The Wever of the Tale and the Sucker Who So Badly Wanted to Believe It

The City of Ludington has shown itself to be a terrible real estate agent over the years of City Manager John Shay's regime.  

Recall Lee Peter's Bicycle Circus Building at 420 South James:  the city took over the land, spent $50,000 demolishing the structure, additional for engineering, surveying, cleanup; they were informed the lot was worth $50,000, held it for a dozen years despite interest in it from business owners before John Shay and his rubber stamp council sold it for a tenth of that to his daughter's soccer coach for $5000. 

The unimproved lot in the business district brings in about $400 yearly in tax revenue these days, less than half of what it brought in back in the year 2000, the last year it was on the tax rolls.  If you were worried whether the soccer coach could handle the extra burden, consider that he is paying about a thousand dollars less in taxes on the adjoining property than it was paying the post-recession years (2009-2011), going a much different direction than other properties in the area, like their neighbor at 404 S James who have seen a $4000+ increase in taxes over that same period. 

At a residence at double-lotted 808 E Danaher, the city leadership somehow convinced the county that they would utilize the property for a public purpose in 2013 and took control over it via this special option for foreclosed properties.  In that case, John Shay mentioned that the acquisition of the property and the $20,000 price tag for demolishing the very livable house thereon would help in future water tower paintings (even though the house was a lot older than the water tower and wasn't a problem in any previous repainting or the installation, not being all that close and protected by trees also), the city council's resolution stated exactly no public purpose, just that they were to sell half of it immediately to the neighbor at much lower than market rate, at what was definitely not a public purpose.

Nearly five years later, there has been no public use of the property, though the neighbor has revamped the shed on the lot he got for a steal.  The City sunk $20,000 into undeveloping the property, got nearly half of that back from an unethical sale of the one lot, but has lost that amount by taking the lot off the tax rolls, losing over $2000 per year, since the property tax link to that property indicates that loss (not to mention the added maintenance costs):

With such a poor history of getting rid of acquired properties without losing a lot of cash in the process, and without hardly a shred of ethical conduct, one would hope John Shay would stay out of the land speculation business, but alas, one of his better bad deals has gotten back into the spotlight.  

Recall back in 2007 when the city manager worked behind the scenes to get the Ludington Fire Department (LFD) out of the downtown and sell the property the station was at for big bucks.  At that time, few knew what was being arranged with John Wilson of Western Land Services (WLS), but Shay had secured a fairly centralized four lot property at 428 E Dowland Street to purchase for $95,000 from Padnos Iron and Metal Company.  The city council on July 9, 2007 without discussion decided to purchase it, contingent on an environmental study to be conducted to determine whether a fire station could be built there.

The environmental study came back, determining that the land was unsuitable for just about any other purpose than for a fire station, which would conceivably cover almost all of the tainted soil with concrete, making contamination by contact impossible.  Despite some objections made, the sale became final without any other vote, since the study showed its feasibility.  

Some who were aware of the environmental problems with the lots wanted another site for any future fire station, despite the expenditure of the $100,000 plus to survey and purchase the Dowland property.  In 2008, the city manager made it clear that they were set to do a deal where they would pick up the Varsity Cleaners building and additional property on North Washington for a new fire station, and WLS would effectively pay for it contingent with their designs to purchase the old station and the bowling alley property for a new headquarters.  

Due to the 2008 economic downturn, and a downturn in the fortunes of WLS's speculative ventures in northern Michigan, this never developed.  Over the next seven years, the LFD would be content with their old station, until John Wilson and some high-rolling friends came back with another deal to construct a lot of low-income rental units downtown (at nearly $300,000 per unit) funded primarily through the generosity of the local and state taxpayers.  Former Councilor Brent Scott, who agreed to purchase  the Dowland property, sold his old lumber yard property on Tinkham in a complex deal that cost the city at least $102,500 for its part of the property. 

It's still not certain that the station will be built there anytime soon, as the costs continue to skyrocket for a station that was envisioned costing under a million back in 2008 to at least $2.3 million now.   But after that purchase, the city council did finally get rid of the Dowland property, for what was a substantial loss.

The $95,000 plus costs for closing, studies upkeep, taking the property off the tax rolls, etc. were recouped in part by what was to be a sale finalized this year for a grand total of $60,000.  This was agreed to at the council meeting of August 22, 2016, where Daryl Wever, an Itasca, Illinois foot doctor, who already owned a rental property across the street on Dowland, invested $30,000 into purchasing the south two lots of the property, and would purchase the other two lots by the end of April 2017 for the same price, by contingency.  

