Project again up for auction
Another attempt will be made Thursday, Aug. 9, to see if somebody — anybody? — is willing to spend $243,250 to acquire a property that was valued at some $6.4 million just two years ago.
The property, located up Scott Hill Road just north of M-204 and west of M-22 in the Village of Suttons Bay, represents Phase II of the massive and now bankrupt BayView project. Known as Leelanau Hills, the property encompasses an estimated 50 acres and includes 92 lots as well as the unfinished shells of five single family homes.
Leelanau County has been the owner of the property since April of this year. The former owner failed to pay off some $159,000 in unpaid 2008 and 2009 property taxes by the end of March. As a consequence, the property was permanently forfeited to Leelanau County. Late last year, the former owner of the property tried to auction off the property and was ready to accept a minimum bid of $159,000 simply to take it off his hands. However, only two lots were sold, at $5,000 apiece — both to a local attorney. No one else offered up a bid on any of the remaining lots.
The minimum bid on the property is now up to $243,250— the amount of unpaid taxes due through 2012. The former owner, Kingsley surveyor Bob Mitchell, still owns five lots in Leelanau Hills on which he did pay taxes.
Mitchell acquired the property in 2010 after a local judge ruled that an $82,000 workman’s lien Mitchell had imposed on the development was superior to the claims of a mortgage speculation firm that had acquired notes on the property after Mitchell’s lien had been filed. Mitchell had imposed his lien because the developer, Leelanau Hills Development, L.L.C., failed to pay Mitchell’s surveying bill.
The head of Leelanau Hills Development, Marcus Yono of Brighton, was also the head of Suttons Pointe Development, L.L.C., a nowbankrupt company that developed the BayView condos on the Suttons Bay waterfront. Yono has not been seen nor heard from locally for at least two years.
A federal bankruptcy court judge was expected to hold another hearing in Flint Aug. 1 on how and whether unsold BayView condos and common areas in Phase I of the development were to be liquidated.
The fate of BayView Phase II — Leelanau Hills — may be decided at an auction at noon on Aug. 9 at the Grand Traverse County Governmental Center when a number of other properties in the region will also be auctioned off as a result of tax forfeiture. The only other Leelanau County properties to be auctioned off on Aug. 9 are six tax-forfeited residential lots in Northport on which the total minimum bid is $47,050 – again, the amount owed in taxes.
Leelanau County, represented by Treasurer Chelly Roush, is the nominal owner of the tax forfeited properties. Roush said that in the past Leelanau County has been involved in auctioning off a few tax forfeited properties such as the ones in Northport, but never anything like the massive Leelanau Hills property.
Roush said that anyone who considers bidding on the Leelanau Hills property would be well advised to conduct a comprehensive “due diligence” effort beforehand and would likely want to retain an experienced real estate attorney. The pattern of property ownership in the development is highly complex, with a percentage of common areas in the development conveying with each of the lots.
“And people need to remember that this property is part of a planned unit development,” Roush added. “It comes with the requirement that it be developed according to an existing plan unless some other steps are taken.”
Materials posted online by the auctioneer acknowledge that each of the parcels in the development are required to be connected to municipal water and sewer services, and that “these infrastructure improvements have never been extended to the parcels.”
Under the planned unit development restriction, none of the lots may use on-site septic systems or wells. In addition, anyone who hopes to purchase the property must provide evidence of a performance bond “sufficient to ensure that this infrastructure will be installed within one year of the date of sale.”
The amount required “is being determined” and will be available online and announced at the Aug. 9 sale. Information about the sale is available at www.tax-sale.info online.
Under state law, the State of Michigan was given “first right of refusal” to acquire the property back in April after it was forfeited to Leelanau County. Next, Suttons Bay Township and the Village of Suttons Bay got a crack at acquiring the property, and declined. Under state law, the state and local municipalities would have been required to pay off the taxes and must use the property for a “public purpose.”
Similarly, Leelanau County, including the county Land Bank Authority, could have acquired the property — but would also have been required to pay up the $243,250, and use the property for a public purpose.
In addition to being county treasurer, Roush is also chair of the county Land Bank Authority.
“The Land Bank Authority did not request, and does not plan to request, that the county acquire this property permanently,” Roush said. “We don’t want to pay the taxes owed on it and we don’t want to become the developer of this property.”
Under state law, if nobody makes the minimum $243,250 bid at the Aug. 9 auction, another auction may be offered before the end of October 2012 at which no minimum bid will be required.