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DETROIT-A development group has agreed to give up its lease of the Michigan State Fairgrounds, as long as it is able to buy a neighboring 36-acre property for $10.5 million. The state attorney general already forced Joseph Nederlander and his company, State Fair Development Group, to vacate more than 200 acres on the fairgrounds.

The state had leased the property at Woodward Avenue and Eight Mile Road to the development group for a $200-million redevelopment project, including a racetrack, amphitheater and hotel on 36 adjacent acres.

However, the racetrack project died due to nearby resident protests, and the hotel project fell apart soon after.

The state and the developer got into legal battles over the vision of the fairgrounds, and it became just a question of when Nederlander would get the boot.

Various companies, employed to do design work for the $200 million development, filed suit to recover their payments.

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

Penny Davis, a spokesperson for the state department of management and budget, says a settlement with Nederlander has now been reached.

The terms, she said, include Nederlander vacating the 50-year lease he had on the property. Nederlander will also be reimbursed $4.5 million for work he’s done on the fairgrounds so far.

“That money will allow him to pay for the work done,” Davis says.

Also, Avenue Investors, a firm affiliated with Nederlander, will buy the 36 acres for $10.5 million, with a caveat.

“If Avenue sells the property, we shall be given 40% of any amount over the $10.5 million,” Davis tells GlobeSt.com.

Part of the reason the state took the fairgrounds back was the questionable Nederlander move. As part of the fairgrounds, lease, he was buying the nearby 36-acre hotel property for $6.1 million.

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

The attorney general’s office says Nederlander indicated he intended to build hotels on the 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.

The management of the grounds will now revert back to the state Department of Agriculture.

“This settlement puts to rest all the lawsuits,” Davis says. “We’re very happy with the settlement. It benefits everyone.”

She adds it is too early to say what the state plans to with the property.

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