Otsego threatens to sue sitting city commissioner over land purchase
Editor’s note: Commissioner Nick Breedveld resigned Wednesday, May 22, after signing a settlement with the city in which they agreed not to pursue litigation. Read our story here. The story below printed in our May 23 issue which went to press Tuesday night.
As of Tuesday afternoon, the City of Otsego intended to sue one of its sitting city commissioners for taking advantage of his elected position and buying property the city was pursuing.
The civil complaint set to be filed in Allegan County this week alleges Nick Breedveld was in the confidential meeting at which the commission decided to seek the 5-acre vacant lot at the end of Mitchell Street—and then he purchased it a month later while the city prepared its purchase agreement.
At the Monday, May 20, meeting at which the commission approved the legal action, commissioner Brent Milheim said, “I feel personally, as a commissioner and as a resident of the city, we’ve been betrayed.”
Breedveld dissented, so the vote to file the seven-count complaint—four of which also name Karin Breedveld, his wife—passed 4-1*. Specifically, the suit accuses Breedveld of a breech of his fiduciary responsibility to the city, fraud and violating the Open Meetings Act. It accuses both of civil conspiracy and interfering in the land deal.
The city seeks to be awarded the $11,000 property along with attorney fees and costs.
The Breedvelds met with city officials Tuesday afternoon, but city manager Aaron Mitchell declined to comment on it before The Allegan County News/Union Enterprise went to press Tuesday evening. Breedveld declined to comment at the meeting and did not immediately respond Tuesday evening.
*Editor's note: This vote total was incorrect as printed in our May 23 issue and has been corrected above. We regret the error.
Mitchell said the property owner emailed the city March 7 about selling two vacant parcels totaling 5 acres he had split from an adjacent residential home. They met four days later and agreed on the $11,000 price.
“I thought everything was going well,” Mitchell said.
A week later, on March 18, city commissioners met in closed session to discuss the proposed real estate purchase, a permitted exemption to otherwise public meetings.
Though the minutes of the closed meeting are sealed, the city’s lawsuit claims Breedveld said, “If it was that cheap, I would have bought it.”
After the meeting, commissioners directed Mitchell to assemble a purchase agreement. Mitchell said he and city clerk Angie Cronen prepared the purchase agreement after she returned from vacation a week later. While she was off, Mitchell emailed the seller March 21 to let him know the city intended to buy the land. The lawsuit quotes the seller’s response as “That sounds good, I will wait to hear from you.”
A month after the March closed session, on April 17—after the details in the purchase agreement had been hammered out—Mayor Cindi Trobeck directed Mitchell by email to proceed with the purchase.
While scheduling a closing with Devon Title the following week, April 23, Mitchell discovered Nick and Karin Breedveld had signed a property transfer affidavit a week prior, on April 16. They were its new owners and had purchased it for the same price the city had agreed to.
Trying to piece together how the deal fell apart, Mitchell called the mayor and then the property seller.
“From our conversation, he said he had put a ‘for sale’ sign in his yard on March 25,” Mitchell said. “Which is 96 hours from the last time he said everything is fine; he’d had no issues, everything was going forward.”
Mitchell said he next called Breedveld, who’d claimed he’d seen the for-sale sign.
“And then there was a down payment made on March 31,” Mitchell said. “That means everything changed in four short days without anyone being made aware at the city.”
The city’s lawsuit alleges Breedveld’s purchase of the land violated his fiduciary duty to the city by acting out of self-interest. It was also fraud and a violation of the Open Meetings Act, as he was privy to the city’s confidential discussions about the purchase.
Marshall Grate, an attorney at the city’s legal firm Clark Hill PLC of Grand Rapids, said, “Whether Mr. Breedveld realizes it or not, as an elected official of this community, he owes a fiduciary duty to the City of Otsego.
“If he was not an elected official, he would have every right to try and acquire that property out from under the city,” though he’d likely not have had access to the closed session.
“But as an elected official... he had a legal obligation... to communicate his interest... before acquiring it,” he said. “He breeched his obligation under the Open Meetings Act by using information from a closed meeting for personal gain.”
The latter carries with it up to a $500 fine.
While announcing the lawsuit was considered for closed session, Grate said, “Because of the extraordinary situation in which the city is in a legally adverse position with one of its elected officials, it was believed that the appropriate thing to do was to make this presentation public; it would be transparent to the community as to what this is about and why we’re going forward.”
Grate said Breedveld was offered a chance to meet for an hour prior to Monday’s meeting, though the details of what would be discussed were not provided. Breedveld did not take the city up on its offer.
During a public comment period, former Mayor Tom Gilmer commended the commission for their action.
“I’ve been on city boards for well over 30 years, and this is the first instance of anyone acting in a way that lacked integrity,” Gilmer said. “I think it’s pretty obvious in the standards of how we’re to conduct ourselves.”
He said the property had little value other than for the city, both related to efforts to remove the nearby former hydroelectric dam as well as the city’s riverfront development along the Kalamazoo River. Any future dam removal project would require a staging area.
“It’s property the city has been interested in for well over a decade,” Gilmer said. “It’s an integral part of the extension of the river walk between (here) and Brookside Park and hopefully in the long term to the City of Plainwell.
“It also is theoretically the site where we would put in a kayak and canoe launch. It is not land that is particularly valuable other than that.
“To believe a verbal agreement had been made, at least, and to have it circumvented in this way—especially when a city commissioner used information received in a private, closed session, which all of who have served on a city board know is inappropriate.”
This is the sequence of major events the City of Otsego alleges in its pending lawsuit against sitting commissioner Nick Breedveld:
March 7: seller contacts city; informal agreement on price
March 18: closed session; city commission directs staff to pursue purchase agreement
March 21: city and seller exchange emails; sale still expected
March 25: seller displays for-sale sign
April 16: documents filed showing Nick and Karin Breedveld as new owners
April 23: city discovers the sale and begins investigation