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DETROIT-A Michigan Senate committee is looking into potential wrongdoing in the saleof 36 acres of State Fairgrounds land in Detroit to developer Joe Nederlander. The Senate government operations committee has met twice in the last two weeks, most recently on Thursday, to interview witnesses and hear presentations of the different parties in the transaction.

“It’s a fact-finding committee tasked with the purpose of finding out what happened,” says Paul Bukowski, press secretary for State Sen. Thaddeus McCotter, (R-Livonia). “There is an appearance of wrongdoing. It’s the senators’ job to check into that. The committee will draw a conclusion, and see if something needs to be done.”

Phone calls to Nederlander for comment on the allegations were not returned.

There are also questions why the state accepted Nederlander’s $200-million lease and redevelopment plan without taking bids for the entire Fairgrounds property, about 206 acres.Nederlander wanted to build some sort of race track and an amphitheater. He also wanted to build a large hotel on the 36 acres of adjacent land. The hotel idea died when a lawsuit to prevent the track dragged on, Nederlander says.

The state attorney general’s office has halted completion of a purchase agreement of 36 acres to Nederlander, claiming he defrauded the government in plans for Detroit land.

The attorney general’s office says Nederlander indicated he intended to build hotels onthe property. Instead, the developer sold it to a friend, who then in turn sold it to the Detroit public schools for $11 million more than what it was originally purchased.

“In fact, your client indicated during negotiations that the property was not worth the $6.1 million ultimately agreed upon by the parties,” says Matthew Rick, Assistant Attorney General in a letter to Nederlander’s attorney, Leonard Hyman.

Nederlander was to purchase the land for $6.1 million as part of his lease of the State Fairgrounds at Woodward Avenue and Eight Mile Road. He said he sold it to a real estate investment trust, headed by a former business partner, for $10.5 million after local residents and four cities, including Detroit, Ferndale, Pleasant Ridge and Huntington Woods, filed a lawsuit to prevent the construction of a Grand Prix racetrack at thefairgrounds.

The suit is still in discovery.

The trust has offered to sell the property to the Detroit school district, which would build a new high school, for $17 million. The district says it would use 24 acres and sell the rest to Home Depot Inc. for $9.5 million for a new store.

Nederlander also has sued the state to allow him to buy the 36 acres, claiming the loss of the hotel deal was not his fault.

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