February 17, 2015

William R. Bloomfield
State of Michigan Department of Attorney General
Charitable Trust Attorney
Corporate Oversight Division

Re: March 4, 2014 Agreement between the City of Benton Harbor and HSCRI

Dear Mr. Bloomfield,

In recent months I have attempted through FOIA requests to obtain
documentation of email communications and phone discussions, etc., between
the Attorney General’s office, John Cameron of Dickinson Wright PLLC, the
City of Benton Harbor, HSCRI (Harbor Shores Community Redevelopment
Inc.) or other interested parties involved in the
March 4, 2014 revision to the
2008 Lease Agreement  between the City and HSCRI. According to your
office, and with the exception of your March 27, 2014 non-objection letter to
John Cameron, practically nothing exists.

The Agreement effectively removed HSCRI’s obligation to see that the Klock
Rd. Extension (as required under the
Considerations as Rent in the Lease  
was constructed. The road extension had a
construction cost of $873,954  
and was to be additional compensation for the loss/conversion of 22 acres of
Jean Klock Park for 3 holes of a golf course.

The Agreement circumvented the democratic process because it was entered
into without transparency as the City of Benton Harbor Commissioners and the
public at large were not notified or involved in the process. As a result the
Agreement has violated the political process.  

Below are observations, questions and comments regarding the March 4,
2014 Agreement between the City of Benton Harbor and HSCRI.

March 4, 2014 Agreement to Amend Lease

On March 4, 2014, the City of Benton Harbor’s EFM (Emergency Financial
Manager), Tony Saunders, and the President of HSCRI, D. Jeffrey Noel,
signed an
Agreement to “delete” Section 2.03(b)(iv) of the July 25, 2008
Lease Agreement between the City and HSCRI for the conversion of 22 acres
of Jean Klock Park:

    4. Section 2.03(b)(iv) of the Lease is deleted, and Harbor Shores shall
    have no further obligation in respect to the extension of Klock Road.

Section 2.03(b)(iv) required HSCRI to provide $375,000 in matching funds
toward the construction of the East Klock Road Extension which was intended
to be an economic and community benefit for area residents and businesses.

On March 14, 2014 John Cameron emailed you a request for approval of the
amendment to the Lease Agreement. Included was the Agreement in question,
along with a letter dated September 9, 2013 from
Bob McFeeter of HSCRI to
the EFM.  Of the terms of the Lease requirements for the Klock Road
Extension Mr. McFeeter states: “the terms and conditions need to be
revisited.” – referring to the Lease requirements for the Klock Road extension,
which is required under Section 2.03 Consideration, subsection (b) Additional
Rent (iv).

Pertinent details were omitted by Mr. Cameron from the “relevant facts’ noted
in Bob McFeeter’s letter regarding land HSCRI purchased from the City of
Benton Harbor, and facts concerning the Modern Plastics bankruptcy case.
Notwithstanding that neither of these issues has any bearing on the Lease
Agreement or the properties transferred through the Lease.

April 13, 2006 Memorandum of Understanding/Parcels 77, 78, 79

The information that the property was used as a dumping site was known to
Harbor Shores for more than two years before the Lease Agreement was
signed. On April 13, 2006 the City of Benton Harbor and Harbor Shores
entered into a MOU  (
Memorandum of Understanding) regarding the
“Project.” Part of the “Property” included in the Project were parcels 77, 78
and 79; the same parcels Mr. McFeeter spoke about in his letter to Mr.
Saunders as being contaminated: “Unbeknownst to the City of Benton Harbor
and Harbor Shores, this land proved to be non-developable to its highest and
best use” because in prior decades the City “had used it as a public dumpsite.”

    Recitals section of Lease Agreement: “(…)The Memorandum of
    Understanding provides for the sale of certain City of Benton Harbor-
    owned land (not including any part of Jean Klock Park) for the Project
    and sets forth additional terms regarding community benefits, parks and
    recreation and zoning.(…)”

    Lease Section 7.18. No Other Agreements. “(…) the Parties
    acknowledge that they have entered into the 425 Act Agreement,
    Memorandum of Understanding and the Rezoning Agreement referenced
    in the “Recitals” Section, which shall remain in full force and effect.”

