As Joe Nederlander steers his gold Grand Cherokee through the impoverished Detroit neighborhoods south and east of the sprawling fairgrounds he leases from the state, he takes his right hand from the wheel and holds it out flat, palm down.
“Look at that,” he says.
The hand trembles.
It’s not that the neighborhood has him scared. The theater magnate may call the lush suburbs of Oakland County home, living in a spacious condo that looks out onto woods and a lake, but he grew up in this city, and feels at ease here. So much so that when he pulls up to the Original New Grace Baptist Church to visit with his pal and ally the Rev. Royce Lester, he leaves the Jeep unlocked, its key still in the ignition.
No, what has him trembling, he says, are nerves frayed by the wild twists and turns he’s encountered in his failed attempt to keep a $200 million entertainment development on course.
A deal — intended to help save the Michigan State Fair — that’s so far off track Nederlander can’t predict its fate. “I don’t know what the hell’s going to happen,” he says.
In what has become a certified fiasco, lawsuits are flying like BBs at a midway shooting gallery. A suit filed last year against Nederlander’s State Fair Development Group by Detroit, three other cities and area homeowners seeks to block key elements of the project. This summer, a group of taxpayers filed suit to block a controversial land sale connected with the fairgrounds deal. The Nederlander group responded by suing the taxpayers’ lawyer. Then, in September, the Nederlander group sued the state, which filed a countersuit.
As a result of the suits, a project intended to ensure the fair’s long-term financial success is now in limbo. And a lot of people feel like they’ve been taken for a ride, spun dizzy by secrecy, bungling and deception.
A deal is born
In 1999 John Hertel and Joe Nederlander found themselves chatting at a social gathering. Neither man is sure exactly when the conversation took place, but it was certainly before midyear.
The two have been friends for decades. Hertel, the Democratic chairman of the Macomb County Board of Commissioners, had been appointed in 1993 by Republican Gov. John Engler to run the Michigan State Fair. Nederlander, 74, a native Detroiter who with his brothers continues to run a theatrical organization founded by their father in 1912, is an avowed fan of both politicians. Even now he continues to sing their praises, saying Engler’s fiscal constraint has made him a model governor, and that Hertel has done a masterful job managing the fair.
But Hertel was struggling to keep the fair operating in the black, which is where Engler decreed it must be. With some legislators calling for the fair to be moved to Lansing, or simply shut down for good, the governor announced in 1995 that the days of million-dollar shortfalls had to end.
According to heretofore undisclosed testimony provided for one of several lawsuits the deal would spawn, Hertel was all ears when Nederlander showed interest in bringing private enterprise to the 206-acre fairgrounds near the southeast corner of Woodward and Eight Mile.
The two men talked intermittently, with Nederlander gathering details about the fair and its operations. And by the fall of 1999, he had enough information to present a proposal to top state officials. To assist him in negotiating the deal, he retained Lansing attorney Richard McLellan, a longtime Engler crony who helped his friend first reach the governor’s mansion in 1991.
Also helping Nederlander was Oakland County developer Bernie Schrott.
Bernie’s world
Nederlander is vague when asked how Schrott became involved in the fair deal, saying only that the two crossed paths at a restaurant sometime in 1999.
Last year, Schrott was the focus of a Metro Times story revealing accusations by a government witness that Schrott was involved in money laundering for a major cocaine smuggling ring in the early 1990s and alleged fraud for his role in a failed Bahamian casino deal ("Six degrees of Bernie Schrott,” Aug. 16-22, 2000). At that time, Nederlander told this paper that Schrott played a tangential role in the fair project.
Schrott has denied all allegations of wrongdoing. Attempts to reach him for comment on this story were unsuccessful.
Nederlander continues to defend Schrott, saying the allegations are mere innuendo. “I talked to Bernie about the things you wrote,” Nederlander says. “He told me that the mistake he made was getting mixed up with the wrong people.” He says Schrott has been an immense help lining up contractors to perform numerous projects at the fair during the past year.
“He’s saved me millions of dollars,” says Nederlander, “and he’s never made a nickel off this project.”
If that’s true, Schrott has been doing a lot of pro bono work. He appears to have been involved in the fair project almost from the outset. According to state records, he signed incorporation papers creating the State Fair Development Group in May 1999.
