Voter Guide to the MSUFCU Land Sale Ballot Question

Wednesday, February 19, 2020, 6:00 am
By: 
Alice Dreger

East Lansing voters have an opportunity on March 10 to indicate support for or opposition to the idea of authorizing City Council to sell a chunk of public land downtown to the Michigan State University Federal Credit Union (MSUFCU) for a new office building. This nonpartisan voter guide is aimed at helping you hit the ballot informed.

What does the ballot language say?

“In order to allow Michigan State University Federal Credit Union (MSUFCU) to construct a five to eight story commercial office building, not to exceed a height of 112 feet, which may include an MSUFCU branch office, intern center, office space, and a community room that may be utilized to host MSUFCU, MSU, and non-profit events, shall the East Lansing City Council be authorized to sell for Eight Hundred and Ten Thousand Dollars ($810,000.00), as fair market value determined by its recent appraisal, approximately 13,250 square feet of City-owned land at the NW corner of Albert Avenue and Abbot Road, commonly known as Parking Lot #4, to MSUFCU?”

Where is the land?

The following map shows the location. The land includes the public Parking Lot #4 just south of the Dublin Square restaurant and also part of what has been Albert Avenue.

Because Albert Avenue west of Abbot Road is currently being shifted south to align it across Abbot Road, part of the Albert Avenue right-of-way has become available to the City to attach to Lot #4 for possible redevelopment.

How was the price arrived at?

The City received one independent appraisal from Valbridge Property Advisors, dated Nov. 18, 2019. We’ve obtained the appraisal and you can see it here.

The appraisal included the entire piece of land on the ballot (both Lot #4 and the part of Albert Avenue to be attached) and the estimate of value came in at $810,000.

Property values are going up downtown. If the City holds on to this land longer, could the value go up?

It might go up, but it could also go down.

Has the City put the property out for bid, or is it planning to?

No. City planners and at least some members of City Council believe that an MSUFCU office building would be a “game-changer” for downtown, so they are interested in selling for this particular use (a major office building for a major local employer) rather than putting the property out for bids or issuing a Request for Proposals for this land.

City staff have already been moving to rezone the land from “community facilities” (the zoning for a parking lot) to B3 (the most intensive downtown use), a rezoning necessary for the MSUFCU idea, and City staff have said that one reason to do this is so that if this deal falls through, it will be easier to market and sell the land.

In that case, Council would have to ask voters for authorization to sell through a different ballot proposal in a later election.

What exactly does MSUFCU want to build?

The credit union’s CEO April Clobes has told ELi the plan is to construct an 8-story, 112-foot-tall office building with an MSUFCU branch on the first floor, a community room on the second floor, an intern center on the third floor, and office space on floors 4-8. Some of the office space might be leased to non-MSUFCU office users as MSUFCU grows into the building.

Clobes told ELi in mid-February, “We have been growing 7-10% per year and have nearly doubled in asset size in five years….Our current facilities on Coolidge Road will support our growth for five to six years. This project will add capacity for growth beyond that time. If we don’t build in downtown East Lansing, in a few years we will evaluate where we locate our next facility.”

Putting in a new branch at this location would mean the closure of the branch currently located next to Peanut Barrel at 523 East Grand River Avenue, and the new building would also involve the closure of the MSUFCU Financial Innovation and Education Center now located at 309 East Grand River Avenue.

There would be no parking on-site for this office building. Users of the building who drive to it would park in the City’s public parking system. There would be a net loss of about three dozen surface parking spaces in that area.

The following is a conceptual rendering provided for the Feb. 18 Council meeting. This view is looking northwest, with buildings now under construction shown to the left. Dublin Square restaurant and the small downtown park (Sharp Park) are shown on the right.

The following is a rendering of the project looking north across Albert Avenue from the area of the hotel now under construction, just east of Peoples Church. Note that the credit union's representatives have said these are just conceptual renderings. An actual site plan will not be submitted unless voters approve the sale authorization.

Read more about what we learned at the Feb. 18 meeting of Council here.

If a majority of East Lansing voters vote “yes,” is it a done deal?

