PR Firm Being Hired to Help Downtown Businesses Survive Redevelopments

Thursday, August 24, 2017, 3:54 pm
By: 
Alice Dreger

East Lansing’s Downtown Development Authority voted unanimously today to hire an East Lansing-based public relations (PR) firm to try to help downtown businesses survive what is expected to be the major disruption caused by simultaneous construction of the Park District and Center City District projects.

Meanwhile, it is looking like demolition for those projects won’t be starting until at least October. That’s because various parts of the two plans have not yet been fallen into place.

Publicom to try to help businesses survive:

Owners of some downtown East Lansing businesses have expressed significant concern about how they can survive two major redevelopment projects in a small downtown area, both involving major demolition and construction of buildings up to 140 feet tall within a quarter-mile span of Grand River Avenue. Each of these projects is expected to take at least two years to complete and will involve closures of roads and parking lots at various times.

In response to these concerns, City staff recommended hiring a PR firm to help during construction. Amy Schusler-Schmitt, Community Development Analyst for the City, told the Downtown Development Authority (DDA) today that she and other members of a special committee interviewed four PR firms for this work and came to the conclusion a $20,000 contract should be awarded to Publicom.

The interviewing committee included members of City staff, the DDA, and the Downtown Management Board. Two of the firms interviewed are East Lansing-based (Publicom and King Media) and two are Lansing-based (Piper & Gold and Truscott Rossman). The committee felt the strongest pitch came from Publicom, which is owned and run by Lisa O’Connor, a marketing expert.

The work by Publicom will include such things as helping to develop signage letting customers know which businesses are still open, how to get to those businesses through the construction, and where to park. The work is also expected to include a messaging system the City can use to let businesses know what’s going on with construction in terms of road closures and the like.

Publicom recommended that their company produce a “Construction Survival Guide” for businesses downtown. Publicom also recommended that the campaign have a mascot, and recommended a honeybee, because, explained Schusler-Schmitt, “It stings at the beginning but is all sweet at the end.” (She said another mascot may be chosen for the campaign.)

The City Attorney will now review the contract to make the deal with Publicom official. The $20,000 for the consultancy will come from the DDA’s budget. The DDA’s funds come from a special tax (two mills) paid by property-owners in the DDA’s district, a system enabled by State law.

What’s going on with the Park District project:

The Park District project would involve demolition of the vacant, blighted buildings on Grand River Avenue just west of Abbot Road, replacing those buildings with a 13-story structure including The Graduate hotel, retail space, and rental apartments (shown immediately above, as if you are standing at the MSU Union).

Just north of that area, along Evergreen Avenue, the developer DRW/Convexity would also construct a smaller residential building with owner-occupied condominium apartments. A series of older rental houses owned by the DDA would be turned into surface parking to support the redevelopment. (See ELi’s guide to the Park District project.)

ELi reported last week that asbestos abatement on the “big bank building” at the blighted corner is already underway in preparation for demolition. This week, asbestos abatement has also been going on at the smaller commercial buildings just west of there, including the building that once housed Thai Hut. (See below.)

But the prior owner of the properties, Scott Chappelle, is still trying to make claims on the state-level tax credits that current owner DRW is trying to secure to make the redevelopment happen. And that throws a wrench of uncertainty into the demolition plans, for reasons we explained last week.

The City’s Director of Planning, Tim Dempsey, told the DDA today that DRW/Convexity is hoping to get the State-level decision on the tax credits on September 26 when the Michigan Strategic Fund Board convenes for its monthly meeting. If that happens, major demolition of the blight would happen around October 7-8.

But it’s hard to know if that will happen given Chappelle’s legal maneuvering involving the properties his companies lost to foreclosure. The Michigan Strategic Fund Board agenda for September is not yet available. DRW/Convexity’s attorney, David Pierson, did not respond to request for comment today.

Dempsey told the DDA today some lane closures along Abbot Road and Grand River Avenue will have to happen for safety reasons when the major demolition occurs. DRW has said demolition of the properties would negate its ability to obtain a $10 million state-level tax credit, and has promised to demolish the buildings shortly after the Michigan Strategic Fund Board makes its decision on the project. (The asbestos-abatement is being done now so that there is no delay in demolition.)

What’s going on with the Center City District project:

About a block east of Abbot Road, the Center City District project would involve demolition of downtown commercial property that had been occupied until recently by Sundance Jewelers, Noodles & Company and the Verizon dealer and which is still occupied by Clever Clover. (See below.)

In addition to utilizing that Grand River Avenue frontage, the Center City District would also subsume City Parking Lot #1 in a public-private deal made between the City and the developers, Harbor Bay Real Estate and the Ballein family business.

Along Grand River Avenue there would be a 12-story structure with a Target store and rental apartments (shown below). Behind that, on Albert Avenue, there would be a new City-owned parking garage fronted by developer-owned new retail space and developer-owned rental apartments, above the parking garage, for people aged 55 and up. (See ELi’s guide to the Center City District project.)

Dempsey told the DDA today that the developers are still “pushing for a potential start sometime in October” for this project. He said that the final agreements between the City and the developers are still not worked out, including agreements on the construction containment plan and the streetscaping.

In the case of the Park District, Council approved all of the agreement details. In the case of Center City District, however, Council voted unanimously to let City staff and the Mayor work out a number of key legal agreements. Until those are finalized—which Dempsey indicated they have not been—the redevelopment will not start.

To go forward, the Center City District developers also need to secure financing for the complex project. The project is set to include a $58 million Tax Increment Financing (TIF) plan. This will capture up to $58 million in newly-generated property taxes from the project, essentially to pay for the new City-owned parking garage. The way the deal is set up puts a lot of the financial challenges on the developers.

Below: Center City District plan for Albert Avenue, with a new parking garage fronted by retail space and senior rental housing above, shown as if you are above Black Cat Bistro.

Over the last couple of months, development-related agreements that would normally be treated as fairly “boilerplate” by the DDA for this project have been pulled off or not put on the DDA’s agendas. I asked Dempsey about that today, and he said that he expects those to be dealt with in September.

The Center City District project also has to go to the Michigan Strategic Fund Board for approval of various state-level tax incentives, and Dempsey said he expects it to be on the September agenda. For that to happen, all of the agreements with East Lansing would need to be completed.

Attorney James Kiefer, representing Harbor Bay, did not respond to a request for information from ELi. One thing I asked him late last month was this: “The external ‘due diligence’ consultant indicated that Harbor Bay’s lease agreement with Target requires that the white box be ready by September 1, 2018. Development experts I talk to say that’s pretty much an impossible schedule if the financing won’t be in place before (at the earliest) late September. Can you explain what to expect with regard to the Target deal?”

Harbor Bay’s principal Mark Bell has said that the project is not viable without an anchor tenant like Target. It is possible the lease agreement will be renegotiated to continue the plan to include Target. As of now, however, it appears that the financing has not come together for this project.

We will continue to follow these developments.