Nederlander expressed surprise when shown that document, saying he didn’t know why Schrott’s name appears. “Maybe I was in Europe at the time,” is the only explanation he offers. In any case, he says, Schrott has no interest in State Fair Development Group, the limited partnership headed by Nederlander that eventually agreed to lease the fairgrounds and manage the site for the 50 weeks per year the fair isn’t in session.
According to Hertel’s testimony, Nederlander began bringing Schrott to meetings in late 1999.
“They had brought him in to help with the project …,” recalled Hertel.
Sealing the deal
By October 1999, Nederlander had submitted his proposal for the fairgrounds. Negotiations were in high gear. Nederlander had laid out a $200 million plan to redevelop the property into a year-round entertainment mecca. There would be a 25,000-seat outdoor amphitheater for up to 25 summer concerts, and eight theaters where Broadway-caliber plays and musicals would be staged. There’d also be a convention and exposition center, a new 60,000-square-foot equestrian center and a 9,800-seat “Crystal Coliseum” with 100 chandeliers throwing light on concerts, circuses, rodeos and ice shows.
But key to the whole deal was a one-mile oval auto racetrack.
In his deposition, Hertel said that Nederlander described the racetrack as a “very, very important component” because of the revenue it would generate.
Hertel agreed that the track was crucial: “… I had seen the financial information in terms of what else was planned for here, and having run the place for seven years, I have a pretty good idea of what it takes to run this place, and I felt that financially the racetrack was an absolute essential.”
He also testified in that same deposition, however, that he doubted a racetrack’s viability from the outset.
He thought it unlikely the track could attract the six or seven races Nederlander envisioned. “I indicated what I felt the optimum could be,” recalled Hertel. “But your chances of getting the optimum are slim, and … as time goes along they may get slimmer…”
“I’ve always said I think it would be hard to get the races,” he added, “because there are more and more racetracks being built all the time, and there are really a static number of races.”
Asked if he ever expressed those reservations to the governor or other officials involved in the negotiations, Hertel said he decided to keep mum.
Told of Hertel’s testimony, Nederlander expresses shock.
“He really said that?” asks Nederlander. “He was originally gung-ho about the having racing.”
Hertel also testified that he was concerned about political problems a racetrack project would generate. He’d been through that before. In 1996, businessman Bill Davidson, owner of the Pistons basketball team, proposed building a racetrack at the fairgrounds. Public outcry and the threat of lawsuits quickly killed the plan.
Again, Hertel kept those doubts to himself.
The phantom partner
In October 1999, in preparation for a face-to-face meeting with Engler, Nederlander and his group met with Jim Alexander, the governor’s southeast Michigan liaison.
“Nederlander disclosed for the first time that Bill Davidson would be the other principal in the deal,” according to a memo Alexander sent to the heads of the state’s departments of Agriculture and Office of Management and Budget, both of which were involved in negotiating the lease.
Instead of reassuring the state that Nederlander had more than enough financial clout to sustain his proposal, the disclosure raised concerns.
“It is believed that Mr. Davidson’s involvement in the project could be problematic in that he has previously attempted to develop a similar project that ended disastrously,” Alexander wrote.
As it turned out, Alexander had no cause to worry.
In a November 2000 deposition, Nederlander was questioned extensively by attorney Eugene Driker about Davidson’s involvement. Driker represented a coalition of cities and homeowners that eventually sued to block construction of the racetrack and outdoor amphitheater.
Asked whether he discussed a partnership with Davidson whom he describes as a close friend, Nederlander replied: “Yeah. Oh, yeah. I approached him about it, sure.”
Driker then asked if Davidson was willing to participate.
“Not really. He’s not too interested,” replied Nederlander.
Shown the Alexander memo, Nederlander dismissed his claims of Davidson’s involvement as: “Wishful thinking. … I thought I could get him to be a principal, but wishful thinking.”
Driker: “Has Davidson or any of his affiliates invested any money in this deal?”
Nederlander: “No, sir.”
Side deal
There was one more key component to the deal being negotiated between Nederlander and the state. It involved state land adjacent to the fairgrounds. Frequently described in government documents as a 40-acre parcel, it is, as best as Metro Times could determine, actually 34.9 acres.