No. The project would have to go through all the normal review and approval processes for big development projects. The legal counsel for the credit union told Council of Feb. 18 that the sale contract would not be finalized until after the voters approve the sale (if they do). But then on Feb. 25, Council approved a revised version of the contract. It will only be signed if the voters approve the sale.

If the voters say "no," can the Council get around that?

Yes, if MSUFCU agrees to it, Council could do the deal through a land lease like the one used for the University Place project and the Center City District project.

Can the voters say “yes” and then Council decide not to make the sale?

The voters could say “yes” and the Council could still decide not to go through with the deal — for example, if Council finds the building design unacceptable.

If the Council wants to sell the land to another buyer, it will have to go back to the voters with another ballot proposal and again seek majority voter approval. This is because the ballot language is quite specific about the purchaser, price, and land use.

If the voters say “yes,” could Council turn around and sell it to someone else, or sell it to MSUFCU for a lower or higher price?

No. Council would be bound by the ballot language.

Could MSUFCU build something else, or sell the land after a purchase?

The ballot language authorizes Council to sell the land specifically for the purposes of the Credit Union “construct[ing] a five to eight story commercial office building, not to exceed a height of 112 feet.” A deed restriction was written into the draft contract to ensure this use; read more.

MSUFCU could sell the office building after it builds it, but as it has been difficult to find major office users for downtown, that seems unlikely to happen soon after construction. Even if it did happen, it would presumably still result in occupied office space downtown, which is the goal of the proposed sale.

Would this building involve tax-increment financing (TIF)?

Tax increment financing (TIF) plans capture future property taxes to reimburse costs of pre-approved private and/or public development-related expenses.

Asked by ELi whether MSUFCU will be looking to request a TIF plan, MSUFCU CEO April Clobes replied, “We are not intending to seek a TIF.” Clobes reiterated that statement with a qualifier in mid-February, stating, “If there are significant expenses related to cleaning up the site, we will need to evaluate what are options are for the project to determine if the project is still financially viable.”

Tom Fehrenbach, Director of Planning for the City of East Lansing, told ELi there may be a tax increment financing (TIF) plan for this project, because, if ongoing investigations turn up environmental contamination, “it will need to be remediated as part of any development project.” Fehrenbach thinks that would likely be paid for via a TIF.

City staff may be interested in encouraging MSUFCU to cooperate in a TIF plan because it could be to the City’s financial advantage. The City can use TIF to finance needed infrastructure work that it otherwise may struggle to finance. The City also charges fees in relation to TIF plans. But TIFs are politically unpopular in East Lansing.

It appears we will not know about whether a TIF plan will be part of this project until after the March 10 vote.

If this sale happens, what will happen with the $810,000 in sale revenue?

Some sale-related expenses will be paid out of it, including title insurance for the purchaser according to contract drafts. The net funds would go into the City’s General Fund and the City Council would decide through the normal budget process what those funds are used for.

What additional revenue might this generate for the City of East Lansing?

Right now, the land produces no property taxes. A major office building will, by contrast, mean the land produces substantial property taxes. If there is a TIF, some of those taxes may be directed (for at most 30 years) to pay for approved development-related expenses. Otherwise, the new property taxes will flow to the usual taxing authorities.

If this project were constructed as planned, MSUFCU and any other businesses located in the building would be subject to the “personal property tax” East Lansing levies on certain material business goods. Clobes has said MSUFCU will not request exemption from this tax.

MSUFCU is “currently the City of East Lansing’s largest property taxpayer,” notes Clobes. “And, all of our employees working in East Lansing, which includes our headquarters campus locations pay East Lansing personal income taxes.”

Additionally, some users of this building would use the City’s public parking system, generating parking revenue. It seems likely the net parking revenue would go up from the envisioned project, even though the project would eliminate several dozen surface parking spots that currently generate income.

What have voters named as reasons to vote "yes" or "no" on this project?

See our survey results here.

 

This voter guide is being updated as more information becomes available. It was last updated on Feb. 26.

eastlansinginfo.org © 2013-2020 East Lansing Info