    MOU Section 8. Environmental. “(…) Benton Harbor shall convey the
    Parcels to Harbor Shores in their “as-is” condition.” Notwithstanding the
    foregoing, Benton Harbor and Harbor Shores agree and acknowledge
    that because most of the Property is in an area which historically has
    been the home of heavy industrial and landfilling, there is environmental
    contamination that must be addressed before development on the
    property can be undertaken. (…)”  

    Parcel NO.
    58, 77
    78, 79

    Current Use/Environmental Status

    “(…) There is evidence of the historical and widespread industrial and
    municipal waste practices including the presence of foundry-like debris,
    molds, castings, bricks, drums, and slag. Recent sampling indicated that
    at least a portion of the property is impacted with arsenic, chromium,
    copper, iron, molybdenum and selenium at concentrations above
    residential criteria resulting in the parcel being a facility.”

According to the MOU, HSCRI’s claim that they knew nothing about the
condition of the land they purchased from the City is false. Its obvious HSCRI
knowingly purchased the land in “as-is” condition. By entering into the MOU
Harbor Shores acknowledged the land was heavily contaminated, did not meet
residential criteria, and was a “facility.” The City and Harbor Shores were
jointly represented by the same environmental firm, Earth Tech, and were
equally informed of the serious contamination issues by the firm’s consultant.

HSCRI also knew that the majority of the land being developed within the
“Project” was, and still is, heavily contaminated, including much of the
mitigation that was created for the conversion of 22 acres of Jean Klock Park.
Included in the MOU Environmental Status above is Parcel 58 which is
adjacent to Parcels 77, 78 and 79. A portion of Parcel 58 is a part of the
Aircraft Components Superfund clean-up site that is still undergoing ground-
treatment injections and is occupied by the golf course and Jean Klock Park’s
mitigation Parcel E.


Those three Agreements, along with the Lease Agreement, must be viewed as
a whole document dealing with the development “Project.” Both the Lease
Agreement and MOU view the East Klock Road Extension as an economic
benefit to the City, area residents, and the “Project.” Incremental adjustments
potentially impact the entire validity of the Lease Agreement and diminish each
party’s role.

Modern Plastics Bankruptcy Proceedings

Mr. McFeeter’s September 9, 2013 letter to the EFM also points to the
bankruptcy of Modern Plastics and concerns about its future such as back-tax
issues, and alleged environmental woes, as reasons to amend the Lease
Agreement. What HSCRI didn’t provide the AG’s office with was the
EPA’s
Final Close-Out Memorandum for Removal Action,  signing off on the
environmental status of the Modern Plastics property and giving the
bankruptcy court the okay to move forward with proceedings. Contrary to Mr.
McFeeter’s dire predictions in his letter ‒ that the EPA could place a lien on
the property for reimbursement of emergency response expenditures ‒ the
EPA recommended closing the Modern Plastics site without pursuing recovery
of costs because the estate did not have funds to pay for response actions.

The back story is this - Modern Plastics is a neighbor of NPC (New Products
Corporation). For years NPC supplied parts to Modern Plastics and were one
of many unsecured creditors still owed money when Modern Plastics filed for
bankruptcy. Sometime in late 2012 NPC learned Harbor Shores was
attempting to purchase the Modern Plastics property for almost nothing.

