A California-based developer spent about $1.6 million of a $5 million taxpayer-funded grant to pay off back taxes owed to Oakland County on a property that’s long been an eyesore alongside Interstate 696 in Southfield.

But using state tax dollars to pay off county-level property taxes didn’t prevent the former Embassy Suites in Southfield from falling into receivership earlier this year and being put up for sale in the coming months.

As of June 2024, the most recent records The Detroit News was able to obtain through a public records request, developer Michael Collier’s firm, Pivot Development, had spent about $2.3 million of the $5 million no-bid grant sponsored in 2023 by state Rep. Samantha Steckloff, D-Farmington Hills. The expenses included $700,000 in developer fees, consulting, travel and some cleanup work at the vacant hotel that fronts I-696 between Franklin Road and the Lodge Freeway.

Collier and a partner, Scott Gibson, are in line to benefit from another $4.5 million earmark sponsored in 2024 by state Sen. Sue Shink, D-Northfield Township, for the city of Jackson for the redevelopment of the long-vacant Hayes Hotel through their firm, Collier Gibson LCC. Their company is also receiving a $900,000 brownfield loan from the city of Adrian’s Brownfield Redevelopment Authority for the redevelopment of the former ProMedica Bixby Hospital into 63 single-family, market-rate homes.

Steckloff said she was not aware when she sponsored the grant for the Southfield hotel that $1.6 million would be used to pay off taxes from 2019, 2020 and 2021; she learned of the expense from a Detroit News reporter.

She stood by Collier’s vision for the property and noted that the Michigan State Housing Development Authority had deemed the use of the money to pay off tax debt, as part of the property acquisition, to be in compliance with the grant agreement.

“I personally believe that this is one of the greatest projects that has reached my desk,” Steckloff said. “It is an affordable housing unit that will convert an old, dilapidated Embassy Suites to over a hundred units of affordable housing. It is a gateway to both the city of Southfield and the city of Farmington Hills.”

Collier last week defended his use of the Southfield grant money and suggested The News should instead focus on “the city preventing a much-needed housing development to go through by unnecessarily appointing a receiver.”

“The tax payment was a documented requirement in the much larger real estate transaction necessary to assemble the land to redevelop the property,” Collier said.

Shink had similar redevelopment hopes for the Hayes Hotel when she sponsored a $4.5 million grant for the city of Jackson last year to help pay for the redevelopment of the century-old hotel.

The sale of the Hayes Hotel is currently mired in litigation after the developer that was in place when Shink sponsored the grant, J. Jeffers & Co., was abruptly swapped for Collier Gibson in a February city council vote. Shink said she hasn’t been engaged with the city regarding its decision to sell the property to Collier Gibson, a limited liability company registered in Delaware.

“While I can’t comment on the litigation and I’m not involved in the litigation, my goal is that that building should be redeveloped into housing,” Shink said.

As of last month, MSHDA had not yet disbursed the Hayes Hotel grant, which eventually will be administered through the city of Jackson.

The grants are the latest to come under scrutiny in Lansing after years of big, no-bid earmark spending being inserted into state budgets hours before passage with little information on the project, sponsorship or what connections may exist between a lawmaker and the recipient.

The Democratic-led Legislature, starting in 2023, put some earmark transparency requirements into place But some projects still have raised eyebrows, such as vetoed line items for a Detroit development with disputed ownership and a shooting range at a private gun club. This year, Republican House Speaker Matt Hall introduced a House rule that requires advance disclosure of earmark requests and bars earmarks from going to for-profit entities.

The Southfield grant raises new concerns about what sort of vetting earmark projects and recipients have received in the past, said state Rep. Jay DeBoyer, a Clay Township Republican who leads the House Oversight Committee.

“This is another example of believing that government understands how to execute business transactions and we don’t,” DeBoyer said. “Meanwhile, taxpayers are getting fleeced.”

The Southfield hotel

The nine-story, 289-room former Embassy Suites in Southfield ceased operations in 2019 and has had no utility services since 2021 amid a tangle of liens, divided ownership and increasing deterioration and vandalism at the building, according to Oakland County Circuit Court filings.

