Council May Make Big Decisions on Blighted Area Tonight

Tuesday, January 10, 2017, 12:12 am
By: 
Alice Dreger

East Lansing’s City Council is set to potentially make some big decisions about the blighted area downtown at its meeting tonight. A public hearing for the site plan of the major redevelopment proposal is on the Council’s agenda, which means the Council may approve, reject, or rework the site plan for the project tonight. Meanwhile, the business portion of the agenda calls for consideration of a $25 million tax deal related to the project.

WGR Finance owns the privately-held properties in the redevelopment area, including the vacant and blighted commercial buildings along Grand River Avenue just west of Abbot Road. Chicago-based Convexity Properties has been working as the developer for the project, which is estimated to cost $148,000,000 and which would include a large number of privately- and publicly-owned properties, as shown here:

The properties marked with red arrows are owned by WGR Finance. The properties marked with blue arrows are publicly owned by East Lansing’s Downtown Development Authority (DDA).

The plan calls for construction of three major new structures, including “Building A,” along Grand River, set to house a 150-room hotel and 177 rental apartments, along with a restaurant, “rooftop” bar, and parking in the basement level for the hotel guests. The rendering provided by the developer is shown here:

The second building, Building B, would be a major new City-owned parking garage. On the west side of the garage, facing towards Valley Court Park, there would be an attached series of 12 owner-occupied apartment condominiums (called Building C2). They would face a greenway that would be where Evergreen Avenue now is, and across that greenway would be Building C1, which would house 52 additional owner-occupied apartment condominiums. This image shows this area as if you were walking towards it from Peoples Church. Building C1 is on the left, Building C2 on the right.

The following image shows the layout of the new structures. It also shows how Evergreen Avenue would be closed and repurposed in the section south of Valley Court Drive. Part of Evergreen Avenue would become the greenway between buildings C1 and C2, as shown above, and the part nearest Grand River Avenue would be transferred to WGR to be subsumed in Building A. Albert Avenue would also be realigned under this plan.

On the table is discussion of a possible $25 million tax increment financing (TIF) plan, the details of which have been difficult to pin down. As we reported on Friday, East Lansing's Brownfield Redevelopment Authority (BRA), which is responsible for sending proposed TIF plans to City Council for final approval, sent up an unusually vague recommendation that was different from what the developer proposed.

According to a memo to Council from City Planning Administrator Lori Mullins, the motion approved by the BRA last week expressed a desire to use the TIF to pay for the City's redevelopment-related expenses. Mullins referred to the BRA's  “interest in having the eligible expenses that would be reimbursed by the [TIF] plan be allocated solely to the public components of the project. There was also discussion about the need to address the [DDA's] outstanding debt from the Evergreen properties, the balance of which will be $5,605,000 this April.” This DDA debt was incurred for properties that the DDA bought years ago to promote redevelopment of this area. This is an issue for the City because the City taxpayers are on the hook for that DDA debt.

Confusingly, the version of the TIF plan linked to tonight's Council agenda was drafted back in December and does not take into account the recommendation of the BRA from last week. The description of the TIF plan and list of “pros” and “cons” contained in the Mullins memo apparently refer to this earlier, now-outdated TIF plan. (For example, the memo states, "The plan does not include full funding for the construction of the parking structure or for payment to the DDA for any of their properties.")

Among the “pros” of the plan listed by Mullins for Council is that this redevelopment would revitalize “underutilized properties,” that it would create 120 new full time equivalent jobs and 100-150 construction jobs, that it would potentially provide new owner-occupied housing (if people purchased the condos), that the area would be substantially improved in terms of infrastructure like sewers and roads, and that eventually—after 23 years—the project would produce more taxes for the City’s general fund.

But under the “cons,” Mullins has noted that the plan would mean the City would “forego the majority of new tax revenue from the site for 23 years,” that it doesn’t solve the problem of what the DDA owes on the Evergreen Avenue properties (and that debt will soon be costing East Lansing taxpayers $375,000 a year), that there isn’t a plan for paying for the whole of the parking structure, and that the parking structure might not be big enough for what’s needed in the area.

With the City now facing a debt load fast approaching $200,000,000, even if Council wants to approve the site plan for this project, Council is still faced with the challenge of trying to finance what the City would have to provide for this project to happen. (And that’s not the only challenge remaining, as we explained in our Reader Guide to this development yesterday.)

The TIF plan also doesn’t add up financially for the developer, according Mullins' memo to Council: “The applicant has indicated that with…$25 million in TIF reimbursement and the $10 million MBT [state tax] credit, there remains a financial gap if they are required to build and finance the parking structure and pay off the entire debt associated with the land.”

So at this point, there is no clarity about what Council will be considering tonight in terms of a possible TIF plan. Ordinarily the Council would send out a "public hearing" notice in advance of such a TIF discussion, and that notice would  make clear what plan they are going to consider. But in this case, the usual path of approval was altered in order to speed up the process; in response to an expressed desire by Mayor Mark Meadows to get the project approved sooner rather than later, on a suggestion by the City's Planning Director Tim Dempsey, the public hearing notice was officially done by way of the BRA meeting last week, instead of doing it via Council as is customary, so there will be no formal public hearing on the matter through City Council.

That said, Citizens can still communicate their opinions on the matter to Council. Citizens who want to weigh in on this matter to Council have two options. They can show up tonight to the meeting, which starts at 7 p.m. in East Lansing’s City Hall, or they can write to Council at council@cityofeastlansing.com. The agenda for tomorrow’s meeting along with the attachments is provided by the City through this link.

 

Read more:

The Blighted Corner Redevelopment: An ELi Reader Guide

Council to Consider $25M Tax Plan for Park District Development

Following Tense Council Discussion, Demolition of Blighted Buildings Delayed

Park District Plans Morph, Move Forward (more info on the site plan)