Either way, the parcel — located on the northwest corner of the fairgrounds — is a distinct tract the state assembled piecemeal during the late 1980s and early 1990s. Once a solid neighborhood, the area had deteriorated into a crime-ridden slum. Using $4.6 million from the Natural Resources Trust Fund, the state acquired the property and bulldozed the houses intending to create an urban campground to accommodate people showing livestock during the fair.
But that didn’t happen. Instead, the land — located at a prime spot at Woodward and Eight Mile — was used for parking.
Hertel said developers approached him twice about buying the land to build shopping centers, but both times he rebuffed them. “We were using it to make money for the fairgrounds and using it to have the fairgrounds get to the point the governor had asked me to, which was to have the fairgrounds become self-sufficient,” Hertel explained. “So, in effect, the 40 acres was very helpful to use for income from the additional property.”
Nederlander had other plans for the land.
His promotional literature gushed: “Remarkably, there is a vacant, privately owned 40-acre site … that has been set aside for the location of three convention hotels.” (In fact, it wasn’t private land at all.)
“There is no question that the proposed hotel sites will be in position to reap great benefits from this magnificent entertainment complex.”
To help realize that dream, the Michigan Legislature — with its Republican majority securely under Engler’s control — stepped in to assist by passing a bill (“in the dead of night,” one critic later chided) authorizing the state to sell the land for “not less than fair market value.” On Dec. 28, 1999, in the quiet between Christmas and New Year, Engler signed the bill into law.
On Jan. 14, 2000, Nederlander and Dan Wyant, director of the Michigan Department of Agriculture, which oversees the state fair, signed a 30-year lease agreement that was to take effect Oct. 1. Beginning in 2003, Nederlander would start paying annual rent of $500,000; it would jump to $1 million a year in 2008.
The signing of this lease was such a closely guarded secret that fair manager Hertel didn’t know about it, according to his October 2000 deposition.
In fact, the lawmakers didn’t even enact the legislation needed to legitimize the deal until late February.
Following unanimous passage of the bill authorizing the state to lease the fairgrounds, Detroit’s daily papers began to get wind of the deal.
In early March, the Detroit Free Press reported that a “massive development proposal” was in the wings, and that “veteran Detroit theatrical producer Joseph Nederlander leads the contenders” vying to lease the facility. When reporters asked whether a racetrack was part of the plan, Hertel said no.
Likewise, when Detroit News columnist Pete Waldmeir wrote about the deal, he quoted Hertel, noting that the fair manager was “choosing his words carefully.”
“I have said before that our plans for renovations and new construction did not include a racetrack,” Hertel told Waldmeir. “We are sensitive to the feelings of the community (complaints about the crowds, the noise, the traffic etc.).”
Waldmeir, however, was skeptical. He concluded his piece by observing, “It is an ill-kept secret that Hertel’s long-range hopes continue to include auto racing. …”
Asked during his deposition why he told the papers the track wasn’t part of the plan when he’d known for months that it was a key component, Hertel said his statements to the press reflected his belief that the racetrack was politically impractical.
There was another, perhaps more powerful reason.
“I was given instructions that until this item was to go to a public meeting, which was the State Fair Council, that I was not to discuss it,” admitted Hertel.
And where did those orders originate?
The governor’s office, said Hertel.
Off to the races
Within a month, the truth about auto racing was disclosed.
A second lease, nearly identical to the first, was signed April 4. A week later, at meeting of the Michigan State Fair Advisory Council, Bernie Schrott, speaking for Nederlander, pitched the vision for “Fairgrounds Park.”
Schrott told the council that if it acted immediately, Fairgrounds Park could be open for business as early as fall 2001. After adjourning to closed executive session for a half hour, the board voted unanimously to approve the plan.
In the news reports that followed, there was apparently no mention of the provision granting Nederlander right of first refusal if the state decided to sell the fairgrounds at any point over the next 30 years — or even 50, should Nederlander exercise options to extend the contract.
Still secret at that point was the fact that, six days prior to the fair board’s approval of the lease, Nederlander signed a purchase agreement to buy the 34.9 acres slated for hotels for $6.1 million.
So most of the attention was on the racetrack. Which is understandable. It was considered so imperative that Nederlander won an escape clause allowing him to opt out of the deal before Jan. 1, 2002, if he couldn’t build it.
