Sweetwater Holdings LLC to Buy Lot for $5000 in Sweetheart Fashion

[XLFD]

On Monday night, June 23, 2014, the City Council of Ludington will most likely vote to sell the lot at 420 South James to a private limited liability company well-connected to the City Manager for the low price of $5000.  It is the lot between the two buildings below as viewed from the southeast:

 

The older history of this property is very conclusive:  the lot is worth about ten times as much money, and the property's other neighbor was denied buying the property for that higher price about eight years ago with a similar plan of development and the same city officials involved. 

 

A recent history shows that this deal was brokered by Ludington City Manager John Shay exclusively, corresponding with the LLC's principals, and MDOT to create the sweetheart deal, and change the character of that section of the downtown business district.  This reflects a crooked type of public policy the City  adopted in acquiring the property of 808 East Danaher Street.

808 East Danaher:  No Public Purpose, Big Public Loss

 

It differs in that in the Danaher case, the city council did not own the property until they exercised their special option to get the foreclosed property for a public purpose.  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. 

 

A decidedly un-public bit of cronyism that was carried out unilaterally behind the scenes between Joseph Irelan (the neighbor) and John Shay.  The house was demolished, the lot cleared, and a structure was left behind because the neighbor wanted it to.  As we approach a year before that sweet deal was made, there still has been no public use assigned to the City's holdings.   The City does charge the taxpayers for maintaining and mowing the property now, it will be interesting to see who they gift this parcel to eventually.

A Brief History of 420 South James

Many of our older members will remember The Bicycle Circus, a bicycle repair and retail shop ran by local character Leland (Lee) Peters since 1972.  On his death (Lee obit) just before the turn of the millennium he had been buying the building on land contract.  His heirs did not give the place the upkeep it deserved and the old roof collapsed in the year 2000, as seen in this backview:

 

The Peter's estate wound up doing a quit claim deed on the property, and the City of Ludington took ownership of the lot, and quickly demolished it for the public safety at the cost of just under $50,000:

 

Once it was cleared off and replanted, the lot remained vacant, unused and not for sale, but there were some inquiries into it, including a serious one by local developer Bob Gibson in 2006.  He made known to the Building & Licenses Committee that he wished to purchase the lot, develop it as a parking lot initially, and eventually improve on it.  He was quoted that the assessed value of the empty lot in 2003 was $45,000. 

 

 

 

Mr. Gibson brought the house and lot a 424 S. James for $73,000 but was denied the right to lease and/or develop the lot at 420 S. James.  The lot at 424 S. James immediately had its tax rates increased by 264%  the next year with no clear idea why.  No favoritism to Mr. Gibson was given, and the City effectively shut his dream to expand down.

The next overture for the property was made by Ann Barber of Kirby, across the street at 415 S. James, they wanted to have extra parking too.   As you can see, John Shay spoke for the city and denied the request, saying the B&L Committee had not changed its mind. and wanted to develop this property into something other than a parking lot, telling Ms. Barber the decision made the previous year. 

The empty lot at 420 S. James remained vacant, and the City of Ludington made no intention to sell it until this year.  The old party wall which used to exist between 416 and 420, and was now solely belonging to 416, was poorly fixed and is crumbling in many areas currently.

"AII I want to do is join the happy crowd behind the red door; Wish they'd let me in so I could find out what's behind the red door.  Red Door, What's that Secret You're Keeping?"

 

In March, Nathan Grubich, one of the owners of the Red Door Gallery, and recent purchasers of the property at 416 S. James (May-19-2014-Deed), made several overtures about 420 S. James.  Grubich to John Shay, and various members of the Michigan Department of Transportation (MDOT) to see whether a curb cut for a parking space would be allowed if they were to purchase the property.   You will note in these E-mails that City Manager John Shay was going out of his way to help this obscure use of 'private parking' in the business district.   Nathan and his wife, Amanda St. Hillair-Grubich, formed a LLC very recently called Sweetwater Holdings, LLC in preparation for these land transactions. 

 

You may recall that Amanda was the beneficiary of public funds during New Years Eve in the past, selling her etched glassware, paid for by the City of Ludington's DDA funds, and never getting back that investment in the budget records of the City or the DDA; someone received money from the sale of those glasses and it's very likely that Amanda saw some or all of it. 

 

In this 2010 thread we see some misuse of public funds by her and serially-corrupt Councilor Nick Tykoski:  "Amanda St. Hillaire of the DDA (the same one that made a motion to divert more funds to the NYE project in September) just so happens to make specialty glassware for the Red Door Gallery which made at least 500 of the $20 glasses.  Tye Signs Inc., ran by DDA member Nick Tykoski (the same Tykoski that motioned $1500 be diverted to creation of the ball in April) charged $200 of the vinyl lettering for glasses to the taxpayer, as well as $300 for lettered banners, and $987.21 on electrical supplies for the New Year's ball." 

