BARRYTON — For two years, a marijuana business has leased 14 acres of land from the village of Barryton for the purpose of establishing a marijuana grow facility.
Recently, the company, M66 Group LLC, made an offer to the village council to purchase the land for the purpose of expanding their project.
During a meeting this week, residents voiced their objections to the proposed sale for over an hour during the public comment portion of the meeting.
Many residents in attendance expressed concern that the village was giving up more than it was gaining by the sale of the property.
Tyler Dutcher with Vivid Farms Cannabis Company, who also leases land from the village, addressed the council during the meeting. Dutcher said he has been trying to educate the council on the value of “green zone” land and the opportunity for the village to capitalize on establishing a green zone.
Green zone properties refer to commercial real estate eligible for a growing, processing, testing, transportation, or provisioning permit from a local municipality.
“Today, the cheapest green zone you can find is $16,500 per acre, with the highest being $127,000 an acre,” Dutcher told the council. “The negotiations on this property started out at $6,000 per acre. Council decided on $8,500, which is barely anything over what the lease would have made for the village and now they have lost their asset.”
Council president James Soriano said that when M66 Group made the offer to purchase the property, he and another council member contacted realtors to gauge the value of the land before proceeding.
“We contacted two realtors, they both understood that this was for cannabis growing,” Soriano said. “The low end was around $9,000 an acre and the high end was around $20,000. In our area, we are at the low end of value for property. The high end numbers were on more populated areas versus more rural areas. Depending on your location, it makes a difference.”
Attorney Joanna Stevens, who is working with M66 Group in the negotiations, concurred with the local realtors’ assessments.
“Those numbers (that Dutcher represented) are not comparable,” Stevens said. “There is no way on the open market you are going to get that much for acreage in this area, even with the potential for the business, because you have other issues. If they don’t have people from this town, they have to move operations here. There are logistics to consider. There are so many factors that people are not going to pay that.”
When asked why council didn’t offer the property for sale on the open market, Soriano said that was not an option because of the lease contracts currently in effect.
“In the contract that was created by the prior council, a clause was put in for first right of refusal to buy the property,” Soriano said. “That is what sparked the offer to purchase the land. M66 Group approached me with an offer. I, in turn, contacted Tyler Dutcher and informed him of the same opportunity, if he desired.”
In an email dated July 23, Dutcher told the council that “Vivid Farms would like to continue our lease as is.”
“We are not currently interested in purchasing the village land at this time, and we recommend that council reconsider the value of the land before offering a sale to any party involved,” Dutcher said.
Council decided to proceed with negotiations with M66 Group.
TO LEASE OR TO SELL?
Other residents in attendance questioned whether it would be financially better for the village to maintain ownership of the property and continue with the lease contract.
The village currently has lease contracts with both M66 Group and Vivid Farms for sections of the property in question.
M66 Group leases 14 acres at a rate of $8,000 per year for 10 years, for a total revenue to the village of $80,000 over the 10 years. Vivid Farms leases 2 acres at a rate of $2,000 per year for 10 years, for a total revenue of $20,000 over the 10 years.
According to village council meeting minutes, M66 Group approached the council in July with an offer to purchase the 14 acres they currently lease.
Council voted to approve the sale of the property for $8,184 per acre, for a total of $119,000 during the July 23 meeting, however, the village was told by their attorney that the terms of the contract are not legal because the village cannot hold a mortgage or land contract.
“If council decided to sell, it would have to be a cash sale,” Soriano said. “The purchase agreement has to be renegotiated. It will go back and forth until both parties are happy.”
Soriano explained the council’s reasoning for selling the property included getting money for the needed repairs to the village’s park pavilions, which is estimated to cost $20,000.
“Because this property was acquired through the USDA for the sewer system, $23,000 would go right to an extra payment for the sewer line,” Soriano said. “The other monies would go to fixing the two pavilions. That was the mindset of the council.”
Another advantage they considered was additional tax revenue from having the property on the tax rolls.
M66 Group representative Judd Jaffee told those in attendance at the meeting that by selling the property to them, the village would gain $5,000 to $10,000 a year in tax revenue.