Among those who lined up in opposition to the track was Detroit Mayor Dennis Archer. Although Nederlander met with the mayor to brief him on the plans, he didn’t disclose that the racetrack was part of the deal, said mayoral spokesman Greg Bowens.
“It was a complete surprise, and there was a real sense of betrayal,” Bowens says. “From that point on, we proceeded with a great deal of caution and trepidation. On this issue, things are not always the way they appear on first blush.”
Divide and conquer
Opposition to the track was predictable. But Nederlander thought he had an ace up his sleeve. Four years earlier, his pal Bill Davidson’s plans for a speedway collapsed because he had no community support. To avoid that pitfall, Nederlander had been quietly gathering key allies in the poor neighborhoods south and east of the fairgrounds.
His point man was Schrott, who courted key ministers in the area.
“The ministers like Bernie,” observed Nederlander.
The churches were told they could be partners in low-income housing projects. And in at least one case, they received more than mere promises.
According to Nederlander, at least 10 lots were handed over to the Rev. Royce Lester’s Original New Grace Missionary Baptist Church south of the fairgrounds. In his deposition, Nederlander estimated the value of the property to be $30,000.
Nederlander tells Metro Times that his philanthropy wasn’t motivated entirely by altruism.
“We were trying to get their support,” he said.
It worked. When the fair council convened to vote on the proposal, residents from the poorer neighborhoods turned out in force to show their approval of the project.
It wasn’t the same for the residents west of Woodward. In middle-class to upscale neighborhoods such as Green Acres and Palmer Woods, opposition to a racetrack was overwhelming.
“What they did,” observes Bowens, “was try to divide the community, playing off one group against another.”
Joe Nederlander doesn’t see it that way.
“I went to all the neighbors south of us, the slum area, east of us … burnt-out houses, junk, years of accumulation of trash, a disgrace that the city of Detroit has that neighborhood the way it is,” he explains. “And we decided we would have a racetrack, and that we would — after the debt service on the track — we would turn the proceeds over to the community.
“I thought I was doing a great thing for a lot of nice people that live like Americans shouldn’t have to live. That’s how I got involved with this. I mean, would you rather live across from a racetrack or a slum?”
Fight, not flight
Bob Handley sounds weary.
Handley and his wife have lived in the Green Acres neighborhood since 1963. They’ve watched most of the city’s other white residents flee to the suburbs. But the Handleys and some of their neighbors decided to stay, putting up with rising crime and insurance rates and streetlights that are out for weeks at a time.
The perseverance has paid off. Every year the home’s value has appreciated.
“Every single year,” he repeats.
But the Handleys own a home, not an investment. They feel connected to the community that surrounds them.
“We’ve created a quality of life here that’s so high, we think it’s worth it,” he explains, sitting in his cozy kitchen.
Seven years ago, after retiring as a manager at the state’s Department of Consumer & Industry Services, he returned to school to pursue a second career as a nurse. Now he works in a dialysis unit at Sinai-Grace Hospital.
It can be trying work. But that’s not what has Handley sounding weary.
As he sits and talks, he ticks a list of neighborhoods he’s seen fail over the years, good, decent pockets that suddenly collapsed into poverty and abandonment.
And he worries about that happening to his neighborhood.
As it is, residents are willing to live with the state fair — and the nuisance that comes with it for two weeks each year — as a neighbor. Cars clog their streets because people won’t pay to park on the fairgrounds. There is litter. And the noise from bands playing for 14 straight nights.
“It’s loud,” he says.
But if Joe Nederlander added his track, and got his seven races a year, that would mean a total of 21 days of racing. And if he builds his amphitheater that hosts 20 to 25 concerts, you’re talking 50 days or more a year of headaches.
If that happens, Handley says, people who have stayed will give up and finally leave.
“You’ll destroy this neighborhood,” he says. “And you can’t afford to destroy a neighborhood like this in Detroit. We’re a model for urban renewal. You look around here, and what you see is an incredible cauldron of diversity.”
And so he fights. Since Bill Davidson’s racetrack plan surfaced in 1996, it’s been an almost constant battle for Handley and his neighbors, keeping track of what’s going on across Woodward, keeping tabs on the rumor mill, filing Freedom of Information requests and joining lawsuits in an attempt to keep abreast of the next big development.
