D-Day ship left adrift by Muskegon politics

A Muskegon business is fighting city hall over what it says is the city’s failure to engage in a land swap required by $2.8 million in earmarks from state lawmakers. At stake is the fate of a campground, a commercial port, and a ship that saw action on D-Day during World War II.

The shores of Muskegon Lake have been the home of the USS LST 393, a former military ship that delivered armor and supplies to Omaha Beach. The ship attracts veterans, their families and other tourists from across the country, but it is in poor condition, Jim Flood told WGVU News in July. Flood is the executive director of the USS LST 393 Veterans Museum, a nonprofit that works to preserve and restore the ship.

The West Michigan Dock and Market Corp., a boat storage facility, or Mart Dock, as it is informally known, owns the ship. Mart Dock had long eyed Fisherman’s Landing, a city-owned campground, for development.

Its parent company offered the city some land as part of a swap in 2012, according to an MLive account from 2021, but public opposition doomed the proposal. Mart Dock offered another proposal in September 2018, when president Max McKee proposed a different swap, this one involving land called the Third Street Perimeter Property.

This parcel was near an area the city wanted to use to increase public access to the lake.

The city had designated the campground for eventual use as a commercial port, and under the 2018 proposal, Mart Dock would convert the land to a port.

The letter of intent stipulated that “upon completion of due diligence and subject to the conditions noted below, the parties shall enter into a swap agreement defining customary real estate sale/lease transaction, purchase price, lease terms, and proper consent by the authorized owners.”

It also envisioned that the city would take the Third Street property and use it as a public park or a facility for recreational boaters. The city agreed to the letter of intent.

State lawmakers seemed to help move the development along with two earmarks.

The 2021-22 fiscal year state budget included a line item of $1.5 million, described as the “Third Street Wharf Project – City of Muskegon on Muskegon Lake,” according to a November 2021 analysis by the House Fiscal Agency. The $1.5 million grant would pay for land cleanup and improvements, MEDC official Jake Eckhold told MLive in 2021.

The next fiscal year, lawmakers granted a $1.3 million earmark for the “3rd Street Wharf redevelopment project (City of Muskegon),” according to an official summary of the 2022-23 budget.

On Oct. 28, 2021, the city of Muskegon applied to the Michigan Economic Development Corporation for a Michigan Enhancement Grant.

The city said it wanted to “revitalize an under-utilized 8.5 acre site into a multi-purpose wharf and waterfront park,” with the goal of “providing opportunities for increased tax revenue” and public access to the park. It wanted to “increase the city’s capacity to dock larger vessels,” including cruise ships.

The application form had a paragraph advising applicants that “any portion of the grant funds paid to grantee and not spent or not spent in accordance with the grant agreement must be returned to the MEDC.”

But the relationship between the city and Mart Dock grew worse over time. In August 2022, Mart Dock sued the city, saying it had harmed the public by selling a small piece of lakefront property to another company for its marina. The judge in the case criticized city officials in January 2023, saying they had acted in bad faith.

Mart Dock’s McKee told CapCon the lawsuit is one reason the land swap has not gone through.

The city stopped talking to him in September 2022, McKee said, saying it needed more time. McKee says Muskegon Mayor Ken Johnson told him the lawsuit would imperil the swap.

The letter of intent Mart Dock offered the city does not mention the LST 393, but McKee told CapCon that the land swap idea was supposed to result in the ship being moved to dry land.

The company has spent a “generous amount of money” to keep the ship afloat, McKee said, and it worked with local volunteers, including veterans, to restore it.

McKee said Muskegon officials offered to forgo the land swap and buy Mart Dock’s 8.5 acres outright. Mart Dock, he said, also offered to sell the city just the portion of the land the ship would need, but officials did not respond to that offer.

Mart Dock laid out its argument with the city in an Aug. 29 post on its Facebook page. It said lawmakers intended for all the funds from the two grants to be used “solely for the Third Street Wharf project.”

Some of that money was meant to pay the costs of relocating the ship, the company added.

“Mayor Ken Johnson has stated his intentions that the City withdraw the grant funds and move them to another location unless Mart Dock sells the Third Street property to the City,” the company argued. “The mayor also wants the city to own the ship.”

Johnson, the mayor of Muskegon, disputes McKee’s account.

“Mr. McKee is mistaken in his belief that the $2.8 million in enhancement grants from the state are required to be used for LST 393 or were even intended for this ship,” Johnson said in an email to CapCon. “Any assertion that this money has to be used for the LST 393 is false.”

The letter of intent expired in 2019, Johnson told CapCon in an email.

“City management has not had enough confidence in any proposal from Mr. McKee / Sand Products to bring it to the City Commission for consideration,” Johnson added.

Johnson said the $2.8 million in taxpayer grants does not need to be used specifically for the Third Street Wharf or the LST 393. The city will explore all options, he said.

“The prospect of using this grant money for the LST 393 was not even on the radar of the city and state government officials involved with securing these grants.” Johnson said. “State Rep. Terry Sabo, who worked on securing the grants, has informed Mr. McKee that this funding was not contemplated for the LST 393, let alone required to be used for Mr. McKee’s ship.

“It appears Mr. McKee won’t entertain any offer that doesn’t include him and his company taking control of the city-owned Fisherman’s Landing Campground, which they’d like to convert into a private commercial port & dock operation,” Johnson wrote.