State lawmaker asks Nessel to review Northern Michigan University Foundation land deal

MARQUETTE – An Upper Peninsula legislator has asked Michigan Attorney General  Dana Nessel to review a land deal involving Northern Michigan University's foundation, a for-profit hospital and a Marquette developer who serves on Northern's Board of Trustees.

“There are many valid concerns that community members brought to me that I feel need to be addressed surrounding this project and the people who are either publicly appointed to serve on these boards or who work for a public institution at NMU that are giving the appearance of an insider deal," said state Rep. Sara Cambensy, D-Marquette.

The controversy centers on 23 acres of land in the middle of Marquette that had been home to  Marquette General Hospital. After being bought by a for-profit company, LifePoint Health, it was vacated in favor of a sparkling new facility across town.

The old hospital facility and land sit mostly empty now — a few weeds are popping up in parking lots and signs announcing the closure are stuck over wayfaring signs on the hospital property.

The buildings sit so close to Northern Michigan's campus that the school's football quarterback could stand in a parking lot in front of the school's Northern Center and throw a ball through the windows of the large hospital tower.

"All the conflicts were cleared," foundation CEO Brad Canale told the Free Press earlier this month, before the letter was sent.

He reiterated that in a statement after the letter was sent.

"Throughout this nearly 10-month initiative, we have been transparent in the overall process. Our commitment to transparency remains. The letter to the Attorney General by Rep. Cambensy issued today needs to be evaluated in depth.

"The NMU Foundation will cooperate fully with any investigation the Attorney General may pursue. We have nothing to hide, including our motivation to facilitate the alignment of resources and partners needed for the transformation of the critical site directly next to campus.

"Taking action for the betterment of our campus community and our larger community is something we are proud to be doing. We have taken great care to do so through appropriate measures at each step."

The developer issued a statement Thursday night, saying it hadn’t had a chance to completely read the letter asking for an investigation.

“However, we do not need to read Representative Cambensy’s letter to state the following. Throughout this process to redevelop the hospital campus, the people of Veridea Group and its owner, Robert Mahaney, have conducted ourselves at all times with complete integrity, honesty and transparency. Furthermore, any potential conflicts of interest have been presented and cleared in advance by legal counsel and the respective Boards of the University and the Foundation. Our interest in participating in this project is simple: it’s necessary for our community. No other developer has been willing to take on this project. We owe it to the community, the City and the University to see this through and we intend to do exactly that.”

Nessel's office and LifePoint were unable to be reached for comment.

In 2018, LifePoint put the property up for sale and the Veridea Group entered into a purchase agreement for the property. That agreement eventually fell apart in 2019.

Veridea Group is owned by Bob Mahaney, who was appointed to Northern Michigan University's board in 2015 by then-Gov. Rick Snyder. Mahaney was the liaison between the university board and the Northern Michigan University foundation board until he resigned that post in October 2021. The nonprofit NMU Foundation raises funds for the university and is legally separate from it.

In 2021, the foundation and LifePoint had discussions about the hospital property, which led to the foundation agreeing to buy the land for $1. It has yet to close on the property, foundation officials told the Free Press earlier this month.

The foundation then put out a request for bids, looking for a developer to take on the project. Veridea was the only group to submit a bid, the foundation said. A mix of parking, a hotel, offices and residential areas are planned for the site, although details are still being worked out.

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Canale said the foundation provided the due diligence and other materials to everyone who was interested, but because Marquette is so far north and away from easily accessible labor pools, no other companies wanted to take this project on.

"If you don't know this labor market — that is a learning curve," he said.

The foundation and the developer have worked with city of Marquette officials to put together a brownfield plan to capture tax incentives to help pay the $20 million cost of demolition, and lead and asbestos abatement on the site.

Then $8 million was included at the start of the month in the state budget to help also cover costs tied to demolition and redevelopment.

That was a surprise to Cambensy.

"As the Representative for this district, I was not aware that this enhancement grant ask and approval were in the budget until the day the legislature voted on it," she wrote in her letter to Nessel, adding that the circumstances surrounding the deal raise questions

that need to be answered.

Is "there is a substantial conflict of interest from an NMU Board of Trustee member using public office for personal gains through his private development and investment company (Veridea)?" she wrote. "Second, is there a significant taxable gain and advantage made by the private entities by having the NMU Foundation accept the old hospital property from (LifePoint) for $1 instead of selling it at fair market value?

"Also, since the Marquette City Commission raised property taxes on its residents three weeks after approving the $4.6M brownfield agreement that allows 16 years of reduced or no taxes on the old hospital site, constituents want to make sure they are not paying more while the hospital and developers find a way to pay less."

The foundation said it got involved simply as a way to make sure the property would be put to good use. Having a huge chunk of vacant property with deteriorating buildings next to campus wouldn't be good for Northern, Canale said, while having the chance to offer more housing in Marquette would be good for everyone, including the city, which could see tax revenues grow by $4 million a year.

"This a story of goodwill between all partners," Canale said. "We stepped up because inaction was no option. Our role to facilitate and then we will go back to our normal role of fundraising for the university."

Contact David Jesse: 313-222-8851 or djesse@freepress.com. Follow him on Twitter: @reporterdavidj. Subscribe to the Detroit Free Press.

This article originally appeared on Detroit Free Press: State reps want Nessel to review Northern Michigan University land deal