It’s been a long fight, and he says it’s not easy battling officials who should be looking out for your interests.
“There’s no peace,” he says. “That fairgrounds is public property, but they are operating without any public accountability, or without any public input into the process.”
The races are off
Even before the neighbors west of Woodward joined forces with the city of Detroit and communities such as Ferndale and Huntington Woods across Eight Mile, Joe Nederlander’s dreams of constructing a racetrack faced another significant hurdle.
“I don’t know anything about racing,” he admitted during his deposition. “I just thought it was a great idea.”
And his pal?
“Bernie Schrott knows less about racing than I do,” he said.
Which may explain why Nederlander didn’t realize until after he signed the lease with the state that there wasn’t enough room to hold those lucrative NASCAR races touted in the development’s original promotional material, according to his deposition.
But he had other options, and some help.
As early as March 1999, at about the same time the State Fair Development Group was formed, H. Kent Stanner, corporate vice president for IMG — the organization in charge of holding the annual Grand Prix at Bell Isle — was talking with John Hertel about moving that race to the fairgrounds.
By July 1999, a deal was on the table and Governor Engler was directly involved. According to a confidential letter dated July 20 from Stanner to Engler:
“IMG Motorsports is prepared to enter into a long-term lease which could approach payments of $1,000,000 a year. We would agree to initially only stage one major event per year, but would like to have a driving school and some other minor events during the year.”
According to the letter, John Hertel was very much in the loop at this point. It couldn’t have hurt that his brother, Curtis Hertel, a former state legislator, was working as a lobbyist for IMG. The letter ended on a note of urgency.
“… [T]ime is of the essence regarding this project, so I am requesting that we all move forward as quickly as possible,” wrote Stanner.
But the wheels came off the deal when the city of Detroit, neighboring cities and residents west of Woodward filed a lawsuit in June to block the track.
Less than two months later, Nederlander gave up. In an Aug. 10 letter to Mayor Archer, Nederlander announced that he had terminated an agreement with IMG to stage the Detroit Grand Prix at the fairgrounds.
“We agree with you that Belle Isle, which is a beautiful facility, should continue hosting this world-class event.”
“As a result,” he continued, “it is not economically feasible to build a racetrack without the Grand Prix.”
The governor’s office was outraged.
“We are absolutely shocked that this was not communicated to anybody at the state,” Engler spokesman John Truscott was quoted as saying. “This is a major disappointment and puts the entire lease and the entire contract in serious jeopardy. Our only recourse may be to open this up again to other proposals.”
The anger emanating from Lansing wasn’t Nederlander’s only problem. In a letter to Archer, he expressed hope that the city would support the rest of the project without the track. He learned in the next day’s paper that the lawsuit to block construction of the amphitheater as well would continue. So the Nederlander group countersued, claiming the court action cost him $40 million in development deals and financing. That suit — which his opponents claimed as an attempt at intimidation — was withdrawn after Nederlander admitted during a deposition that he had not inked a single deal.
The racetrack was expected to be a major drawing card for those three hotels Nederlander envisioned for the 34.9 acres he’d agreed to purchase for $6.1 million. With no racetrack, the hotels weren’t feasible.
What to do with the land?
Swingin’ deals
According to Nederlander, there was a lot of interest among “big box” commercial developers in cutting deals in that part of town. Home Depot had been looking to acquire land near Seven Mile and Woodward, about a mile south of the fairgrounds, he says, but gave up when area homeowners objected.
At that point, Nederlander says he just wanted to unload the land for enough profit to recoup the cost of improvements under way at the fairgrounds.
“I’m not a developer,” he explains.
So, he says, he signed a purchase agreement with another old friend of his, businessman Edward Rosenberg, who offered to take the property off Nederlander’s hands for $10.5 million. Exactly when that deal was struck is unclear. What is clear, though, is that Bernie Schrott continued to play a key role.
By Nov. 6, 2000, Home Depot had written Schrott a letter of intent to pay $7.25 million for a 13.5-acre slice of that land.
At about that same time, Robert Francis assumed his new job as director of capital improvements for Detroit Public Schools. Francis was instructed to go shopping for a site to build a high school. He was pointed toward the fairgrounds.
According to an article published on Jan. 23 of this year, Nederlander told the Detroit News his plan was to build a major retail center on the site formerly planned for hotels.