Excerpts from NPC’s January 8, 2013 press release:

    “(…) NPC learned that an offer of $25,000 to purchase Modern Plastics’
    facilities and property was made by a company formed by an attorney
    from the law firm of Dickinson Wright, which also represents Whirlpool
    and Harbor Shores.”(…)”  

    “(…) “It’s no coincidence that Harbor Shores has been eyeing our
    property  and our neighbor, Modern Plastics’ property,  for many
    years,” added Miller. “We have access to drawings that date back to
    2005, showing residential development on both the properties.” (…)”

Despite several attempts by HSCRI to control the Modern Plastics property, in
March of 2013
NPC announced that it had outbid Cleanup Modern
Plastics, LLC, a new entity created by Mark Miller, a St. Joseph attorney that
has also represented Harbor Shores.  Because NPC was successful in
purchasing the note for the property, the Klock Rd. extension and parcels 77,
78 and 79 were no longer beneficial to HSCRI.

Mr. McFeeter’s September 9, 2013 letter places blame on the City and
threatens “proper recompense from the City for land that was claimed to have
been developable at the time”, if HSCR is forced to expend fees in the amount
of $375,654 for road construction. HSCR then offers $150,000 “contribution
payment” in lieu of constructing the Klock Road Extension, reasons given in
the March 4, 2014 Agreement were:

    F. Because the development prospects for the Property and other land in
    the vicinity of the Property are at best uncertain, there is no present need
    to extend Klock Road, but the City is in need of funds to support, among
    other things, its pension obligations and current operations.

As I stated above; pertinent details were omitted from the “relevant facts’ noted
in Mr. McFeeter’s September 9, 2013 letter to EFM Tony Saunders regarding
land HSCRI purchased from the City of Benton Harbor and the facts
concerning the Modern Plastics bankruptcy case. The Agreement to amend
the Lease is the result of one thing; Harbor Shores’ inability to gain control of
the mortgage for the Modern Plastics property.

Emergency Financial Manager Tony Saunders

On February 1, 2013, Tony Saunders began his duties as the City of Benton
Harbor’s EFM. Shortly after he arrived he met with Cheryl Miller, CEO of NPC,
and her consultant, Chris Lannert.  They discussed the land dispute litigation
between NPC and Harbor Shores, the Modern Plastics bankruptcy issues,
and asked Mr. Saunders of his intentions regarding the Klock Rd. Extension,
which was necessary for NPC’s interest and provided for in the lease. Mr.
Saunders indicated he was not aware of NPC’s litigation, had nothing to do
with Jean Klock Park or the Lease Agreement, and more specifically: “The
Governor said don’t touch it.”

Despite what Mr Saunders claimed to the NPC representatives (and contrary
to his duties as EFM), on March 4, 2014, Mr. Saunders touched the 2008
Lease Agreement by signing the Agreement, effectively allowing HSCRI to
“delete” their obligation to construct the Klock Road Extension.

EFM Tony Saunders duties were to look after the economic interests of the
City. Why, instead, would he remove an economic community benefit by
accepting $150,000 payment (for flimsy purposes) in exchange for a fully
funded, free road with a value of nearly $1,000,000? It doesn’t make sense!

The timing is extremely suspect as well because the Agreement was signed by
Mr. Saunders 3 days prior to him concluding his duties as Emergency
Financial Manager, and 5 days prior to the Benton Harbor City Commission
regaining its voting rights.

Was Mr. Saunders aware Harbor Shores and the City signed the MOU
acknowledging the property was contaminated, or did Harbor Shores withhold
that information from Mr. Saunders? In my December 2013 conversation with
Mr. Saunders he told me he was not familiar with the terms of the Lease
Agreement. If what he said was true I find it unlikely he took the time to study
the MOU, either.

Connecting Trail

The 12.5 mile trailway system for the “Jean Klock Park Expansion and
Trailway System”  was to be completed in 2013 and was supposed to
include a trail that would run parallel to the Klock Road Extension. Its purpose
was to link Parcel G, the stand-alone park mitigation, with the rest of the Jean
Klock Park Expansion and Trailway System. That section of connecting trail,
as depicted on the Trailway System Map of the Conversion Proposal; the
developers website; trail head signs; and glossy trail maps stored in boxed
compartments on the trailhead signs, doesn’t exist.

