Hotel Suddenly Gone from Downtown Development Plan

Image: The previous plan for Building A, which was to include a hotel and to be 10 stories

Plans to put an upscale boutique hotel in “Building A”—the building PDIG is proposing to erect at the corner of Abbot Road and Grand River Avenue—have fallen through. PDIG has informed the Downtown Development Authority there will be no hotel after all—and the building will be eight stories rather than ten.

Until recently, PDIG representatives have been saying that Hotel Indigo would be the major commercial tenant of what they had planned as a ten-story structure. But at the East Lansing Downtown Development Authority (DDA) meeting yesterday, PDIG representative Tom Eckhardt revealed that they met with Hotel Indigo representatives in Atlanta last week, and Hotel Indigo had declined to extend the agreement to allow a franchise on the Building A site.

Eckhardt told the DDA that PDIG had approached some other hotel companies, and no one is interested in placing a hotel there at this time.

City staff and PDIG representatives have been saying that there is a strong market for another hotel downtown. So it is unclear why this is no longer a viable plan.

This would appear to represent a major change to the site plan for the building, considering the reduction by two stories and the loss of the main commercial tenant, which was due to occupy floors 2-4. What the building’s eight floors will now consist of is not clear, but presumably it will involve a first-floor of commercial tenants and residential units above that. More office space is said to be projected in the new plan, which staff said is expected from PDIG by the end of this week.

The parking plan is also called into question by these changes. The planned underground parking, which required valets to manage the specialized car lifts, was pegged to the needs of a boutique hotel, not a mostly-residential building.

PDIG says they believe the site plan does not need to go back to the East Lansing Planning Commission because the changes represent a reduction and not an increase in the scale of the project.

At the DDA meeting, City Planning staff who were present did not disagree with this assumption about the Planning process. City Planning staff have since cancelled the Planning Commission meeting scheduled for January 28 “due to lack of business.”

The meeting of the DDA occurred in conjunction with the Brownfield Redevelopment Authority (BRA), as it has the same committee membership and was covering much of the same business.

For those unfamiliar with the BRA, according to the City’s website, “The purpose of the BRA is to assist development projects that face economic challenges due to environmental constraints.” In practice, the BRA arranges public subsidies (sometimes referred to as tax incentives) to development projects, including through Tax Increment Financing (TIF).

Yesterday the DDA and the BRA deferred all discussion about the draft development agreement between PDIG and the City, as well discussion of the draft TIF agreement, because the financial estimates will change substantially with the elimination of the hotel and two floors. Here is one example of how the site plan changes can impact the TIF plan: City staff told the DDA’s Project and Infrastructure Committee at its meeting on January 15 that including the hotel in the building required a larger TIF. This is consistent with Eckhart’s letter to City Planning Director Tim Dempsey of January 8, which said that residential units in the building were “essentially subsidizing the hotel.” Now there is no hotel, which would suggest the TIF amount can be lowered.

At yesterday’s meeting, City staff pushed the DDA to proceed on the agenda item called “Allocation of Funds for outside expert to evaluate PDIG Development Agreement.” This refers to the use of DDA funds that staff wants to be spent on outside experts to review the legal and financial aspects of the development agreement, in apparent response to public concerns about the high risk perceived with PDIG and its major player’s track records.

Staff suggested that the DDA allocate money from its budget for this purpose now—despite the delay caused by the change in the site plan—so that staff can give outside consultants a sense of the scope of services and get pricing from them. Lori Mullins of the City’s Planning department said at yesterday’s meeting that the City staff would also like some DDA members’ assistance with determining the scope of services of external consultants.

The DDA decided to defer action on allocating any money for outside consultants on the project until its Executive and Financing Committee meeting on February 19.

ELi is a reader-supported, nonprofit, noncommercial, nonpartisan news source for the people of East Lansing. If you want us to keep bringing you news like this, contribute now! Donate online or donate by check. Your contributions are tax deductible!