“We came to the village after speaking with our attorney, thinking this purchase would be good for everybody,” Jaffee said. “We think it would help us develop if we can mortgage it (the property) and the bank will give us money to build a bigger facility and make more money which would bring more money to the village and employ more people. There is a lot of motivation. We would like to work to improve this community.”
‘NAILING DOWN THAT 1%’
Soriano said a big factor they had considered was a clause in the contract calling for a 1% of net income donation back to the village from the grow facilities owned by M66 Group.
“The 1% is where my concern is,” Soriano said. “One percent of a $14 million operation is amazing and that is what the understanding was — that the village was going to benefit and that the funding could be used anywhere. Part of the value to me was nailing down that 1% donation.”
Soriano explained that with the current MRA rules, the village is not receiving any money from the cannabis businesses other than the licensing fees and the lease payments.
“Even with the businesses up and running, on a grow facility right now there is not an excise tax that is being offered like it is on a provisioning center,” he said. “All of that money that the village thought it was going to get, they are not going to get.”
President pro-tem Kathryn Kerr said right now the excise tax that comes back to municipalities only comes from the provisioning centers or a microbusinesses.
Both M66 Group and Vivid Farms have said they plan to eventually establish a provisioning center.
“I was trying to nail them (the companies) down to that 1% because that is going to help our village thrive,” Soriano said. “We found out later that the village cannot include that in the sales contract. It is in the business plan, but the business plan is not binding.”
Soriano said both companies have agreed, in principle, to the 1% donation.
Some residents expressed concerns that the million-dollar industry may never happen, stating that in the two years since M66 Group began leasing the property, there has been little movement on the project.
In an email to the village council, Dutcher said his main concern was the intentions of the M66 Group in trying to purchase the property.
“There has been no forward motion on the property in two years, except for ours,” Dutcher said. “Most of the village licenses do not have any forward motion taking place. This is tying up valuable tax money and land that the village could be getting hundreds of thousands of dollars from. Once the land is no longer in the village’s hands, it can be sold with the license the company already has for millions with the village at a complete loss.”
Stevens responded saying this is something she deals with every day in working with municipalities and cannabis industries, and that is handled through the contract negotiations.
“Through the contract, that is how you protect the village,” Stevens said. “That is how municipalities are ensuring how these parcels of land that are being utilized by these companies and that it (the development) actually comes to fruition. There are timetables that can be set. If some of those companies lose funding and can’t continue, there are processes in place for that.
“I have yet to see where people aren’t doing what they have said they would do, especially if it is under contract,” she added.
Jaffee said they have been making progress on the current project and have done excavating, building road access and putting in a septic and drain field for their Class C grow facility.
CONFLICT OF INTEREST?
In his presentation to the council, Dutcher also accused Soriano of conflicts of interest in dealing with the sale of the land to M66 Group.
“The first few time Jim came to talk, we discussed his role with helping the M66 Group and how they had him doing everything — designing their facility, locating contractors, managing the job site and logistics,” Dutcher said during the meeting. “He said they were helping him out with rent, so it paid off.”
Residents questioned Soriano about whether the accusations were true or not.
“I do not help with the business,” Soriano said. “What I did is help with measurements for building permits. They are not here, so it is easier for them to call me and ask for help. I have done no different for them than I have done for Tyler.”
Soriano stated in an email to the Pioneer that he understands that to some, it might seem to be a conflict of interest because he rents his home from the M66 Group.
“I do not work for the M66 Group, I rent from them,” Soriano said. “I began renting from them in June 2020, prior to running for the village president seat. It was no secret where I was living or who I was renting from.”
Soriano went on to say that he and Kerr had asked their attorney if there was a conflict of interest and were advised that it was not a conflict of interest for him to lease his home from the M66 Group.
“I have been involved with the council for many years,” he continued. “If I was working for M66 Group, I would simply abstain from anything involving them. The fact is I do not work for them.”
When asked if the residents had any vote in the decision to sell the land, Soriano responded that they have a voice.
“You may not have a final vote, but you do have a voice,” he said. “You can bring information to the council that might change a decision.”
No action was taken on the sale of the property during the meeting.
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