie the hazardous waste removal charges.  And to be honest with you, I just flat don't have the money to step up and say I can do that.  The amount $9690.97 is beyond any estimate I had seen or had planned on spending.  At this point I am in for $200.00 with the planning commission and so I would be willing to tender that check for the $9690.97 to the city and for that I would expect to get the deed to the property I am purchasing.  At that point I would want my part in this venture to be finished.  I would not be responsible for any more charges for hazardous waste or any other charges.  If this is acceptable I can get the check to the city just as soon as I can get my hands on the deed 

Thanks again

 

Joe Irelan.

[Willy]

Another excellent article X. The prosecutor had better put a stop to this corrupt deal. Has anyone brought up the fact that the City would be loosing $50,000 in property taxes over the next 20 years if this dwelling is torn down? In my opinion this is criminal and the fact that the City Council is going along with this makes them partners in crime with Shay. Why hasn't  the LDN taken an interest in this situation, oh yeah I forgot, they represent the City.

[XLFD]

Let's not forget that Councilor Gary "Cazzy" Castonia was also a facilitator here as he was the original city agent that pointed Joe Irelan into this crooked scheme to defraud the taxpayers.  Joe Irelan sounded interested in bidding on the property when it came up, but learned that the City was going to get it with their special power to do so [for a public purpose, as per law] and so the gears were set in motion, but a public purpose never developed.

If the building went to auction, Joe would have likely bid on it and may have had to spend a bit more than he did to acquire the property, and even if he did take the house down, the extra taxes the City lost for land they have no public purpose for leaves me scratching my head.  Did Castonia and Irelan both fear that someone else would buy the property at auction and convert it into a "row house or slum"?  If so, I believe we see a germ of the City's intelligence in this matter-- Councilor Castonia wanted fewer neighbors.  But it's still nowhere near a public purpose.

[Willy]

I'm sure Joe will not add this lot to his existing property because he will have more flexibility in his options for the future if the lot stands alone. Most zoning codes do not allow a garage to be located on a lot without a dwelling because a garage is not considered a "principal" use of the property. So he may have to tear the garage down after all or build a dwelling on the lot.

[XLFD]

Willy, in John Shay's July 24 E-mail he said "You would have to combine your existing parcel with the parcel upon which the garage at 808 East Danaher is located."  So even though Joe notes later on that he sank only $200 into getting the special permit, he needs pay only $50 extra according to Shay. 

EyE, property taxes are mostly arbitrary, the citizenry are at the mercy of Carol Ann Foote and our shaky Board of Review, which is why Joe's property taxes leveled out between the same time the 808 E Danaher taxes doubled, and the person's property across the street almost halved itself.  In the almost-words of Pat Benatar, "Stop using tax as a weapon"

 Yeah, I know the above is from "Love is a Battlefield", but it's a better song and video.