 

Amanda has since retired from the DDA, but the money is still unaccounted for, the lack of ethics involved never explained.  Nathan Grubich apparently has gotten a friend in the Ludington City Manager from the tenor of the E-mails, and the fact that he (admittedly in a rare display of disclosure) is the coach of his daughter's soccer team for several years, as seen in this memorandum announcing the deal and explaining it:

 

 

Notably absent in the records is any talk in the Buildings & Licenses Committee, which still has Councilor Holman in its ranks.  This includes any sort of decision like they made in 2006 (and carried on to 2007 by Shay), that they may want to sell the property.  Interesting, because if we equate the value of 420 S. James (under the loving care of the City) to keep up with the taxable value of the neighboring 424 S. James (which has had its taxes nearly quintupled since 2003 ), the value of the property would be somewhere around $180,000. 

 

In an undated letter sent to John Shay at some time, they make an offer which is ridiculous:  $5000, which is one-ninth the 2003 property assessment, and could be as much as one-thirty-fifth of what may be fair value today. 

A couple of things beyond the offered price is ludicrous.  Both Shay and the Grubich's say they are going to repair the 'party wall' that exists between the two lots, as if a building still shares that wall at 420 S. James as a condition of sale.  This is just a wall nowadays, not a party wall, that needs to be the responsibility of 416 S. James to repair whether it has the 420 lot or not. 

 

The proposed small 'green space' to the south of their 'trailer parking' is not in the best interest of the central business district.  It is nothing more than a side yard, with no plans for a business, but it will also prevent real (but snubbed by this same City Manager, because they were willing to offer 'fair market value') entrepreneurs like Bob Gibson or Kirby of Ludington to create extra community parking, or have any real expansion that is not deleteriously affected by the proposed curb cut on James Street for private parking of a trailer.  How are those other 'green spaces' on Ludington Avenue working out, City officials?  But this is offered as a positive, with no mention of the loss of actual parking spaces by the curb cut and the 'party wall' repairs in the Resolution-Red Door Gallery Purchase Offer.pdf:  

 

 

There is no mention of the obscenely substandard price in the resolution, and a section accidentally left in by someone at the City of Ludington who perhaps thought this was unfair, was taken out.  People can argue with the Council on Monday that this sale is shady, need only point out that this clause promoting a scintilla of fairness was taken out.  Sorry Mr. Gibson, sorry Kirby of Ludington.  You're not part of the clique of cronies like the Grubich's are. 

 

 

For twice in a year, the City of Ludington City Manager has arranged two deals which have been disaster's as far as the 'public interest' goes.  At 808 E Danaher, the City should have allowed for the selling of the property at public auction.  It has no interest in having any 'public purpose' there, and has unethically allowed someone who may have brought all or part of the property to get a City brokered deal, and steal half the property in a method that was illegal and immoral.

 

At 420 S. James. John Shay, along with two current councilors that were in the B&L Committee back in 2006 has kept two local people interested in developing the lot into a conforming and useful public purpose (parking lot) after purchasing the lot for an actual 'fair market value'.  This could have been producing money for the City for nine years, and providing necessary downtown pubic parking spaces.  Instead, he decided to convince his allies in the City Council to hold the property and sell it for a substantial amount less than its' worth, with anti-business restrictions to his friends. 

[XLFD]

 An interesting side note:  416 South James used to house Alway Photography (Mane Street Moxie).  This article from 2011 not only has the two businesses moving into Ludington, but also has Bob Gibson in his capacity as the Ludington Elks Lodge leader, talking about the lodge's latest move. 

Not surprisingly, Rob Alway writes a typical uninspired piece about the council being set to pass this unethical effort:  "By Rob Alway. Editor-in-Chief.

LUDINGTON — The City of Ludington is selling a small, unused portion of land it owns to a local business. The Red Door Gallery is currently located on West Ludington Avenue. Owners Nathan and Amanda St. Hilaire-Grubich recently purchased the building located at 416 S. James St. and plan to move their business there. The building is currently houses a pet grooming business.

The city owns a small piece of land immediately to the south of the building at 420 S. James St. During its regular meeting tonight at 6:30 p.m. the city council is expected to pass a resolution waiving the bidding and appraisal process and sell the property to Sweetwater Holdings, LLC (the Red Door’s parent company) for $5,000. In exchange, the new owners will agree to preserve the south 23-feet of the property in a restrictive covenant creating a green space.

The city owned lot is considered “surplus property.” The resolution states that by placing the property back into private hands, it would thus add the property back to the tax rolls.

