2017-06-15 / Front Page

Leland property pennies on dollar

By Eric Carlson
Of The Enterprise staff


IN THIS file photo, a duplex is offered for sale by the defunct Varley-Kelly corporation that was built on property that once included the former county courthouse and jail. The duplex has already been sold, and new, larger lots were formed on the property. Interestingly, Realtor Tim Schaub is now handling lot sales for the property’s new owner, Courthouse Redevelopment Group. IN THIS file photo, a duplex is offered for sale by the defunct Varley-Kelly corporation that was built on property that once included the former county courthouse and jail. The duplex has already been sold, and new, larger lots were formed on the property. Interestingly, Realtor Tim Schaub is now handling lot sales for the property’s new owner, Courthouse Redevelopment Group. Although a sale of the former Leelanau County courthouse property in Leland was finally consummated last month after a decade of effort, it wasn’t until this week that county officials revealed exactly how much money the county made on the deal.

It was only a fraction of the money officials thought the property was worth in 2007.

The 2-plus acre property that was the site of the county courthouse, jail and other office buildings on the Leland riverfront in downtown Leland was considered a “brownfield” that required environmental cleanup because of historic contamination on the site.

In 2007, the county agreed to sell the property for redevelopment under the county’s Brownfield Redevelopment Authority to a group of local investors doing business as Varley-Kelly Properties.

The price tag was $2.4 million.

Work got underway almost immediately on environmental testing and the design of a community water system that the Michigan Department of Environmental Quality said would be required to serve a high-density development of “reasonably priced” smaller homes in downtown Leland.

Then, financial and real estate markets in Michigan, the U.S. and worldwide began to crash in 2008. Ultimately, Varley-Kelly Properties went belly-up. Only two condo units, in a duplex, had been partially constructed on the site. That part of the property was sold to a Traverse City real estate investor, Gene Lafave, last year for $260,000.

In addition, some of the property was sold for use by the Leland Fire Department for $137,500.

Also last year, a new group of investors headed by Leland resident Ross Satterwhite, doing business as the Courthouse Redevelopment Group, offered to purchase the remainder of the property for $800,000. The official owner of the property, the Leelanau County Brownfield Redevelopment Authority, closed on the sale of the remainder of the property with Satterwhite’s group last month.

Since then, however, members of the Leelanau County Board of Commissioners have been pressing Brownfield Redevelopment Authority head Trudy Galla and county Treasurer John Gallagher for a fuller accounting of exactly how much money, if any, the county ended up making on the entire deal.

The short answer is: $392,306.75. That’s on a property the county had valued at $2.4 million a decade ago.

District No. 7 Commissioner Melinda Lautner, is the only board member who has served continuously since the property was first sold. She was not pleased.

“We would have done much better if we’d just put the property up for sale on the open market without getting involved with Brownfield Redevelopment and trying to put ‘affordable housing’ there,” Lautner said.“There were just so many mistakes made along the way.”

Galla explained that one of the most important factors dragging down the figure is the fact that the brownfield authority was put in the position of having to buy back much of the property for $600,000 after Varley-Kelly failed. The Brownfield Authority borrowed the money from county coffers to do so and has since paid that amount back.

However, added to that amount was the cost of conducting environmental tests on the property, developing cleanup plans, and doing the actual work, which involved removing contaminated soils. According to an accounting provided this week to the County Board, the “cleanup costs” amounted to $77,725 and the “brownfield site costs” came to $58,165.

Closing costs on the sale of the property were $69,302, according to a “Leland Sale Breakdown” provided this week by Galla and Gallagher.

“It’s really pretty complicated,” Galla explained. “But the good news is that the property is now back on tax rolls, the environmental contamination has been cleaned up, and it’s ready for redevelopment.”

Satterwhite said this week that since his Courthouse Redevelopment Group finalized purchase of the property, three vacant lots are already under contract for sale to private owners and will close in the next 30 days.

Gone are plans envisioned in 2007 for dozens of smaller single-family homes and townhomes on the property. Currently, the property owned by the Courthouse Redevelopment Group consists of eight lots for single family homes.

“In the following weeks, we will be installing the water distribution system and improving the landscaping,” Satterwhite said. “We have five vacant parcels remaining available, three of which have deeded private river access on Chandler Street.”

Satterwhite noted that lots for sale in the former courthouse neighborhood are larger than the typical platted lots Leland.

“The lots are conveniently located to Leland’s amenities and are all on the Leland township sewer system,” Satterwhite added. “They are priced aggressively to sell.”

He said local real estate agent Tim Schaub is handling the sales.

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