Of course, it is significant that the $100,000 plus the city put into the very contaminated vacant lot and studies had them lose over $40,000 in the transaction, it seems a bit unclear even at this point that the City ever notified the purchaser of the lot's contamination, which would require workers to wear personal protective equipment if they were to ever develop the property.  Shay never notified the people who denuded the lot of the serious contamination during the reconstruction of Dowland Street back in 2012 ; they spread soil from that lot throughout that street, including my front lawn.

Losing over $40,000 in a transaction is bad, but at least the City did it ethically and properly, right?  One would hope, but recent research shows that they just can't follow the rules/stipulations and just can't get what they should in compensation.  

On p. 81 of the 8-22-16 packet starts the terms of the deal with relevant parts being that Wever would buy the south two lots now, and the northern lots sometime before April 30, 2017 with two payments of $30,000.  There is no division of 428 E Dowland into two separate properties, rather the four parcels would remain combined by the one purchase agreement included in that packet (p. 89-92) nor was it ever intimated at the meeting there would be any split of the property.  As has been noted with the Spence Riggs scandal, the Ludington Planning Commission and city council needs to be involved in such changes.

This didn't happen.  It turns out that the actual purchase of the south two lots didn't happen until over four months later on December 29, 2016.  The two lots were split off of the 428 E Dowland address and relabeled 710 S Emily Street, a change never envisioned at the August meeting and which required planning commission review, which never happened at any time.  This property's history and current state of gross contamination (it is a bit worse than the front two lots) will not show up on any sort of records maintained by the MDEQ, because this address and re-numeration of parcel will clean its slate for all but the most thorough of investigations.

Unlike normal property records recently created, the warranty deed is conspicuously absent, as is any kind of map of the two lots, which you may notice were combined into one and zoned commercially; it is still a secret what Wever plans on doing with the property, as nothing has happened with it in the near-year he has had it.

Which brings us to the other half of what was 428 E Dowland.  The address here remained the same and it's city assessment page states it was purchased on April 30, 2017, the very last day it could have been sold.  

But April 30 was a Sunday.  When you close on a house, finalizing the deal, you need to properly register the deed at the local courthouse.  The warranty deed was not registered until three weeks later, well after the imposed April 30 deadline obligation (and the assessor's date of sale) and different than the April 28 date found throughout the deed.  Daryl Wever did not fulfill his obligation.  

But look closer at the deed.pdf.  It has this clause that the property is:

A look at both of those laws and subsections indicates that this property should not be tax exempt, except perhaps for the transfer fees between parties.  Yet this property allegedly purchased on April 28th or 30th, officially purchased on May 18th, should have had Daryl Wever pay his first installment of summer taxes in July.  In Michigan, your taxes are always paid in advance and Wever definitely did not have to assume Ludington's zero tax liabilities.  But according to the assessor records, the parcel is still fully tax exempt, this is duplicated in its tax records.  For some unclear reason, Wever doesn't have to pay a cent of taxes on his supposedly-commercially zoned property.

So much for the city manager's claims that 428 E Dowland would be put back on the tax rolls following this sale.  When a normally greedy City of Ludington decides to go outside the law to make a property exempt from its taxation authority (you will notice City Attorney and uber-crook Richard Wilson specially wrote this deed up), that something extra fishy is going down.  

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You would think that with a real estate attorney on the city council and the high priced legal firm employed by the city that they would be able to uphold standard practices when engaged in real estate transactions.

What say you Councilman Krauch and Attorney Wilson?

Are you guys once more gonna once more laugh and chortle and bounce up and down with glee that you pulled off another one on the taxpayers of Ludington?

Was this real estate transaction some kind of a professional courtesy for a fellow Illinois's resident orchestrated by the hotheaded Councilman Krauch?

I put nothing below what they are capable of trying to get away with.

Daryl Wever is a foot doctor, Councilor Mike Krauch is well-known for putting his foot in his mouth while talking; there may be a connection.  

As with all real estate fiascoes Shay has wasted the taxpayer's money on, he will shrug it off, and the councilors will all agree he's doing the best job ever.

Excellent article X. Thanks for doing the research and posting this information. I bet Shay and his puppet Council wish they could eliminate any paper trails they may leave.

Thanks, Willy.  They do often try to eliminate those trails by violating FOIA or the OMA in one way or another, but like the slugs they are, they leave a trail of slime and mucus that they don't always clean up.  

Diane, could you get me a copy of those minutes/notes?  That differs significantly from final offers.

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