In 2023, the city of Southfield condemned the property and, in 2024, sought to have it declared a nuisance and dangerous building and be placed into receivership. The city argued in court filings that several liens on the property had served to further complicate a triangle of ownership and mortgages involving limited liability corporations registered to Collier, Ernest “Rick” Barreca and Remo Polselli, who once did time in prison for tax evasion.

“Some combination” of all three developers, the city argued in its filing, had been involved in hotels subject to receivership, including the St. Clair Inn in St. Clair, the Sugarloaf Resort in Leelanau County, the Delta Hotel in Romulus and the former Metropolitan Hotel in Troy.

Collier, according to Southfield’s filing, had been involved in the Tremont/Selina Hotel in Chicago and the former Garfield Suites Hotel in Cincinnati, both of which, in recent months, have been subject to lender attempts to appoint a receiver. Collier told The News on Wednesday that those hotels’ failures were in part due to COVID pandemic challenges, but said he had “successfully developed dozens of major projects over my career.”

Instead of pushing the building into receivership in 2024, the court appointed a facilitator, former U.S. District Judge Gerald Rosen, who reached an agreement requiring the owners to list someone responsible for the property and make a variety of improvements to secure the facility.

A year prior, in 2023, Steckloff, knowing the eyesore the building had long been along the expressway and at the “gateway” of Southfield and Farmington Hills, sponsored an earmark “to acquire and convert an abandoned hotel into a workforce and missing middle housing complex.”

The grant was given to Pivot Development, which is referred to in MSHDA filings with a California address but is registered out of Delaware and has Collier as CEO. Pivot provided MSHDA, the agency tasked with overseeing the grant, with an application that included a Jan. 24, 2024, purchase agreement for two of three parcels that made up the hotel property. It included a stipulation requiring Pivot to pay off three years of overdue tax bills, according to documents obtained through a public records request. MSHDA Director Amy Hovey signed the grant agreement with Pivot and disbursed the first $2.5 million on Feb. 28, 2024.

Two days later, on March 1, 2024, Collier, who had previously been involved in the hotel property through an Indiana-registered entity called HC Southfield LLC, formed another limited liability company in Delaware called Southfield House LLC, according to Delaware business records.

Southfield House cut a $1.6 million check to Oakland County for overdue taxes from 2019, 2020 and 2021 on March 30, 2024, the deadline to avoid foreclosure on the property, according to court filings. The $1.6 million expenditure was later reported to MSHDA as a “ground lease acquisition” expense, according to public records obtained from the agency.

Pivot, according to receipts submitted to MSHDA between January 2024 and June 2024, also paid another $200,000 in “developer fees” to Southfield House, which is registered to Collier; $75,600 to Michael A. Collier Management and Consulting; nearly $20,000 in Pivot payroll costs and $8,000 for travel expenses. He also paid $50,000 in consulting fees to Windev LLC, a corporation out of Ohio registered to his business partner Gibson.

Collier’s travel expenses were largely comprised of a few plane trips between Michigan and California and hotel stays and car rentals in the Detroit area, according to MSHDA records. However, Collier did submit receipts for a March 18, 2024 hotel stay in Adrian and a car rental that was picked up in Detroit Feb. 4, 2024, and dropped off in Adrian on Feb. 5, 2024.

Collier’s decision to pay off $1.6 million in back taxes with state taxpayer money is understood to be allowed within his grant agreement because it was part of the expense involved with acquiring the property, MSHDA spokesman Josh Pugh said.

Southfield City Manager Fred Zorn said the city is “outraged” that the state grant money was used to pay property taxes and said, even with the state’s infusion of cash, the site has not been maintained.

“No work has been done since October 2024,” Zorn said.

Collier maintained Wednesday that all of his expenses were allowed for under the grant and that he’d undertaken a “massive cleanup” of the property with the money, even sending along before and after photos of debris cleanup inside the hotel.

Between April and June 2024, Collier spent about $224,000 on demolition, cleanup, construction, landscaping and security at the site, according to records. Collier also argued he had entered a purchase agreement for the third of three parcels that make up the hotel and was on his way to close the deal when the city got involved.

