AG won’t issue opinion or open investigation into former Marquette hospital redevelopment

MARQUETTE, Mich. (WLUC) - The office of Michigan Attorney General Dana Nessel has declined to issue an opinion on legal questions state Rep. Sara Cambensy presented in July on the proposed redevelopment of Marquette General Hospital.

A letter from the AG’s office to Cambensy, dated Tuesday, also says there are not “sufficient grounds to open an investigation at this time.” After the state budget included $8 million to help with demolishing the former hospital, Rep. Cambensy asked the AG’s office to look into a possible conflict of interest and misuse of state and local funds.

Tuesday’s letter, which is signed by Chief Deputy AG Christina Grossi, is below:

“Dear Representative Cambensy,

“We are in receipt of your letter dated July 28, 2022, and modified by your letter dated July 29, 2022. In short, you’ve requested an investigation into, and asked a series of legal questions related to, the proposed redevelopment of the old Marquette General Hospital. This office has also received responses stemming from your inquiry from various parties including the Veridea Group, the Marquette City Commission, the Northern Michigan University Board of Trustees, and the Northern Michigan University Foundation. We’ve reviewed all of the materials presented to us thoroughly, and ultimately concluded that the Department must decline to issue an opinion on the legal questions you’ve presented. Further, we have not been presented with sufficient grounds to open an investigation at this time.

“First, although we would like to be helpful in answering questions about local issues, because the Attorney General is not legal counsel for local units of government or universities, both she and her recent predecessors have concluded that this office’s resources will best serve the interests of the people of the State of Michigan by responding to opinion requests that involve the operation of state government. Moreover, while the Attorney General’s opinions are binding upon state agencies and officers, they do not have the force of law and, therefore, are not binding upon local units of government or private actors. See, e.g., Michigan ex rel Oakland Co Prosecutor v Dep’t of Corrections, 199 Mich App 681, 691 (1993). The matters in your letter strike at the very heart of those that constitute local concerns, namely economic planning and redevelopment. We take no position on the wisdom of the redevelopment project at issue here. We only note that – as counsel for the State of Michigan – the legal questions related to conflict of interest, tax consequences, property valuation, and the bidding process for a local project are often times best left to local counsel. Further, the questions presented related to the Freedom of Information Act and the Open Meetings Act are not novel but rather can be evaluated under the existing body of case law, which weighs against the Attorney General issuing a formal legal opinion.

“Finally, the Department has reviewed the matters in your letter pursuant to the Charitable Organizations and Solicitations Act, PA 169 of 1975, the Supervision of Trustees for Charitable Purposes Act, PA 101 of 1961, and the Nonprofit Corporations Act, PA 162 of 1982 (collectively “charitable trust law”). The facts provided do not support a viable action under charitable trust law, nor provide sufficient grounds for the institution of a criminal investigation by the Department at this time.

“In conclusion, after considering the information presented in your request, we have respectfully determined that action by the Attorney General is not now warranted. In the interest of transparency, we have copied to this correspondence those who contacted this office in response to your request. If you have any additional questions or concerns, or if you have any supplemental information concerning this matter that you would like us to review, please let us know.”

The NMU Foundation, which is facilitating the redevelopment of the former hospital property adjacent to the university campus, responded to the letter with the following statement:

“The Northern Michigan University Foundation is extremely pleased with today’s decision by the Michigan Attorney General declining to take any action regarding unfounded allegations by State Representative Sara Cambensy concerning the redevelopment of the former hospital site.

“The Board of Trustees and staff leadership of the NMU Foundation appreciate the Attorney General’s diligent, expeditious and thorough review of this matter, and we remain focused on continuing the process of bringing this significant project to fruition for the benefit of the Marquette area, Northern Michigan University, and the Upper Peninsula.

“Our appreciation extends to the City of Marquette staff, Mayor Jenna Smith, City Commissioners, the Marquette Brownfield Redevelopment Authority, Michigan Legislature, Governor Gretchen Whitmer, the Michigan Economic Development Corporation, Veridea Group, UP Health System – Marquette, our consulting team, and members of the Marquette and NMU community who have joined this important effort over the course of the past year for the betterment of our community.”

Rep. Cambensy’s office says she was left with optimism after the AG’s response to her letter. Cambensy says she doesn’t see the AG’s letter as an ending point to the questions she asked, but rather a starting point to where the taxpayers want to go with getting answers and transparency. Cambensy’s statement is below:

“After speaking with the AG’s office today, I believe the public has several options to consider going forward. First, the AG’s office is still willing to take testimony from individuals who have detailed information regarding this project that may lead to a criminal investigation. My office cannot speak for those individuals, but I would encourage those who have information and who have shared that information with me to still contact the AG directly. Second, even though public universities are given great autonomy in how they operate in our state constitution, our judicial system remains one of the ways the public can challenge university decision making and transparency surrounding projects such as the hospital sale and redevelopment property when they can’t get answers directly from elected or appointed officials, or see many of the documents used. The public would start that process using FOIA and request meeting minutes and documents from the NMU Foundation and/or city. Lastly, the public can contact the IRS regarding tax compliance or ‘any other information they feel would be important to the agency regarding the NMU Foundation, Lifepoint Hospital, and Veridea surrounding the gift of property for this project while remaining anonymous.

“Finally, the public can direct local and state officials to strengthen brownfield laws to make sure there are increased checks and balances that protect the public taxpayers. State brownfield laws rely on local officials to understand extremely complex state laws that put them in vulnerable positions. Developers and consultants have lobbied for the laws to be fluid and as recent as 2017, extend the number of qualifying uses that brownfields can be used for on purpose. Taxpayers could also look into requiring that any developer with a brownfield request over a certain threshold for a project be subject to adequate public review time or even a vote by the public.”

Cambensy said she hopes that the significant amount of public support from the taxpayers that her letter received is an alarm to those orchestrating this project.

“Even a month later, there continues to be a growing concern for why the project is being done this way and the lack of transparency surrounding it. Yet those involved obviously feel that they don’t need to gain the public’s trust and support with the almost $58M of public tax dollars or credits they were able to secure in a matter of five months without even showing a detailed plan of what the project was. The average taxpayer can’t go to a bank and get a $1000 loan without signing their life to it, yet appointed or elected officials gave $58M of your tax dollars away this spring without hardly knowing what the project entails, who was involved or how the money is going to be used. It’s really quite unbelievable.”

The Veridea Group released a statement Wednesday morning:

“We are gratified to learn of the Attorney General’s decision to fully reject Representative Sara Cambensy’s meritless request for an investigation into the redevelopment of the Marquette General Hospital campus. We now look forward to returning our focus to pursuing the successful redevelopment of this vitally important community project.”