YPSILANTI, MI - Funding for a $16,800 trip to China by four Ypsilanti city officials is threatening to unravel a $150-$300 million development proposed for the city's Water Street property.

Ypsilanti City Council is investigating what the city officials knew about who paid for the overseas trip, a 12-day excursion that may have been funded by Global Capital Group LLC, the investment group behind the International Village proposal.

A special meeting Tuesday, Oct. 11 saw five city officials questioned about the trip and who paid for it by city council members who did not travel to China.

No action was taken during the meeting. City council voted last week to issue a request for proposals for special counsel to oversee the continuing investigation. The requests are due Friday.

The developer of International Village, Amy Xue Foster, initially proposed to pay for the trip in May during a city council meeting in order to further understanding of the project.

International Village is a $150-$300 million housing project proposed for Ypsilanti's Water Street property. The project would be financed primarily by Asian investors and is designed to attract Asian immigrants.

The Ypsilanti City Attorney's Office previously stated in a memorandum and email to City Manager Darwin McClary a trip to China would be "unethical and illegal" if paid for by the developer.

Mayor Amanda Edmonds, Mayor Pro Tem Nicole Brown, Police Chief Tony DeGiusti and Economic Development Director Beth Ernat traveled to China from Sept. 21 to Oct. 3.

Each official was questioned separately at Tuesday's special meeting, and asked to take an oath to tell the truth when asked questions by city council about the trip.

Many of their questions were aimed at Ernat, Edmonds and McClary, and focused on a lack of communication with the city manager and the rest of city council about how the trip was organized and the funding source.

Ernat said in documents she provided to the city Oct. 6 that the Wayne State University's Chinese Students and Scholars Association (CSSA) called her to offer funding for the trip out of interest in fostering cultural connections between southeast Michigan and China.

A link between the China trip and the developer was made after a LinkedIn message was sent by a CSSA representative in reply to Mayor Amanda Edmonds, according to documents submitted to the city.

The LinkedIn message, written by CSSA president Peifeng Li, that said scholarships totaling $16,800 may be provided through donations from Global Capital Group LLC, the Troy-based investment group behind International Village.

The LinkedIn message was one of several issues covered during Tuesday's special meeting, five hours of questioning by city council members into what officials invited to China knew about the funding along with comments from at least 60 residents in attendance.

Ernat was asked whether she considered it suspicious that an offer by the CSSA was made despite the group not being approached by the city and if she inquired about how the scholarships were funded.

"I have not previously investigated grant sources," she said. "It did not strike me as odd or concerning."

It was believed by Ernat and Edmonds the funding source was through the Chinese consulate, they said at Tuesday's meeting, as a result of internet research done by Edmonds that they later verbally confirmed with the developer.

In documents on the city's website, Ernat said she asked Foster if she had provided the funds for the student group and was told the developer had not provided the scholarships.

Though she was looking into alternative funding sources like Ann Arbor SPARK and the Michigan Economic Development Corp., Ernat said she felt the CSSA's scholarships could be trusted because of its relation to Wayne State University.

While she received confirmation that MEDC smart zone funds could be used related to the Local Development Financing Act, Ernat said she thought "it was safer to use separate public funding."

Edmonds said she sent an email Sept. 10 followed by the LinkedIn Message two days later to members of the CSSA because she, along with the public, would want to know the scholarship source.

In documents provided to the city and verbal testimony, Edmonds said she did not read the LinkedIn message from the CSSA until her arrival back in the United States on Oct. 3.

On Sept. 26, during a conversation in a hotel lobby in China, Ernat said she told Edmonds the trip funding may be connected to the developer.

When asked about the effect on the International Village project, Edmonds said she has the same questions as the rest of city council about the developer allegedly funding the trip.

"That's going to be the question for this body to deal with," Edmonds said. "If there was some knowing deception that happened, then I have very real concerns with working with anyone who deceived us along the way."

Questions also arose from a chain of emails related to the CSSA's letter of funding that was revealed in city documents to be forwarded from the developer to Wayne Hoffman of Spence Brothers.

Spence Brothers is the general contractor for the International Village project.

McClary said he was not aware the letter of funding passed through the developer until the city published emails and documents associated with the trip on Friday, Oct. 6.

McClary responded to questions of why city council approval was not sought for both the trip and its funding before he pointed to the Sept. 11 letter sent on his behalf by Ernat to members of city council and city officials.

"I did not receive any feedback from city council that this should be on the next agenda," McClary said, before acknowledging the absence of any communication from the Chinese Consulate later raised red flags.

McClary brought up a lack of city staff as possible reasons for miscommunication involving the trip.

Members of city council did not ask about the China trip's agenda, which according to documents available on the city's website included trips to historic sites and tea house performances.

They also did not ask if the developer has since been contacted by any city officials about funding the trip.

Several city residents spoke during the meeting about the investigation leading to decreased trust in the city's process to establish International Village and what they saw as a lack of professionalism by city staff.

Ralph Lange served as Ypsilanti city manager from 2012 until his resignation in August 2016, and said Ernat and DiGiusti were "among the best" of city officials he supervised in his 35-year career.

He pointed out numerous groups and entities that stand to gain from development of Water Street, and the millions of dollars the city has estimated it would take to clean up the property due to contamination from its previous years as an industrial site.

"At some point, it's going to have to be cleaned up and someone's going to have to pay for that," Lange said.

Lange added he would pay for the trip to China taken by officials, "if payment needs to be made."

Dave Heikkinen, president of the Downtown Association of Ypsilanti and a local business owner, expressed his disappointment in how the city handled information related to funding for the China trip.

"It's really sad that we're here," Heikkinen said. "This should have never got to the point where we're here today."

Some residents encouraged city council to break off negotiations with the International Village developer, and commented on a discussion among council members on how to proceed with the investigation.

"You guys have to be fair," said Ypsilanti resident Sue Melke, who pointed to Council Member Pete Murdock's comment that he had already come to a conclusion about the investigation. "Unless you have all the facts, how do you know?"

Ypsilanti resident Steven Wilcoxen told city council he is concerned about statements made that question whether or not the investigation would continue.

"I would encourage you to keep with that and engage in that process," Wilcoxen said toward the end of the meeting, which was adjourned just before midnight.

Attorney Dan Duchene, representing City Attorney John Barr who was absent from the meeting, reminded city council the special meeting is considered a fact-finding mission and not a legal investigation.