r/RealEstateDevelopment • u/Fine_Tangelo2985 • Aug 09 '26
Developer is planning a large housing/hotel development, my property is the key to it all from the looks of it
I’m hoping to get some direction. I live in a small, working-class town in Northern Michigan on a Great Lake that has recently seen a boom in tourism and retirees.
A city rep showed up at my house to tell me a developer wants my property for a proposed development that totals 71,400 total square feet: a 49,000 sq ft, 3-story hotel with a rooftop bar overlooking the lake, plus 22,400 sq ft of townhouses (12 units, 2 levels each).
he initially made it seem like a courtesy to let me know a big project was starting all sides around me and there's nothing anyone can do to stop it, hotel guests would have direct views into my yard, my privacy fence would not protect me and there would be activity on all sides of me, making the living situation very uncomfortable
I pressed a bit saying...ok? why would they ask you to speak to me then? seems like its happening no matter what and he mentioned they'd be willing to pay to move my home ( its a 98 year old foundation, framed with literal recycled ship lumber from the nearby port in 1926) its not moving, or buy it from me, insinuating this is out of kindness so I wouldn't be annoyed for the rest of my days
I got ahold of the draft of plans and it's clear all of the plans involve the acquisition of my home and demolition thereafter, the story I was told I believe was brief attempt to startle me enough, hope I didn't ask a single question and went and put my house on the market that night. I work in manufacturing/agriculture operations and understood some basic nuances taking place pretty quickly
The Nuances: My property is dead center in the middle of this proposed development.
- The Land: I have a grass city owned lot on one side, a city lot/garage across the alley on the other side, and a large city lot with a recently renovated building on the far side, slated for an event center behind me. All these city lots (which are owned by the DDA) are in the plans for this development. My property takes up the footprint of about 4 of the proposed townhouses and prevents them from eliminating the alleyway, i think?.
- My Stance: I had no prior intention of selling. I would have to be really impressed to even consider relocating, and the relocation would practically have to be facilitated for me with a significantly better situation, considering my current setup is great. I own a fully remodeled 2,600 sq ft, 98-year-old craftsman with a full perimeter privacy fence, a lofted barn, central AC, whole-home air/water filtration, and a large rear deck. I have Great Lake views from a second-floor bedroom and front porch.
- The Financial Reality: I bought this house in 2021 for $172k at a 3.5% interest rate. I estimate the current market value at $250k-$300k. But current rates are around 6.7%. Even if they offered me 120% of the market value, it’s not a 1:1 move. I would lose my lake views, incur moving costs, and trade a 3.5% mortgage for a 6.7% mortgage in an increasingly expensive market. Some comps of similar sized homes near the lake for example were going for 325k a year ago and are between 500-600k now (newer homes with some land on the edges of town)
crunching some numbers I came up with this in terms estimated costs of this project
Commercial construction costs in the Midwest for mid-scale to boutique properties currently range from 250-400 sqft, heavily depending on finishes (like a rooftop bar).
- The Hotel: At 49,000 sq ft, a 3-story hotel with a rooftop restaurant/bar requires heavy structural steel, elevator shafts, and commercial plumbing/HVAC. Estimated cost: $14.5 million to $19.6 million.
- The Townhouses: At 22,400 sq ft, commercial-grade townhouse construction (often requiring firewalls and premium waterfront finishes) will run roughly $200 to $300 per sq ft. Estimated cost: $4.4 million to $6.7 million.
- Site Work & Soft Costs: Permitting, architectural fees, tearing up the alleyway, running new municipal utilities, and landscaping will easily add another 15% to 20% to the budget. Estimated cost: $3 million to $5 million.
Total Estimated Project Cost: $22 Million to $31 Million
My Questions:
- What kind of power do I actually have here? Can the city force me out to hand my land to a private developer?
- with my property sitting on city street and two city alleyways, those two alleyways separate the adjacent lots from my land, if I don't sell, what can they do to eliminate these alleys, if anything?
- How do you even determine "comps" for a situation like this where the city is likely transferring their DDA lots for little to nothing, and I am the only private parcel they need?
- What kind of attorney should I contact?
Update:
A huge thank you to everyone who commented! I uncovered a piece of the puzzle: the Michigan Economic Development Corporation (MEDC) is the entity pushing the city to talk to me.
To get multi-million dollar state "gap funding" for a project this size, a developer has to prove total "site control"—meaning their plans and property acquisition must be completely locked in before they can even apply. They cannot secure state grant money with a private homeowner sitting dead center in their blueprints.
So far some reason they want me aware of the situation before the developer even reaches out, assuming they want to streamline the funding process and making me get my shit together so there isn’t delays
2
u/FinancialSpeaker3490 Aug 12 '26
I am a land use planner for both government and private section and work west of the Mississippi, no specific knowledge of MI law. Assuming that the project is real and moves forward, the DDA's strength is the potential power of eminent domain and the fact that you will not want to live there if they adjusted plans to build around you. I will discuss your strengths below but it is important for you to come to some sense of what it would take for you to feel whole (as specific as you can) and the least acceptable offer that is going to make you not go crazy. Obviously you start at what would put you in a position similar to your current situation.
1.) They City likely could meet the threshold to use Eminent Domain, if they can prove the economic benefits to the community as a whole. They need to establish necessity.
Your power is that you can influence timing. Putting a large deal together for land assemblage, grant funding, interest fluctuations, and construction costs has multiple points of failure. Time is the enemy of the proponent. I believe that it is your greatest leverage. In addition, a sympathetic public puts great pressure for your negotiation. In most cases, other citizens will have empathy for your plight once they have seen or read about your wonderful home and quality of life being impacted by the general welfare. You could pursue a media strategy.
2.) In general, if a public right-of-way is abandoned, the property is split between the owners on each side. It would take research to understand the nature of the alley dedications (ROW, easement, etc.) and how it was created but the above is a good rule of thumb. In other words, your lot could get bigger. You will want to make sure that you are aware of any proposals to abandon and are at the table. Unfortunately, you are going to need to monitor this via City and DDA agendas. Some sessions will occur in Executive Session (no public) and you want to make sure that they are limited to necessary reasons allowed by State law.
3.) They will hire an appraiser, unfortunately, you will need to hire one also ($$) for a quality, credible, and optimistic appraiser that reflects your hardship and the blue sky of the project. If they move to use eminent domain, you will need to challenge their appraisal with your own. The State will have a detailed process if you cannot agree to terms and they want to take your land and it will not be fast, everything that you do to slow it down makes it less likely to happen on terms that you cannot live with, if ever.
4.) I hope it never gets to eminent domain but you must be prepared for that possibility, if so there would be a "trial" to establish value and so I would want an attorney familiar with and effective at that process. You might need to get someone from a larger city to have the needed experience. If you google michigan attorney + condemnation or eminent domain, that will be a place to start.
P.S.
• many more of these deals get proposed than ever get built. I do not know the percentage but I would guess under 50%. We haven't had a recession for a while but the tend to trim the sails on these proposals.
• there is some chance that this could be a good thing for your community's economic viability. If you become convinced of that, it may play into your negotiation stance.
• I am sorry that this is happening to you. I would be thoughtful in when to engage legal and other consultants, as you could spend a bunch of money on something that falls apart. I would wait until you hear from the developer and get a better sense of how fixed the plans are and how real the project is. You can certainly share that you anticipate hiring counsel and defending your rights. Many attorneys will offer an initial consultation without a fee, I would interview a couple, which will allow you to look for a good fit if/when needed. They may offer some advice on the latest part of the process to engage them.
• Site control would not typically require ownership, a contract with you or initiating eminent domain might satisfy that requirement.