"The sale — or privatization — of any state asset should be done right the first time," said State Rep. Leon Drolet.
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