2013, the year the trails were to be completed, was the same year that New
Products gained control of the interest in Modern Plastics property and Bob
Mcfeeter wrote the EFM about revisiting the terms of the Lease. It is no
coincidence that neither the Klock Road Extension project nor the required
adjacent trail link to the remote piece of mitigation for Jean Klock Park was
ever completed.

Does the deletion of Section 2.03(b)(iv) of the July 25, 2008 Lease Agreement
between the City and HSCRI for 22 acres of Jean Klock Park allow for the
abandonment of the required section of trail, too?

Golf Course Oversight Panel

Two email’s were attached as exhibits to John Cameron’s March 14, 2014
email to you; one from
Tracy Sonneborn to Benton Harbor City Manager
Dwight Mitchell in 2007,  and another from Mr. Sonneborn in 2008  to Don
Schmidt,  attorney for the City of Benton Harbor. Both emails provide
outlines of what the AG’s office expected of the Oversight Panel’s rules and
procedures. I have concluded the reason they were attached to the Agreement
may be that HSCRI was attempting to show the AG’s Office that the Golf
Course Oversight Panel has control and oversight of the Lease Agreement.

In the June 4, 2008 email from Tracy Sonneborn to attorney Don Schmidt, Mr.
Sonneborn lists terms of duties for the Panel that the parties agreed to. Term
#5 states: “Allow a range of remedies to the City, including termination of the
lease, in the event of a violation of the agreement, which would include a
violation of the Deed.”

Nowhere under the terms of the executed Lease Agreement do the Golf
Course Oversight Panel’s duties include any actual authority over the terms of
the Lease. The Oversight Panel’s authority is limited to making sure the golf
course is available to all members of the public without discrimination; making
sure it’s open for play, inspect the course to make sure it’s in compliance with
maintenance standards; set fees for the course; review the golf course
operating budget; make play available to county residents at discounted fees;
make the course available for at least 2 high school invitational competitions
for the cities of Benton Harbor and St. Joseph’s public schools; and that it be
made available to the Boys and Girls Club First Tee program 7 to 10 days
annually. There is nothing in the language of the Lease that suggests the
Oversight Panel has any decision making authority over the Lease Agreement,
itself.

The Oversight Panel has always been loosely organized and ineffective to the
degree of being in violation of the terms of the Lease. Meetings are not
scheduled upon request by the City or are cancelled at the last minute, and
representatives from the City continue to be shuffled on and off the panel with
total disregard to the rules and procedures set forth in the Lease.

The Oversight Panel is to be comprised of two members of the City
Commission; one who is head of the Parks and Recreation Committee; the
other to be nominated by the mayor and approved by the Commission. The
Mayor is also to nominate a City employee who must be also approved by the
Commission. Other members are to be a representative from the Management
Firm and a City resident who is a certified CPA (or professional equivalent).
With the exception of the appointment of the original Oversight Panel
members, no City Commissioner or City employee has been nominated by the
Mayor or approved by the City Commission since the initial formation of the
Oversight Panel, as is required by the terms of the Lease.

On February 16, 2012, then EFM Joseph Harris removed the acting head of
Parks and Recreation and
appointed himself,  automatically putting himself
on the Oversight Panel. He then
removed others from the Oversight
Panel and appointed Debbie Popp, the then Assistant City Manager who
resided in Chicago, and the current Benton Harbor Mayor, James Hightower.  
These actions should be viewed as a blatant default of the Lease and trigger a
default under its terms.

Lease Agreement Protocol

There is nothing in the lease that expressly permits the consideration section
of the lease to be amended. As a result, both the City of Benton Harbor and
Harbor Shores Community Redevelopment Inc. were required to provide the
Attorney General of the State of Michigan and the head of the Charitable Trust
Section of the Attorney General 60 days advanced written notice of the
proposed amendment to the lease agreement.

    Section 7.11 of the lease states: “Except as may otherwise be expressly
    permitted in this Lease, this Lease and the Exhibits attached hereto may
    not be amended except by way of a written document signed by both
    Parties after providing the Attorney General of the State of Michigan and
    the head of the Charitable Trust Section of the Attorney General of the
    State of Michigan sixty (60) days advance written notice of any such
    amendment.”   