Three days later, Detroit Public Schools signed a $17 million purchase agreement with Schrott, who was acting as an agent for an unspecified limited partnership, later identified as Avenue Investors.
Because of the takeover of Detroit Public Schools by Governor Engler in 2000, rules regarding due process and public disclosure were voided. The new rules give the school CEO far-reaching authority and take away much of the oversight previously provided by an elected school board. Consequently, no disclosure of any sort took place prior to the school district’s signing the deal. Without even having the land appraised, schools CEO Kenneth Burnley cut Schrott a $1 million deposit check that was put into an escrow account, where it remains today.
The district made the transaction public on Feb. 1. A few days later, a reporter at the Detroit Free Press connected the dots and all hell broke loose. There was a public outcry over the fact that the school district would pay $11 million more than the property had sold for just 10 months earlier.
The district hustled to justify the deal, commissioning a hasty “evaluation” of the property that concluded the land was really worth $21 million. The district also assured taxpayers that it would recoup part of its costs by selling off part of the land to a retailer. On March 14, Home Depot signed a letter of intent with the district, offering to buy about 11 acres for $7.5 million.
Francis says that offer justifies the price the school district paid for the entire 35 acres, making the $10 million or so it would end up paying for the remaining 24 acres a bargain. “That’s the best evidence of a property’s value — what a purchaser is willing to pay a seller,” he says.”
But even he admits that public concern about the arc of the deal is understandable. “That’s the element of this entire set of circumstances that’s so compelling,” he says. “It just doesn’t look good from a taxpayer perspective.”
Gone to court
In June, a group of taxpayers went to court in an attempt to stop the state from selling the land to Nederlander. They retained George Ward, formerly the No. 2 man in the Wayne County Prosecutor’s Office. Ward agreed to handle the case pro bono.
Ward contended that taxpayers and schoolchildren were being shortchanged on one end of the deal or the other — either the state sold the land too cheaply or the school district agreed to pay to much.
“It’s a no-brainer,” he says.
As he dug into the case, Ward found what he claimed was another major problem with the deal. The state Department of Management and Budget, he says, did not follow proper procedure when the Legislature authorized sale of the land. The legislation mandated that the DMB conduct a new appraisal prior to any sale. Instead, the department relied on two previous appraisals performed by the Department of Natural Resources. The highest of those appraisals valued the land at $6.1 million. One reason it is so much lower than the school district valuation is that much of the property is zoned residential, and that was the standard used by the DMB appraiser. The school district evaluation, however, assumes that the property would be rezoned commercial, which would make it much more valuable.
It seems a logical assumption, especially since the property was being sold to Nederlander to build hotels on.
Either way, Ward wanted a judge to step in and decide which price was most fair. Normally, taxpayers could be expected to turn to the state’s attorney general for help, but in this case Attorney General Jennifer Granholm sits on the state Administrative Board, one of several entities that officially signed off on the deal.
As a result, the AG’s office found itself in court standing shoulder to shoulder with attorneys representing Nederlander and the school district, all of whom were lined up against Ward.
In June, Wayne County Circuit Court Judge Susan Bieke Neilson ruled that taxpayers lacked standing to try to halt the sale.
That ruling is being appealed.
Fair-weather friends
While all that was going on, Nederlander attorney J. Leonard Hyman issued a flurry of letters beseeching the state to close on the sale before the purchase agreement expired on Aug. 31. At first the state balked because of the taxpayer lawsuit. When Nielsen dismissed the suit, that door reopened, even though the case was on appeal.
At that point, the state began claiming there were “easement” issues that needed to be worked out, especially regarding parking.
Remember, as Hertel pointed out in his deposition, those 35 acres provided valuable income from fair parking. Along with the hotels, Nederlander had agreed to construct a parking structure to make up for the loss. But the prospect of a school and Home Depot on the land created a new problem.
Nederlander says that argument is a red herring. He claims he cleared about 60 acres for the racetrack — more than enough room to make up for the lost parking.
As the summer wore on, relations between Nederlander and the state grew increasingly strained. In June, the AG’s Office issued a letter expressing displeasure that the original purpose of the sale — building hotels that would enhance the state fair operation — had been abandoned.
