ANN ARBOR, MI - The house at 730 S. Division St. in Ann Arbor has been part of Julie Welch’s family since 1962. Her parents purchased it to rent to University of Michigan students, and Welch has put blood, sweat and tears into the home even from an early age.
“I remember painting the basement walls (there) with my sister-in-law at the age of seven,” she said. “We painted and played tic-tac-toe on the walls before painting over it.”
The university needs all the homes on South Division Street, as well Marshall Court and East Madison and John streets, to pave the way for a new Central Campus residence hall project scheduled for 2025. Welch is one of the few remaining holdouts among dozens of property owners that only sold to avoid legal conflict with the university.
Welch does not want to sell and see workers demolish decades of her family’s work in the South Division house. She would rather her home become like the famous Edith Macefield House in Seattle, Washington -- a lone home surrounded by development.
“Build around me and let’s co-exist in peace,” she said.
The university’s Board of Regents authorized during its May 18 meeting spending $75 million to acquire 49 properties for the second phase of its Central Campus project. The first phase of that development is a $490 million, 2,300-bed dorm to be built on the old Elbel Field between Hoover and Hill streets.
Read more: University of Michigan to spend $75M to buy Ann Arbor land for more student dorms
Local real estate investor and Regent Ron Weiser is purchasing all the properties to sell back to the university, and the $75 million covers Weiser’s costs and closing fees for the 49-property acquisition, documents show.
Weiser will not make a profit from the deal, documents show. Weiser has been acquiring the properties necessary for the second phase through the acquisitions wing of his real estate company McKinley Companies.
Read more: No conflict of interest in University of Michigan dorm project, legal expert says
By the university’s count, there are five properties still holding out on selling to Weiser, said university spokesman Rick Fitzgerald. MLive/The Ann Arbor News has confirmed that James Chen, one of the longest holdouts, has since agreed to sell his two South Division properties next to Welch’s.
Chen, a university alum from Taiwan with a degree in civil engineering, started acquiring properties in the late 1970s and early 1980s with a goal of completely rebuilding and restoring aging student housing. He purchased one of the South Division homes in 1983 for $43,000, according to city records.
“Student housing was (in) pretty bad shape,” he said, adding that he now owns about a few dozen Ann Arbor properties. “Basically, there were a lot of complaints from students...So that’s when I got started. I figured I’d make it better for students.”
The university’s goal of adding student housing is an overall good, Chen said. However, the dealings with the university have soured his opinion of his alma mater, he added.
Neither Chen nor Welch were looking to sell their properties when contacted in January, they said. Chen was contacted by Weiser’s associates, while Welch was contacted by Jim Chaconas, executive vice president of the Ann Arbor-based commercial real estate firm Colliers International.
Both said they were told from the beginning that if they resisted offers, the university could exercise eminent domain. This refers to the right of state entities to acquire private property with “just compensation,” according to Michigan law.
“It’s a little bit like a threat,” Chen said, adding he would be taken to court if he didn’t sell.
The university has a right to eminent domain, and property owners would be better off avoiding that process, Weiser said.
“There’s a different process, and it takes a while and makes it expensive,” Weiser said. “In my opinion, I think (the owners will) end up with a lower number, because I’m giving some fairly hefty numbers in order to prevent us from having to use (eminent domain), because it’s time consuming and costly to both sides.”
Chaconas did not respond to a request to comment, and the university has not initiated eminent domain proceedings on any of the properties, said university spokeswoman Kim Broekhuizen.
Chen said he was initially offered about $600,000 for his home, which he found insulting as a home down the street at 736 S. Division St. sold to McKinley for $1.3 million in January, according to city records.
“The price that gave us was outrageously low,” he said. “The reply was if you don’t take it, we’ll go to eminent domain.”
Chen confirmed May 31 to an MLive reporter that he agreed to sell his two properties for more than $1 million each after months of contact with Weiser’s associates at McKinley. The closing will occur at the end of June, Weiser said.
“I don’t want to put my energy into fighting this,” Chen said.
Read more: Angelo’s Restaurant to close as University of Michigan plans $4.5M purchase
For Welch, the South Division home is a family business she was hoping to give to her grandchildren to help them pay for college and learn a good work ethic. The connection to the property goes beyond just being a landlord, she said, as it is much more personal than that.
“My whole family has worked on this house,” she said. “We are a small, family-owned and operated business...We have worked hundreds of hours to create a space that feels like home for our tenants and to provide guidance to young adults that may have never lived away from home before.”
Welch said she is not close to selling her property, saying the negotiation has made her feel only like “a property address and not a person of value.”
“I hope they move forward with their construction and leave me and my family’s property alone,” she said.
The first 1,300 beds for the new student dorm are expected to become available for students by fall 2025, university officials said. The next 1,000 are expected by 2026, while the specifics of the future phase are not yet available.
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Read more from The Ann Arbor News:
Central Campus dorm project will gobble up Ann Arbor properties, officials say
Saying goodbye to Ann Arbor’s Marshall Court: Houses to be demolished for new dorm
Regents approve at least $490M for new University of Michigan residence complex