Park District Deal Still Likely Dead, as Center City Moves Forward

Tuesday, September 19, 2017, 7:22 pm
By: 
Alice Dreger

Above: Blighted buildings in the Park District redevelopment area, left; Center City District proposed redevelopment farther east, right.

Even as East Lansing’s City Council voted tonight to amend yet more paperwork on the Park District redevelopment project to try to rescue it, it continues to appear that the project will likely die.

The former owner-developer of the private properties in the area, Scott Chappelle, continues to insist he owns the rights to a $10 million Michigan Business Tax credit that the current developer, DRW/Convexity, says it needs to do its project. And the state-level agency that must approve that credit, the Michigan Strategic Fund, doesn’t want to deal with the tax credit question so long as Chappelle is making legal threats to sue over his alleged rights to the credit.

Mayor Mark Meadows told ELi after Council’s special meeting tonight that he believes DRW/Convexity may yet pay Chappelle off to move out of their way. That would make it easy for the Michigan Strategic Fund to move forward without concern about Chappelle suing.

But so far, DRW/Convexity has given no indication that they are willing to pay Chappelle off.

Asked why Council bothered to continue to amend paperwork when the deal is likely dead, Meadows told me he wants the state-level decision-makers to formally make a decision on the project—to support it or to kill it by formal action, and not just let it die in dispute between the former and current developers while the State is afraid to get involved.

“We went ahead because it will keep the matter in play. We believe that this is a really important project for the City of East Lansing, it’s good for the taxpayers, and it will be good for the downtown,” Meadows said.

Meadows’ view is that City Council has done what state-level development staff has asked East Lansing to do—that, in fact, Council has done so again and again—and it is now up to the State to make a decision on the project.

Mayor Pro Tem Ruth Beier told ELi after tonight’s meeting that she’s not interested in seeing the amount of tax money provided to DRW/Convexity increased in order to help DRW/Convexity pay Chappelle off to get out of the way.

“We’re not interested in funneling money to Chappelle,” she told ELi after the meeting. “If we did something that generated more revenue for Convexity, they could give money to Chappelle, but we are not interested in doing that.”

Does Chappelle have the rights he claims?

Yesterday the Lansing State Journal reported that “Chappelle said in an email Monday that the Michigan Attorney General’s office has confirmed” that he “owns the $10 million tax credit Convexity is seeking for the project.” Asked by ELi earlier today, the LSJ reporter indicated she has not actually seen anything in writing from the Attorney General’s office to prove what Chappelle told her.

The Attorney General’s office has not yet returned our call about this. Meanwhile, Meadows tells ELi he has seen no such thing in writing, and he doubts it exists.

Meadows worked for over two decades in the Attorney General’s office and says it is highly unlikely the Attorney General’s office would make that kind of ruling—the sort that would ordinarily be decided by a court in a lawsuit.

As we reported earlier today, whether Chappelle has the rights he is claiming is not what matters at the moment; what matters is that his actions are effectively stopping the DRW/Convexity project from going forward.

Demolition going forward in October?

Asked after the meeting for comment, David Pierson, attorney for DRW/Convexity, was only willing to say that demolition of the remaining blight will still likely be happening around October 7. The current developers have been keeping the buildings up pending the state-level decision, saying the $10 million tax credit approval has depended in part on the blighting buildings still being standing when the decision was made.

But if the Michigan Strategic Fund Board doesn’t make a decision on all this at its September 26 meeting, and it looks like the Board might yet make a decision later in the year, DRW/Convexity might well seek to keep the buildings standing longer.

Beier told ELi after the meeting, “Our goal from Day 1 was to get the buildings knocked down and we’re going to get that. So, I’m declaring victory. I was looking forward to the development, but that’s gravy.”

The Evergreen properties remain a problem for the City:

Whatever happens next, City Council is hoping to keep or create a tax increment financing (TIF) arrangement that will allow the City to deal with $7 million of looming debt on publicly-owned properties along Evergreen Avenue that were purchased years ago for redevelopment in the area. That debt threatens to further strain a City budget already nearing the breaking point.

Beier says that if the DRW/Convexity project doesn’t go forward, “What we have to do now is decide what to do with those [Evergreen Avenue] properties. I’m thinking maybe we should just sell them.”

Center City District proposal moving forward:

Meanwhile, according to East Lansing Director of Plannng Tim Dempsey, the Center City District proposal will be heading to Michigan Strategic Fund board meeting on September 26 for state-level approval of tax incentives for that project.

That is an entirely separate project set for a large area east of Abbot Road, and it has been relatively more controversial than the current Park District proposal at the local level. Planning Commission recommended against the project and local opinion on the redevelopment has been sharply divided, including among local business owners and citizens.

The Center City District project would include a set of two large new structures along a center-block section of Grand River Avenue and on what is now City-owned parking lot #1. (See ELi’s Comprehensive Guide to the Center City District project.)

Local approvals for all the paperwork on the Center City District project are not finished according to Dempsey, but the redevelopment proposal is moving on to state-level review anyway—something we were told was not allowed to happen in the case of the Park District.

