Above: The blighted properties and what was supposed to have been built.
Despite a statement provided to ELi today by Jeff Mason, head of the Michigan Economic Development Corporation (MEDC) saying the MEDC wants to see the Park District project go forward, the would-be developers have just informed ELi that the project is officially dead.
DRW/Convexity will be moving on, scrapping the approved plans, and starting over.
Speaking for the owner-developers of the blighted properties at the northwest corner of Abbot Road and Grand River Avenue, attorney David Pierson tells ELi, “We are looking at what the options are for development of the property, and we are just starting that process.”
Pierson says demolition of the vacant buildings is going forward. Workers are there now doing preparation for knocking-down the buildings, which is set to happen around October 7. The properties will then be empty and fenced in until any future development occurs.
DRW/Convexity had said that to do the project, it needed to obtain $10 million in Michigan Business Tax credits for which a prior developer, Scott Chappelle, had applied for redevelopment of the properties. Chappelle lost the properties to foreclosure in 2015, and DRW subsequently obtained them.
Pierson notes that the MEDC says, “the law requires that we have the prior developer’s consent to transfer the credits. We have no agreement with the prior developer and we do not expect to have one” with Scott Chappelle.
Mason’s statement today from the MEDC says, “the new developer needs access to those critically important tax credits. Therefore, the MEDC has explored the viability of transferring those credits (from the former developer to the current developer). Contrary to the narrative coming from the East Lansing Mayor’s office, at no point whatsoever has the MEDC taken sides or created a roadblock for the development. On the contrary, MEDC has and will continue to pursue every possibility to create and/or utilize economic incentives to attract private developers to develop a site that meets the high standards of the East Lansing community.”
Asked to respond, Mayor Mark Meadows tells ELi, “I have not accused the MEDC of taking sides or designing a roadblock to the project. I don't know what they are referring to in that regard. I have merely pointed out that they have been inconsistent in their advice to East Lansing staff and their interpretation of their own authority. I think the timeline of decisions and advice bears this out.”
As we have reported, MEDC staff has repeatedly come back to East Lansing staff to tell them to redo paperwork on this project in the hopes of getting the credit done. Most recently, East Lansing’s City Council redid yet more paperwork on Tuesday night at the instructions of MEDC.
Part of the redoing of the work this Tuesday at Council involved invoking an old Brownfield Tax Increment Financing (TIF) plan from Chappelle’s day. MEDC has recently told East Lansing staff that that has to happen to trigger the possibility of the $10 million credit.
But Pierson explains that backdating the project to that 2008 TIF plan means the life of the $19 million TIF plan approved for the DRW project in effect shrinks from 30 years to 20 years. That greatly reduces how much property taxes can be captured to help pay for the project—potentially leaving the City of East Lansing, the East Lansing Downtown Development Authority, and the developers all in the lurch financially.
Consequently, the way the MEDC says all this needs to be done—to satisfy what MEDC says is the law and to satisfy Chappelle in the way MEDC says he must be satisfied—makes the project not viable.
Meadows says he would like to know on what legal basis MEDC has reached these conclusions about Chappelle’s alleged rights: “They recently received advice from an Assistant Attorney General regarding this matter. They should share that advice with the public.” That has not happened.
Asked what project proposal he thinks will come next out of DRW/Convexity, Pierson emphasizes that planning has not really started. But, he says, “I don’t think it would be of the same magnitude. But I don’t know what it will look like at this time.”
Does he still anticipate The Graduate Hotel being a tenant of the new redevelopment?
“We certainly hope so,” he says.