Option to Purchase Agreements for Private CC II Properties

Newly on file with Ingham County Register of Deeds are two "memorandum of option" agreements between the Strathmore affiliated limited liability companies and DTN Development Group (ICRD 2013-029794 and 2013-029795).

The memoranda only state the seller has granted the option to the buyer "for valuable consideration" -- how much DTN paid for the option is not given. It is also quite likely the "valuable consideration" involves some kind of secret partnership, and the city will need to get to the bottom of whether any of the current ownership or creditors will be part of DTN Development Group or an LLC for the project, before engaging in any agreements.

There is nothing to suggest the option is contingent of DTN being selected as the Park District RFQ/P winner, and the only of the city properties integral to redeveloping the private properties is the Little Bank Building, which can be sold separately (after a public vote, which should easily win, since no one wants that property, and everyone wants the blighted private properties redeveloped). The claim that an option to purchase was contingent on the RFQ/P was being used as leverage to pressure the choice of DTN, but that leverage must now be considered moot.

One memorandum is between City Center Two Project, LLC and DTN Development Group for 341-345 Evergreen (the boarded-up apartments, formerly Evergreen Arms, across from the city's Evergreen properties). Evergreen Arms was purchased by CADA Investment Group (then transferred to City Center II Project) from DTN in 2008 for $2.4 million. This property does not appear to be part of the RFQ/P proposal, which did include the Grand River Strathmore Properties. This strategically located parcel, which blocks a view of the park from the city's Evergreen properties, could factor into doing something more desirable than massive student rentals, notably the retirement community idea people have been talking about, if DTN were willing to play ball.

The second memorandum is between CADA Investment Group/City Center Two Project and DTN Development Group. It includes all the Grand River Properties, including the Big Bank Building (100 W. Grand River), under CADA, for which ELBB, managed by DTN, now holds the sheriff's deed, with redemption period up on June 18. The other properties are 124, 128, 130, 136, and 140 W. Grand River.

It must be remembered that, among other encumbrances and possible encumbrances, all the City Center Two Project properties are under the Mountain Vista mortgage, with its attached settlement from the failed Florida Strathmore project, and with a personal guarantee that looks like about $22.5 million. Mountain Vista also has the Affidavit of Interest on the Big Bank Building.

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