Wayne County, Farbman Spar Over Former HQ

DETROIT-Wayne County Executive Robert Ficano has authorized a lawsuit against the county’s former landlord at the Old Wayne County Building at 600 Randolph St. In the suit, county officials allege that the venture that made up Old Wayne County Building LP had overcharged the county on rent, and also owes the county at least $18 million to repay back a promissory note. The county, which moved out of the Randolph site after purchasing the Guardian Building downtown about three years ago, is also threatening to foreclose on its former site unless its claims are met.

“This is taxpayer money that’s owed legitimately,” Ficano tells GlobeSt.com. “We’re doing what any other business would do.” He says the defendants have until July to respond to the complaint in Wayne County Circuit Court.

The suit names the partnership, and also names as defendants the original partners in the 1984 sale-leaseback deal, prominent local developers Burton Farbman, Louis Glazier and Henry Wineman II. According to the suit, the partnership bought the building “by making a cash payment of $100 and by executing a non-recourse, interest-bearing promissory note” in the amount of about $4.38 million. The suit claims that the county has since paid more than $100 million in rent and fees for the building.

According to the suit, the county seeks reimbursement for about $5 million in “overcharges,” the refund of a $640,000 security deposit and the payment of the promissory note amounts due. In the suit, the county claims the partnership engaged in deceit. The county said in the suit that it paid rent, since a 1997 amendment agreement, based on the appraisal of someone who was secretly a participant in the ownership partnership. The suit also claims the partnership made charges based on more than $5 million of unnecessary and undocumented fees.

Finally, the suit claims the partnership owes promissory note payments of $1 million per year until 2028, and that a failure to make the payments “represents a material breach of the terms of the promissory note and mortgage, which gives rise to the (county’s) legal right to foreclose its mortgage” against the building. According to a letter by the partnership, however, since the building was not sold to the county, the promissory note is no longer valid.

The partnership did invest a good amount to restore the aging, 181,000-square-foot building at 600 Randolph. From 1986-88, the partnership spent more than $23 million to restore the building. In 1997, the county negotiated a 10-year lease with a base rent of $3.2 million, as well as the 30-year promissory note with the partnership.

As of 2007, the county claimed it was paying about $30 per square foot for the lease, about double the average downtown Detroit office rate. The building is also now worth much less than the $52.5 million price the partnership wanted from the county to repurchase the facility, according to the county’s lawsuit.

David Farbman, co-president of the Southfield-based Farbman Group, said in a response statement on behalf of his father Burton that the claims are “frivolous” and damaging. “Ficano's bullying tactics have gone on too long. This administration hides behind the power of the office while pretending to be righteous. There is nothing righteous about being a bully or abusing power,” said David Farbman in the statement.

He said in his statement that the complaint, of which he only saw a draft, is “loaded with false statements and inaccuracies.” He said he and his family will respond with “aggressive legal action” should the case proceed.

“This is desperate Monday morning quarterbacking and an attempt to distract the public from the current fiscal crisis and the real issues that the administration is facing. While I empathize with many of the challenges faced by the County, attempting to bring forth a fabricated and highly damaging lawsuit on a deal that happened more than 25 years ago is unacceptable. If these attacks continue I will aggressively pursue all remedies,” Farbman said.