In following up on questions raised by an ongoing Mackinac Center investigation, Grand Rapids Press reporter Chris Knape added two facts to the pattern of information so far known about the proposed Hangar42 film subsidy deal.
First, suspicions that the sale of the Hangar42 property would be in the form of a land contract were confirmed. This is significant, because it would mean that an $10 million "film infrastructure investment" subsidy might be granted with no actual money being spent by the "investors."
Under a land contract, rather than the buyer getting a loan or mortgage from a commercial lender, the current owner of the property finances the deal at a specified interest rate. The buyer makes payments for a specified duration just like a regular mortgage, but the seller retains ownership until all the money has been paid, generally many years in the future. If the buyer stops making payments, then ownership of the property never changes hands.
Knape also confirmed that the current owner of the property is planning to use the subsidy money received by the buyer to pay for renovation work that has already been performed by contractors. At least some of the contractors have not been paid and have filed six liens against the property, one of them for $228,000. Here is how the Grand Rapids Press described this development in a follow-up story:
"Hangar42 investor Joe Peters, whom Beck said he never met, told The Press through a public relations firm that contractors will get paid only after the state delivers on what he says was a binding deal to provide a $10 million tax credit for the project."
The newspaper's says that its request for a tour of the building to see the improvements that supposedly added some $30 million in value was denied, along with a request to see an appraisal that Peters says valued the facility at $45.5 million.
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