“The state notes that possibly fraudulent misrepresentations were made regarding the proposed use of the land during the negotiations,” according to a letter dated May 31.
Although it promised to resolve the easement question, the state continued to drag its feet, claims Nederlander attorney Hyman. And when he objected to the fraud allegation, saying his client kept the state fully informed about all actions, the AG’s office fired back another angry letter.
“Your client indicated that it intended to build hotels on the property, not to sell it to someone else who in turn sold it to the Detroit Public Schools for more money than what the State would have sold it to them if it knew the school district was interested. In fact, your client indicated during negotiations that the property was not worth the $6.1 million ultimately agreed upon by the parties.”
In court, Hyman argued that the price spike was the result of Nederlander’s “genius” as a developer.
Nederlander tells Metro Times that the property became more valuable because he cleaned up the fairgrounds and the area around it. He also says there are significant environmental problems at the site, and Rosenberg is obligated to clean those up before the school district begins to build. That, he says, is going to cost millions.
The school district’s Francis agrees that there is some contamination at the site, but says it is “not significant.” Environmental reports obtained by Metro Times show some soil samples contain unacceptable levels of arsenic, lead and the toxic benzoapyrene, but gave no indication of what cleanup costs would be.
After the August deadline for closing on the sale came and went, Nederlander sued the state, claiming breach of contract. In its reply, the state cited arguments made by Ward in briefs he filed for his case against the state, school district and Nederlander.
Asked if he saw any irony in the fact that his former ally in court was now using Ward’s arguments against him, Hyman replied, “I just think that they’re fair-weather friends.”
Limbo land
Today, everything is on hold until the court actions get sorted out. Nederlander can’t sell to Rosenberg, who can’t sell to the school district, which can’t sell to Home Depot.
“It’s a conundrum,” admits Francis.
Taxpayers still have their case in front of the appellate court, waiting to see if they’ll be allowed to try to block the land sale just in case Nederlander wins his suit and the state is forced to sell off the 35 acres for $6.1 million. Meanwhile, the cities of Detroit, Pleasant Ridge and Ferndale, along with homeowners west of Woodward still have a lawsuit pending in case Nederlander attempts to build that amphitheater.
But he says there’s not much chance of that at this point. He says his $200 million vision of a world class entertainment mecca as been whittled down to a $21 million project revolving around the “Crystal Coliseum” indoor arena and an expo center. But because of all the problems he’s having, financiers aren’t exactly banging down his door. Which is why he says it’s crucial that he receive the money that would be generated by selling those 35 acres to his pals Ed Rosenberg and Bernie Schrott. Otherwise, he’s doubtful that anything will happen.
Meanwhile, attendance at the state fair fell in September by nearly 30,000 compared to the previous year, and the slim $20,000 profit was due in part, claims Nederlander, to a lot of free maintenance work his people did that they won’t be doing next year. Meanwhile, Stanner and Hertel are talking again about trying to bring an auto race to the fairgrounds.
Nederlander wants nothing to do with it.
“I agree with the residents [across Woodward] who don’t want the racetrack,” he says. “I appreciate what they are saying. I wouldn’t want to live next to a racetrack, either.”
On the road again
Back in his Jeep Cherokee, Nederlander points out sites around the fairgrounds he says have been cleaned up because of the work he’s done. Same inside the fair where, according to the Department of Management & Budget, about $5 million in renovations have been performed since Nederlander signed his lease.
“Tell people what I’ve done out here,” he says. “That’s all I want, is for them to know. This place was a disaster before we came here.”
“I used to come out to this fair with my dad when I was a kid, and always had a great time,” explains Nederlander. “That’s why I decided to do this, as a legacy to my dad.”
Meanwhile, the Dec. 31 deadline allowing him to back out of the lease is approaching. What happens next, he says, depends on whether he gets the state to sell him that 35 acres. There have been recent reports that he’s considering other options, such as locating an aquarium at the fairgrounds, but because the fair — with its set-up and close-down time — takes over for more than three weeks a year, “It’s tough finding anyone who wants to commit,” says Nederlander.
“I don’t know what the hell is going to happen,” he says with a shrug. “It might be to the point where maybe I just want to get out of all this. We’ll see.”
Curt Guyette is Metro Times news editor. Contact him at 313-202-8004 or cguyette@metrotimes.com