The city of Southfield in January filed for the property to be put into receivership, arguing in court filings that not enough cleanup had been done, that a complicated web of owners, LLCs and liens still entangled the property, and that Oakland County again was seeking to foreclose. Even after Collier’s $1.6 million payment last year, the property has about $1.1 million in unpaid taxes from 2022, 2023 and 2024, according to Oakland County treasury records.

In March and May, Oakland County Circuit Court Judge Jacob Cunningham granted Southfield’s request and appointed a receiver over the property, removing whatever control Collier still had over the site.

“We believe it was totally unnecessary, and it is very unfortunate because it is preventing the transaction from going through as planned, making the redevelopment of the property into housing impossible,” Collier said Wednesday.

The Hayes Hotel in Jackson

The Hayes Hotel in downtown Jackson, which was used as part of Consumers Energy’s headquarters between 1973 and 2003, has been vacant for years as the city has worked to find a developer for the historic site.

In 2022, the city entered a purchase agreement with Milwaukee-based J. Jeffers & Co., and the developer worked for the next couple of years to create a development plan and get financing in order to close on the purchase. Jeffers received two extensions to the purchase agreement, but could not finalize an agreement by the Dec. 31, 2024, deadline, City Manager Jonathan Greene told Jackson’s city council in a Feb. 24 memo on a change in developer. The memo and other emails among the city manager, attorney and mayor were obtained through a public records request for which The News was charged $158.

Even with the failure to extend, the city continued meeting with Jeffers, which had begun to adjust plans for the site to introduce the idea of affordable housing, Greene said in the memo. Greene told the City Council in the memo that additional affordable housing in the downtown would “create an imbalance” since there was already workforce and income-limited housing.

A “workforce housing project is not the highest and best use for the property,” Greene said in the memo. He said Jeffers later switched back to a market-rate housing plan.

Gibson, on behalf of Collier Gibson, approached Greene in early December with inquiries about the Hayes Hotel and moved quickly on their plans thanks to a housing project they were working on in Adrian and a similar rehabilitation of the historic Secor Hotel Building in Toledo, Greene told the City Council in the memo. He said the city had reached an “inflection point” on the project.

“The city has held the building for over 20 years, Jeffers has invested large sums of money to this point and CG is bringing fresh energy and perspective to the project,” Greene said in the memo. “… While no one knows who the right choice is and it is more likely than not, they both would have success, the fresh energy provided by CG is refreshing and invigorating.”

Greene also noted that incentives like those offered by the Michigan Economic Development Corporation “are tied to the project and are available with either developer,” and historic tax credits are available by application.

A few days earlier, on Feb. 21, Gibson had sent Greene a “draft cap stack,” or summary of the capital that would be used to finance the project. It included — but was not limited to — about $1.8 million in Michigan Community Revitalization Program conventional loan dollars, about $5.4 million in federal and state historic tax credit dollars, about $1.5 million termed “local brownfield,” a $200,000 community grant and a $4.5 million city allocation, the exact amount awarded the city by Shink.

The next day, the Jackson City Council voted in favor of selling the hotel for $25,000 to Collier Gibson, which was doing business as 228 Michigan Ave. LLC. The city signed an indemnity agreement, holding the city responsible for bills arising from litigation over the sale, on March 3 and signed paperwork March 4 to close on the property.

Soon after the City Council vote, Jeffers filed suit to stop the sale, an effort that was eventually overruled by a Jackson County Circuit judge. Jeffers appealed to the Michigan Court of Appeals, where it is pending.

When Jackson city attorney Matthew Hagerty alerted parties that Jeffers had filed a claim of interest, Gibson responded in an email: “‘These guys obviously don’t care about ever doing business in this state again. Time to take the gloves off.”

When the actual complaint was filed, Gibson responded in an email to Greene and the city attorney: “Here we go. ‘Unduly enriched’. Laughable.”

When asked for comment, J. Jeffers & Co. said Wednesday it had a proven track record of success in historic redevelopment.

“In addition to our expertise, we committed two years, and millions of dollars, to the Hayes Hotel and are confident in our ability to expeditiously deliver a completed project of which the city will be proud,” the company said.

Greene did not respond to several questions about the city’s knowledge of Collier’s receivership battle in Southfield when the council voted on the sale. Jackson Mayor Daniel Mahoney referred similar questions to Greene.