Council Majority Backs Babcock’s Resolution Calling for Formal Report on eBay Land Sale

Above: Mayor Ruth Beier and City Council members Mark Meadows and Lisa Babcock at last night’s meeting. (Photos by Raymond Holt).

East Lansing’s City Council voted 4-1 on Tuesday night to order a formal report on the controversial eBay auction of public land on Merritt Road that occurred in early 2019.

The eBay land sale sparked heated debate in the November 2019 Council election, primarily with regard to the City’s failure to advertise the auction to more than a few “interested parties” apparently hand-picked by City staff.

Mayor Ruth Beier cast the lone vote against the resolution calling for the report, arguing that it may intimidate staff and make them feel like Council is seeking an opportunity to cast blame.

“I don’t want to create a work culture where people are afraid to do their jobs,” Beier said.

The resolution passed last night by the 4-1 vote directs City Manager George Lahanas to conduct an investigation internally, with the report intended – among other things – to shed light on the decision to sell the roughly six acres of land to Kodiak Landarc via the online auction house rather than by a more traditional approach.

Those in favor of the report also hope it will help explain why so little publicity was given to the auction. The bid history shows at most three bidders participated in the month-long auction.

The report is due back to the Council by March 6.

Lingering questions about the land sale

The idea for the report was put forward by newly elected Council Member Lisa Babcock, who ran on a good-government and transparency platform and was elected overwhelmingly by voters.

“A lot of questions linger about the eBay sale,” Babcock (above) said on Tuesday.

At a debate last fall sponsored by the Associated Students of Michigan State University, Babcock called the eBay land sale “the elephant in the room” driving her campaign and voter agitation over City government.

She criticized the lack of a paper trail around the sale and now is following through on her campaign agenda by asking that Lahanas produce one.

Babcock’s desire for a formal report was backed most vocally and steadily on Tuesday night by Mark Meadows, the former mayor who retained his seat on Council by the slimmest of margins and was often the target of Babcock’s campaign.

But Meadows negotiated resolution language with Babcock over this past weekend, and she made the proposed resolution public late Monday, only a day before the meeting, the first Council meeting of 2020.

“The way this is constructed is a very orderly, lawyerly way to get to the bottom of things,” Meadows said. (He and Babcock are both attorneys, the only attorneys on Council.)

Meadows said he was frequently interrogated about the sale while canvassing for votes, and the jolt of the election led him to believe the public needs to be given clearer information about the Merritt Road sale.

Meadows (above) also suggested that he wanted to cast aside allegations that he had masterminded the deal.

“I’ve been accused of meddling in the City’s affairs too much by some in the community. I wish I’d meddled more in regard to this,” he said, indicating he wished it had been better advertised. Before the election, Meadows, Erik Altmann, and Shanna Draheim defended the auction.

Mayor: Sale communication, not platform, at issue

The resolution lays out 21 points to guide Lahanas in production of the review. It seeks a timeline of events leading up to the eBay auction, a listing of prospective buyers and parties aware of the online auction, any communications about the sale between staff and outside parties, and some explanation for the origin of the eBay auction idea as well as for the zoning change that made the sale of marijuana possible at that location, upping the land’s value just before the auction.

At last night’s meeting, Beier said she believes staff erred in not adequately publicizing the sale, but that there was no intentional wrongdoing.

“The eBay idea itself is not the problem. It’s an auction house that’s basically free [to use]. The problem is we didn’t notify the world,” Beier said.

Beier (above) said the Council could simply ask Lahanas to report more information to them without passing an aggressive resolution, and that most of the information being sought had already been made public.

Beier noted that obtaining new information will be more difficult since the City’s Planning Director at the time of the auction, Tim Dempsey, left the City’s employ last July, and he cannot be compelled to cooperate.

The Mayor also argued that the resolution was rushed, since Babcock only made it public on Monday, with little chance for public review, input, or debate – an approach Beier said lacked appropriate transparency.

Mayor Pro Tem Aaron Stephens (below) agreed with Beier’s concern about voting on a significant resolution that had been made available so late, but voted to move it along so that Lahanas could have the time to produce a thorough report before intense work begins on the next fiscal budget in the spring.

Council member Jessy Gregg (below) said she wanted to see the report done because she believes "it would be nice to kind of put a lid on this, put it on the shelf, put it where it can be a historical record, and then move forward. I don't see a great benefit to delaying."

The eBay auction was held a year ago, from Jan. 6, 2019, to Feb. 7, 2019, and public documents reveal City officials notified “approximately twelve interested parties” of the sale. It’s unclear how widely the word spread; the winning bidder does not appear to have been among those notified directly.

The Council unanimously approved the sale to marijuana developer Kodiak Landarc for $1,000,900 with the closing occurring on September 18. The property was soon listed publicly for $12 million, suggesting the rezoning of the land for marijuana retail had significantly increased its value.

But defenders of the auction, including Lahanas and Meadows, have said that the land had sat vacant for years partly because of expensive environmental problems and have argued that the City got the best or just about the best deal it could while spending almost nothing for the eBay listing.

The purchasers obtained site plan approval to construct three new buildings on the property, starting with a 7,000-square-foot medical marijuana provisioning center. They say they later plan to build a four-story, 107-room hotel and an 8,690-square-foot retail strip mall with about five business units.