We have asked the Michigan Economic Development Corporation (MEDC), which handles the state-level review, how it is that Center City District is moving forward for state-level approval before local-level agreements are approved, but MEDC has not responded.

This is not the first time these two large redevelopment proposals have seen different treatment by government officials, as ELi noted in a special extended report back in February.

The tax incentives the Center City District developers are seeking are separate from those sought by DRW/Convexity. That said, there are some limited resources for which these two project areas and their developers end up competing, as we noted in that extended report.

 

Timeline of the Park District redevelopment project:

  • September 19, 2017, morning: We report that City Council is attempting one last shot at saving the Park District redevelopment plans. Read more.
  • September 16, 2017: We report that former developer Scott Chappelle has effectively killed the redevelopment project by convincing state-level authorities that he may still have some rights to future tax credits on the properties he lost to foreclosure. Read more.
  • September 11, 2017: The Mayor expresses frustration that the MEDC won't seem to make a clear decision on moving forward with the Park District state-level tax incentives. Read more.
  • August 31, 2017: The MEDC suggests the state-level tax incentives may yet happen, despite threats from former developer Scott Chappelle about legal actions he might pursue. Read more.
  • August 24, 2017: A public relations firm is hired to try to help downtown businesses survive two major redevelopment projects, including this one. Read more.
  • August 16, 2017: We learn that the state-level agency that has to approve the $10 million credit will not consider the project until at least September, delaying demolition. Read more.
  • August 2017: Asbestos abatement ongoing at the "big bank building."
  • July 27, 2017: At a special meeting of City Council, the prior developer tries to make a legal maneuver to claim some rights in this redevelopment project. Read more.
  • June 22, 2017: City staff admit a major mistake on the project, delaying demolition of the vacant properties and potentially jeopardizing the deal. Read more.
  • June 22, 2017: East Lansing Downtown Development Authority (DDA) and Brownfield Redevelopment Authority (BRA) approve the revised development agreement.
  • June 6, 2017: City Council takes up the revised development agreement and approves it in a 4-0 vote.
  • June 1, 2017: DDA discusses the development agreement; recommends changes.
  • May 30, 2017: ELi reports on the development agreement going to Council.
  • April 25, 2017: In a 5-0 vote, City Council approves a site plan and $19.4 million tax-increment financing (TIF) plan acceptable to the developer. Council also approves a Memorandum of Understanding about the main elements of the development agreement.
  • April 20, 2017: BRA approves a revised TIF plan for the project, one that is acceptable to the developer.
  • April 12, 2017: East Lansing’s Planning Commission unanimously recommends DRW/Convexity’s site plan.
  • March 22, 2017: DRW/Convexity present revised site plan, including for The Graduate Hotel.
  • March 7, 2017: MSU says it won’t be part of major downtown developments.
  • February 23, 2017: ELi produces a major report showing how the Park District and Center City District plans have been treated differently.
  • February 6, 2017: ELi explains “the Evergreen problem in the Park District” and how it has affected attempts to redevelop the Park District.
  • March 31, 2017: City Council votes 4-1 to let the vacant buildings remain longer, at the developer’s request.
  • January 27, 2017: MSU says it may move to be a part of the Park District redevelopment.
  • January 26, 2017: ELi reports Convexity’s plan to “significantly change” the site plan.
  • January 23, 2017: The developers provide ELi a statement explaining their dissatisfaction with the City’s handling of their project.
  • January 10, 2017: City Council approves a TIF plan that the developers call unworkable in a 4-1 vote. The deal falls apart as a consequence.
  • January 5, 2017: In an apparently unprecedented move, the BRA votes through a shell of a TIF plan on the project, suggesting Council can work out the details.
  • December 12, 2016: Council agrees to extend the demolition deadline after tense discussion.
  • December 1, 2016: ELi reports that the developer has changed the site plans in response to concerns raised by Peoples Church, the Oakwood Neighborhood, and the Planning Commission.
  • November 2016: City Council amends Ordinance 1384 to reduce the requirement for non-student-rental housing in big downtown developments from 50% of units to 25%. This impacts Convexity’s site plan by reducing how much non-student-housing it must include.
  • October 21, 2016: The developer recommends a $34 million TIF deal.
  • October 12, 2016: Planning Commission reviews the new site plan.
  • August 31, 2016: The LSJ incorrectly reports that the developer has withdrawn the proposal in response to Ordinance 1384, which at the time required big downtown developments have at least 50% of residential units be aimed at someone other than student renters. We correct the LSJ story.
  • August 25, 2016: The DDA hears plans for the Park District.
  • August 16, 2016: ELi talks to the developer and finds out what may be in the works.
  • July 2016: The vacant, DDA-owned building at 303 Abbot Road is demolished.
  • July 2016: The developer demolishes the vacant Evergreen Arms apartments at 341-345 Evergreen Avenue.
  • February 5, 2016: Ingham County Court clears the way for DRW to take over the foreclosed properties without major legal encumbrances.
  • January 2016: The deeds on the vacant, blighted properties change hands.

 

For a timeline of the Center City District proposal and an overview of the project, click here.