East Lansing Land Sale Set for November’s Ballot

Friday, June 21, 2019, 8:10 am
By: 
Brad Minor and Alice Dreger

The City of East Lansing is gearing up to sell vacant land it owns in the City’s northwest corner. But first, the idea of selling it will have to be approved by a majority of East Lansing voters.

That's because, for properties worth more than a relatively small sum, East Lansing’s City Charter requires that a majority of voters casting ballots on a land-sale question approve the idea of the sale.

City Council voted 5-0 on June 18 to put the question on the November 5, 2019, ballot.

The ballot language approved by Council does not restrict how the City Council could ultimately decide to go about selling the land at the southwest corner of West and Coleman Roads. It simply asks voters whether Council should have the right to decide to sell land from the approximately 26-acre parcel.

The move comes amid controversy over the City staff’s decision to the auction-off on eBay the purchase rights to a million-dollar piece of public land on Merritt Road.

Voters approved selling that other parcel of land, on Merritt Road on the City’s northeast side, back in 2005, but the City has come under criticism for not openly advertising the early-2019 eBay auction, particularly given that the land had recently become more valuable due to it being zoned for a marijuana provisioning center and being near the new Costco.

The West Road land is vacant, and Council might only want to sell parts of it

The West Road property now being considered for sale comprises 26.83 acres of vacant, “unimproved” land, which means it has no hookups for utilities like sewer and water. It is located at the southwest corner of West Road and Coleman Road, just east of U.S. 127.

Before the vote went through this week, City Attorney Tom Yeadon had slightly changed the ballot language he drafted back in May. It now reads (with Yeadon's recent additions underlined):

“In an effort to recoup the purchase price for property that was purchased as the result of tax foreclosure proceedings, is the City Council authorized to sell all or a portion of the 26.83 acres of mostly vacant unimproved property (unimproved except for two billboards) located at the southwest corner of the West Road and Coleman Road intersection in the northwest tier of the City?”

Voters will be asked to indicate a “yes” or “no” vote. A majority “yes” vote will authorize Council to make a decision in the future about selling all or a portion, and a majority “no” vote will deny Council that right, leaving East Lansing holding the property.

“I’m always interested in Council’s opinion on political questions,” Yeadon told City Council when presenting draft language at the May 14 nonvoting meeting.

In response, Council Member Ruth Beier asked, “Is there a reason we don't have the purchase price in the ballot language?”

“We don't want a particular purchase price,” Yeadon answered. “We’re going to try to get the highest and best offer. This just authorizes us to sell it.”

Mayor Mark Meadows remarked that he sees the November ballot as ideal: “That will be perfect because we should have the Coleman Road extension done by then and that should add to the value of this property.” (ELi reported on the Coleman Road extension here.)

The November 5 ballot will be the same ballot where voters will elect three members of City Council, as the terms of Erik Altmann, Shanna Draheim, and Mark Meadows are ending. All three having indicated interest in being re-elected.

“Clearly [voter] approval is an important step,” Yeadon told Council at the May 14 meeting, “otherwise we have a large chunk of property that we don’t want and don’t need.”

The City of East Lansing bought the West Road land recently

The City of East Lansing purchased the West Road property for $444,777.98 at a Clinton County tax auction last year. The City has indicated the sole reason for purchasing the property was for the purpose of selling it, to minimize loss and maximize profit.

The property carried unpaid property taxes that were owed to Clinton County, the majority of which stemmed from special assessments that were assessed by East Lansing to complete road and utility work from 2007 to 2016.

East Lansing Finance Director Jill Feldpausch has explained that if the City didn’t purchase the property at the foreclosure auction, the City could have ended up effectively losing a substantial sum.

“The City could have been on the hook for any unpaid taxes, including the special assessments assessed by the City,” wrote Feldpausch in a response to emailed questions from ELi.

Waiting for the property to go to auction and trying to win the auction was determined to be the best strategy financially.

Explained Feldpausch, “The City has the right of first refusal before a piece of property goes to tax sale, but we would have had to pay the minimum bid amount,” which for this property was $1,300,500.

There was also another reason to buy at auction rather than exercising the right of first refusal: “the City would only be able to exercise that right to use the property for public purposes. The intent is to sell this property and that would not have been allowed,” says Feldpausch.

So, Council authorized Feldpausch in closed session to bid at the tax auction on the property up to a specific sum (one which has not been disclosed), and the City won that auction.

At the May 14 meeting, City Council also discussed what to do with revenue from this property if it results in a profit after the City’s general fund is reimbursed for the cost of having purchased the property. We have a separate report on that discussion from ELi’s Dan Totzkay.

 

[A version of this article was originally published on June 11 and it was then updated and republished after the June 18 vote.]

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