From the lack of information I received through the FOIA I’ve determined that
the City and HSCRI did not provide the Attorney General’s Office 60 days
advance notice prior to writing and signing the agreement.  With the exception
of the earlier phone conversation John Cameron mentions he had with you in
his March 14, 2014 email to you, there is no evidence of documented
discussion or consultation with your office prior to HSCRI and the City signing
the Agreement. I did request records of written notes from your phone
conversation with Mr. Cameron but was denied for reason that the your office
does not possess such records. Is it normal procedure to not keep records of
discussions held over the phone? Shouldn’t content of phone call discussions
be summarized in writing and entered into public record?

Joint Representation

The signed Agreement, deleting Section 2.03(b)(iv) of the Lease, was
submitted to your office on March 14, 2014, via email by John Cameron of
Dickenson Wright, 10 days after the Agreement was signed. The Subject line
of the email read: Harbor Shores/Benton Harbor. Benton Harbor has its own
attorneys but in this case Mr. Cameron is jointly representing both parties.

Since the City and Harbor Shores are not partners, but rather separate parties
with individual vested interests in the Lease Agreement, is not joint
representation a conflict of interest?

Closing Remarks

In my opinion the following points should be considered:

  • This change of the Lease Agreement violated the political process

  • The terms of the MOU were breached

  • The Lease Agreement; the MOU; the 425 Act agreement, and the
    Rezoning agreement are not being looked at as a whole

  • The failure by both parties to contact the Attorney General’s office 60
    days prior to entering into the Agreement

  • The procedural protocol as required in the Lease Agreement was not
    followed

  • The Agreement was entered into by EFM Tony Saunders three days
    prior to his duties ending, and 5 days prior to the City Commission
    regaining its voting rights

  • The EFM was not protecting the City’s economic interests and weakened
    the City’s economic development potential when he entered into the
    Agreement to delete Section 2.03(b)(iv) of the Lease

  • The proposal to amend the Lease was not presented to and/or approved
    by the Golf Course Oversight Panel and the elected officials of the
    Benton Harbor City Council

  • The lack of transparency by all parties involved

  • The use of misinformation and/or misleading context of information by
    HSCR

  • The omission of relevant details by HSCRI

  • Contrary to what was presented, the Golf Course Oversight panel has
    little authority over the Lease Agreement

  • The potential conflict of interest regarding joint legal representation

With all the erosions that have occurred there’s little left of the Lease
Agreement. It’s all very disturbing as it was done in secrecy and without
transparency. Who is to say it cannot, or will not, happen (in-the-dark) again?
What if the developer comes up with newly created reasons why “the terms
and conditions (of the Lease) need to be revisited.” Are other subsections of
Section 2.03 Consideration and Additional Rent, such as: (a) The $30,000 per
year rent for the leased premises; (b)(vii) The maintenance of Jean Klock Park
and Park Expansion parcels; (b)(viii) The $5,000 minimum HSCRI must pay to
the City for the Community Benefits Program, also at risk of being “deleted?”

I request your additional personal involvement regarding the Lease
amendment based upon the prior lack of review or process in the record. If
proper procedure was not followed, the Agreement cannot exist, and if it does
not exist it is not legal. I ask that you conduct a proper investigation, that the
legal process is followed, and the provisions of the original Lease are restored
and enforced.

Respectfully,

Carol Drake

Cc:

Bob Anderson – National Park Service
Steve DeBrabander – Michigan DNR
Darwin Watson – Benton Harbor City Manager
Benton Harbor City Commissioners
Save Jean Klock Park
Letter to William Bloomfield - Charitable Trust Division
Office of Michigan's Attorney General

Friends of Jean Klock Park | PO Box 8988 | Benton Harbor, MI 49023
info@savejeanklockpark.org | www.savejeanklockpark.org
© Friends of Jean Klock Park. All Rights Reserved.