The Michigan Republicans in the Senate are getting new offices that will cost taxpayers at least $134 million over the next three decades. They are moving from their existing location in the Farnum Building in Lansing to new offices in the Capitol View building owned by GOP donor Ron Boji. New documents not released until now show just how much Ron Boji and his company Boji Group, LLC are profiting from this development. I have been provided with the purchase agreement between the Senate and Boji Group, LLC which you can read HERE. It is a document that, so far as I can tell, has not been made public until now.
The Senate is purchasing the bottom seven floors plus the basement of the Capitol View building for $41 million which amounts to $320.22/square foot for the 128,035 square feet of office space. These floors are known as “Unit 1”. Unit 2 is the top two floors which house the offices of the lobbying law firm Dykema and will continue to do so.
This purchase agreement is a significant departure from the initial bid which was a monthly LEASE for $16.75/square foot. At some point after Boji was awarded the contract, this project went from a monthly lease of $16.75/square foot to a $41 million PURCHASE of the office space. In other words, Boji won the bid with a low per-month lease price and then ended up selling the office space to the Senate instead.
And selling the office space is a pretty big deal because the $41 million price tag is far in excess of the $17.5 million value of the entire building given by the state in 2004 for the entire building (not just seven of the nine floors.) A Lansing appraiser claims that it’s actually “three times greater than anything that has sold downtown of comparable use“:
[Lansing’s assessor of record William] Fowler says that his office currently has Capitol View assessed at about $12 million, a figure he says is closer to what it’s actually worth. Were it to be built brand new today, his office estimates it would cost just under $22 million.
That $29 million difference between what the Senate paid and what the property is worth today is a tidy profit for Boji and you won’t be surprised that Senate Republicans never had the building appraised before agreeing to the $41 million price tag:
But 7 Action News has learned that, before buying the building, the Senate didn’t bother to have it appraised, instead relying on negotiations to set the final price.
Lawmakers who were already critical of the project say the assessor’s comments provide further evidence that the deal stinks.
“When you’ve got a heavy duty Republican donor who’s selling a building to the state for a price that seems to be way out of line with the real estate market, and there was no appraisal done?” said Rep. Jeff Irwin (D-Ann Arbor). “Wow, that’s troubling.”
Boji’s profit doesn’t stop there, however. The purchase agreement also shows a “condominium agreement” in which the “Manager” will be paid an additional $128,000 each year as a management fee for the offices, a five-year contract worth over a half million dollars. And who does the contract designate as the “Manager”? Boji Group, LLC, of course. Boji also retains the “right of first offer” for Unit 1 meaning that he gets to buy back Unit 1 should the Senate decide to move again. He may also expand Unit 2 should he decide to.
All of this is a sweetheart deal for a man that has given tens of thousands of dollars to Republicans over the years. As I wrote about earlier this year, Boji has given at least $110,000 to the Michigan Republican Party, at least $27,800 to Congressman Mike Bishop and his various political funds, nearly $35,000 to Michigan Attorney General Bill Schuette, and at least $41,000 to Governor Rick Snyder and his political funds. He also gave at least $72,600 to the Michigan Senate Republican Campaign Committee, Senator Randy Richardville, and individual Republican senatorial candidates. Based on these generous and well-timed donations, it appears that it’s no coincidence that former Senator Richardville was the top Republican in the Senate when he signed the agreement. It’s also no surprise that Attorney General Schuette has refused to investigate the deal despite repeated requests by Democratic state Representative from the 110th state House District Scott Dianda of Calumet.
The effort to move Senate offices to a new building, in fact, originated with Boji himself:
The deal dates back to 2012, when state officials were considering moving some state agencies out of privately-owned buildings in Lansing to save millions in rent. Concerned that the Department of Community Health might break its lease on seven floors in his relatively-new Capitol View building, developer Ron Boji began proposing that senators leave the state-owned Farnum Building for renovated offices in Capitol View.
He found a sympathetic ear in Senate Majority Leader Randy Richardville, a Monroe Republican who couldn’t stand the out-dated Farnum Building, which was notorious for heating and cooling problems, as well as leaks and other inconveniences.
State officials said it would have cost between $11.5 million and $20 million to renovate the Farnum Building. Instead, Richardville invited developers to submit proposals to the Senate, and he convened a team of state officials to review the deals and report back to him.
Four developers made the cut, and were given seven questions that officials said they should be prepared to answer. Three of those developers voluntarily provided written answers. Only the Boji Group did not.
One of the questions the developers were asked is whether they owed any taxes. At the time, the Boji Group owed more than $65,000 in Michigan Business Taxes. Boji spokesman John Truscott says Boji doesn’t recall whether state officials asked him during an oral interview if he owed taxes.
In other words, Boji should never have been allowed to bid on this project to begin with because he owed the state a great deal of money in back taxes. Not only that, he had millions of dollars of liens on his properties over the years going back as far as 1979:
Building on a story posted Wednesday by TV station FOX 2 Detroit, the Michigan Democratic Party released documents showing Boji executives had racked up $1.8 million in state and federal tax liens dating back to 1979. That should have prohibited the Senate from signing a deal to buy office space at the Boji-owned Capitol View building, Democrats said at a news conference Thursday.
Though all of the liens cited by the Democrats have since been released because the taxes were paid, a more than $65,000 lien was on file against all of the Boji Group’s properties, including Capitol View, when the group submitted its bid to the Senate in July 2014.
Rep. Dianda has a resolution pending – H.R. 344, “a resolution to request that the Michigan Attorney General and Michigan State Police investigate the possible waste, fraud, and abuse of power by former Senate Majority Leader Randy Richardville and the Senate Business Office regarding the lease of the Capitol View Building” – demanding that the state House and the state attorney general take action on what Democrats are calling “The Capitol View Boondoggle”.
In light of these new revelations, Rep. Dianda released the following statement and notes that former Senate Majority Leader Randy Richardville, the man who signed the contract with Boji, is now paid by Boji for consulting services:
The story is clear. The developer is on record donating money to top Republican leaders. Soon after, Senate leadership awarded the same developer a $134 million contract for new office space. Senate leadership then gave the same developer a million dollar management contract to maintain those offices after completion. Finally, the Senator who signed the purchase agreement now consults for the developer. This is corruption and abuse of power.
I have said it since the beginning that this deal does not pass the smell test. The numbers prove this deal was shrouded in secrecy and that we wastefully overpaid for a building at the will of political favoritism. An unjustified profit is being handed over to the developer at the cost of taxpayers pocket books. The right move forward would be an immediate investigation into the waste, fraud and abuse for those who sat at the closing table.
My resolution (HR 344) would compel Michigan’s Attorney General Bill Schuette to open an investigation into the transaction. My U.P. constituents and I agree that this is a shameful waste of taxpayer money, and it’s time we get answers to our questions.
You may wonder why this purchase agreement has never made it to the light of day before now. It’s likely because Senate Republicans don’t want it revealed that they are spending far more money than they should on this new building to the benefit of one of their top donors. And, don’t forget, the state Senate, along with the state House, are immune from Freedom of Information Act (FOIA) requests.
We already knew this scheme had the stench of corruption and political favors surrounding it. Now that stench has gotten just a bit more rancid.
One final thing: The fact that the new Senate offices share a building with a powerful Lansing lobbying firm should raise red flags for ALL of us.