State May Finally Dispose of Northville Psychiatric Hospital Property

LANSING — Privatization comes in a variety of forms, including the sale of government assets to the private sector. The state of Michigan has been looking at selling the 414-acre Northville Psychiatric Hospital property in Wayne County since 2001. The sale price exceeds $30 million.

According to the Sept. 30 edition of Michigan Information Research Service, the Department of Management and Budget tried to auction off the property. Because it received only "one qualified bid," the DMB entered into negotiations with Real Estate Interests Group. The final deal would have REI paying $25 million up front and another $6.5 million at a later date.

This led Grand/Sakwa Properties, a real estate development firm, to file suit on the grounds that REI’s bid did not conform to the demands laid out by DMB in its initial specifications, which mandated a $33 million minimum bid. An injunction on the sale of the property was issued by Ingham County Circuit Court Judge James Giddings as a result of the suit.

On Sept. 30, however, Court of Appeals presiding Judge William Whitbeck overturned the injunction. According to MIRS, "the court said that while Sawka may have standing under the Open Meetings Act, they failed to show that the violation of that act would result in irreparable harm." The term standing simply refers to whether or not a plaintiff has the right to make challenges in a court of law.

The case was sent back to Judge Giddings for additional review, but he decided that the court could not grant a preliminary injunction against the sale of the property. Giddings expressed some disappointment in the way the transaction was handled but found no grounds to halt the transaction.

State Rep. Leon Drolet has since created a five-member panel to review the processes involved in state property sales. In an interview with Michigan Privatization Report, Drolet expressed concern over the number of failed attempts to sell the acreage. "The sale — or privatization — of any state asset should be done right the first time," said the Macomb County representative. "While I applaud the good intentions of state officials, the repeated failure to complete transactions is problematic because it gives an important management technique — the sale of assets — a bad name."

Drolet wants to ensure that every step involved in the sale of state properties is completed carefully and thoroughly to ensure that future deals are not stymied by poor process.