City council meets at city hall, 400 S. Harrison St."

http://www.masoncountypress.com/2014/06/23/ludington-expected-to-ap...

[Willy]

Terrific job of research and writing X. This is absolutely outrageous. The fiasco on Danahar is going to cost the City plenty when the accumulative amount of taxes that could have been coming into the City is tallied.  If we assume that the life of the Danahar house would have been  at least another 40 years more, then the City is losing $160,000 in future tax dollars and that is not considering future tax increases. In the Case of James st. The amount of tax revenue that could have been generated if it had been sold years ago is also quite high. The James st. property is located on a U.S. Highway and just that alone adds considerably to it's value. $5,000 is crazy. Unbelievable. To be fair, It may be that Alway doesn't have all the facts about the property and is just reporting the information the Council is giving him. 

[XLFD]

It's quite probable that Alway and the COLDNews received a news release commenting on the eventual sale using close to the same terminology in the article, but his news-curiosity should have been piqued by the low price of the lot and the lack of any fair selling procedure that may have been offered to others interested in buying the property, particularly at higher rates and interested in more business-oriented purposes.   Selling it and converting it into non-business purposes is a negative for that part of the downtown.

This is unashamed and obvious favoritism being shown to the Grubich's, who moved into Ludington from Tennessee at about the same time as John Shay moved here from Almont (2002/2003).  Much to the delight of the people of Almont, who apparently had a lower threshold of tolerance for corruption than Ludington has. 

[AQUAMAN]

What did I previously post a few weeks ago? That CC Kathy W. didn't reveal the fair market value of the lot, nor the selling price, nor the assessed value. These facts are of paramount importance in any real estate dealings. Real estate 101 if you will, not rocket science. That in itself should have been a red flag to anyone that was serious about selling this publicly owned lot. But guess what? It's just another moot issue for the city council, that abides regularly in it's fixed agenda. Shame on you city councilors, your heads are in the sand again on this travesty. Even a parking lot would serve apartment dwellers better than this usage. 

[XLFD]

Shay, Councilor Castonia and Councilor Holman were all attending that Buildings & Licenses meeting 8 years ago that had the $50,000 fair market value assessed, and gave a wide variety of excuses not to get rid of it at that time, among them:  selling it to Gibson would 'limit the possibilities for future development'- and creating a private parking lot and mandatory side yard doesn't?!

 

I wasn't able to make the Monday meeting, but I read that this sale was voted on without any dissent or discussion.  I invite all to look at the facts of this case objectively and decide if the City made an objective and fair decision here.   This lot was appraised for $50,000 in 2003, just about the same amount of taxpayer money that was used to tear the building down.  Sold for $5000 and the covenant that it never gets developed beyond being a private parking spot.

 

What's going to happen next, is City Manager Shay going to sell 428 E Dowland (the lot they were planning to develop for the LFD Station but reconsidered) to his poolboy for $5000? 

[Willy]

I wonder what is going on with the thought process used by City Council members. None of them are questioning this sale. Is there something about the property that the public doesn't know about, such as a contamination problem that would cause the City to sell this property for penny's on the dollar? What in the World are they thinking? This sale makes no sense economically as well as the usage of the property. Wouldn't it be nice if the Council explained it's actions to justify this ridiculous transaction? Where are the representatives who are supposed to look after the interests of the citizens who elected them?

[AQUAMAN]

It would be nice to know in depth whom these St. Hilaire-Grubich people are, as with regards to any relations, friendships, and of course, blood ties with Shay or any other city employees/councilor. It's obvious the Grubich's have had their hands in some officials pockets, and vice-versa. The NYE deal alone netted the pirates, I mean parties, almost $12K in monies unaccounted for to the present date. The name Sweetwater, is very close to Sweetheart (deal), which is just what this episode in real estate is imho! With the taxpayers coming out on the $hit end of the stick once again! In conclusion, this whole deal is the biggest new stinker on record, right in the eyes and face of the entire public, and no one says a word? 

[XLFD]

Nothing in the history of the property or in the property file that I FOIAed including legal discussions between the City and the Peters Estate shows any sort of environmental concerns, and a year after demolition with a professional assessment it still was at $50,000, without any of the usual caveats a contaminated parcel showing up anywhere then or since. 

This current sale didn't even apparently come up before the Buildings & Licensing Committee this year.  They aren't even trying to hide their graft and corruption anymore; it's become accepted by the community that's agape over extortion of a private charity by the Petunia Lady, while allowing the misuse of their own public funds and resources repeatedly.

[AQUAMAN]

AMEN......, AMEN! What FOOLS have the Ludington public here become nowadays???????No wonder the idiots like Shay think we are all dumb country bumpkins!