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By Rob Alway, Editor-in-Chief
LUDINGTON — The Mason County treasurer removed the former Foster Elementary School property from Thursday’s tax-foreclosure auction after the Ludington City Council adopted a new housing overlay for the property three days before the scheduled sale.
The two-parcel property, which includes the former school building and the playground property across Foster Street, is now scheduled to be offered during an online auction Sept. 25. The minimum bid is $28,561.41, with $15,773.81 in current taxes to be added to the successful bid, according to the auction listing.
In an Aug. 25 email to City Manager Kaitlyn Aldrich, Mason County Treasurer Andrew Kmetz IV said the timing of the zoning change did not provide prospective bidders with enough time to determine how the new requirements could affect redevelopment of the approximately 3-acre property.
“Due to the timing of the adoption of the Housing Overlay Zone and the auction occurring during the same week, I have made the decision to withhold the Foster School complex from the upcoming auction,” Kmetz wrote. “My intention is to offer the property at a later auction, once prospective bidders have had adequate time to review and evaluate the new zoning requirements and determine how those requirements may affect their proposed use or redevelopment of the property.”
Kmetz also asked the city to clarify whether the new zoning required demolition of the former school or allowed the building to be incorporated into a redevelopment project.
“The existing Foster School structure may be retained and incorporated into a proposed redevelopment of the property under the O-HI; demolition is not required as long as they meet all of the guidelines,” Aldrich responded.
Aldrich said the city had been contacted by several developers and would provide them with the adopted ordinance.
“Thank you for getting this information to prospective bidders,” Aldrich wrote. “I appreciate you making sure they have a clear understanding of the zoning requirements before the property is offered for sale. We will subsequently reach out to the developers we have been in contact with in the last few weeks.”
The City Council adopted Ordinance 598-26, creating the Housing Incentive Overlay District, during its Aug. 24 meeting. Councilor Kathy Winczewski voted against the ordinance. Councilors Mike Shaw and Tim Large were absent.
The overlay supersedes conflicting provisions of the property’s underlying Neighborhood District zoning. Its stated purpose is to encourage diverse, attainable and workforce housing while promoting compact, walkable neighborhoods that use existing streets, sidewalks and public utilities.
Under the ordinance, any residential redevelopment must contain at least 15 dwelling units per acre. Based on the property’s approximately 3.03 acres, a redevelopment would be required to contain about 45 units.
A maximum of 24 units per acre is allowed by right. The density may increase to 28 units per acre if the project provides at least one specified public benefit, such as affordable housing, workforce housing commitments, public open space, enhanced pedestrian connections, structured or underground parking, green infrastructure, preservation of historic structures, accessible housing or electric vehicle infrastructure.
The ordinance allows detached single-family houses, duplexes, triplexes, quadplexes, townhouses, cottage or bungalow courts, courtyard housing, apartment buildings containing six units or fewer and live-work units.
A development containing 15 or more units must include at least three housing types. Detached single-family houses may be included only as part of a mixed-housing development and cannot comprise more than 40% of the total units.
At least 15% of the site must be maintained as usable common open space, which could include pocket parks, community greens, courtyards, gardens, play areas or walking paths. Stormwater detention areas would not count toward the requirement unless designed as usable amenities.
The ordinance becomes effective 20 days following its introduction, adoption and publication as required by law and the city charter.
Kmetz had asked the council to postpone action before it adopted the ordinance. In an Aug. 7 letter, he said changing the zoning shortly before the auction could reduce the number of bidders or the amount offered for the property, potentially exposing the county to claims from the former owner.
Changes to Michigan’s General Property Tax Act allow a former property owner to seek proceeds remaining after delinquent taxes and foreclosure expenses are paid.
“If the former owner learned of a zoning change that would take effect days before an auction, this could be viewed as a choice-limiting action, which could create unintended liability where they could argue potential purchasers were zoned out of their ideas, thereby limiting the amount the parcel would sell for at auction,” Kmetz wrote.
Kmetz said he supported zoning changes that allowed greater housing density but objected to imposing the requirements during the same month as the auction.
“I would ask that, to ensure a fair auction and limit liability for both the county and city, you postpone this decision and work with the purchaser to incentivize denser development,” he wrote.
City officials said adopting the overlay before the auction would ensure potential buyers understood the city’s expectations before bidding. Aldrich told the council that waiting until after the sale could result in a buyer purchasing the property under the assumption that it could be divided into lower-density single-family lots.
The former Foster Elementary School complex consists of two parcels at 507 and 504 E. Foster St. Mason County foreclosed on the property April 1 for unpaid 2023 and prior property taxes.
Datum Point Real Estate Development of Grand Rapids purchased the property from Ludington Area School District in 2022 for $20,000. Foster Elementary closed in January 2022 following the opening of the new Ludington Elementary School on West Bryant Road in Pere Marquette Township.
Datum Point initially proposed demolishing the school and constructing four townhouse buildings containing 28 units. The company later revised the proposal to retain much of the school and create 38 apartments and loft townhouses, along with another townhouse building on the property across Foster Street.
The City Council approved an Obsolete Property Rehabilitation Act tax exemption for the project in 2023, with completion initially anticipated in March 2024. However, construction never began.
Aldrich told the council Aug. 24 that the developer lacked the capital needed to pay construction expenses before receiving reimbursement through anticipated grant funding. She said city and county officials attempted to connect the developer with other funding sources, but the project did not move forward.
The city initially considered acquiring the property following foreclosure for approximately $30,000 in delinquent taxes. Aldrich said city officials worked with housing consultant Ryan Kilpatrick of Flywheel on preliminary redevelopment concepts, including options to preserve or demolish portions of the school.
The city abandoned the possible purchase after learning the former owner had filed a claim for excess foreclosure proceeds. Aldrich said the amount the city would have been required to pay to acquire the property increased to approximately $591,000.
The oldest portion of the former school was built in 1886 as Ludington’s Central School and served as Ludington High School until 1957. Oriole Hall, the school’s gymnasium and 16 classrooms were added in 1925.
Central School became the junior high school after the new Ludington High School opened in 1957. It became Foster Elementary School after the original Foster School building across Foster Street was demolished in 1967. Additional sections were constructed in 1969, 1991 and 2008.
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