Altmann Votes for Royal Vlahakis Deal Extension, But Says He Probably Won’t Again

Friday, July 26, 2019, 8:00 am
By: 
Alice Dreger

Above: Mayor Pro Tem Erik Altmann (photos by Raymond Holt).

Subbing in for an absent Mayor Mark Meadows at yesterday’s meeting of the East Lansing Downtown Development Authority (DDA), Mayor Pro Tem Erik Altmann voted in favor of another extension on the DDA’s exclusive land purchase agreement with developers Royal Apartments and Vlahakis Development.

That put yesterday’s vote 8-1 in favor of another 30-day extension for the Park Place West project.

DDA Chair Peter Dewan voted against, as he had last month with Mayor Meadows.

Voting in favor besides Altmann were Greg Ballein, Lynsey Clayton, Jim Croom, Luke Hackney, Mike Krueger, Jeff Kusler, and Jill Rhode. (City Manager George Lahanas, who is on the DDA, was absent, as was Eric Sudol.)

The developers have been paying the DDA $15,000 for every 30-day extension. This is the fourth extension, and according to the current agreement, it is supposed to be the last available.

Dewan (below) argued the new version of this project is uninteresting and lacking in public benefit, and said it makes sense to now open up the publicly owned properties on Evergreen Avenue to a Request for Proposal (RFP) process to invite other ideas from other developers.

In arguing for an end to the exclusive agreement, Dewan noted that it is “nearly impossible” for these developers to meet the final deadline set out in the existing contract.

The agreement as it stands essentially expires if City Council, the DDA, and the developers don’t sign a Development Agreement by August 23.

With plans recently dramatically changed, so much is still missing and unapproved. That means the only way a Development Agreement could be signed by the parties by August 23 is if Council and the DDA sign an agreement that agrees to sort out major components – including the site plan and Brownfield Tax Increment Financing (TIF plan) – later.

Greg Ballein, co-developer with Harbor Bay of the Center City District project, noted that this is what happened with his project. Ballein indicated he’d be comfortable with that. In the Center City deal, Mayor Meadows alone signed off on hundreds of pages of legal agreements, without further consultation with Council.

Yesterday, several members of the DDA indicated they would vote in favor of more extensions in order to help this project happen. Some were ready to do so at yesterday’s meeting.

But Altmann said he expects to vote against another extension. Meadows will be in Europe when the DDA meets again, which puts Altmann in the mayor’s seat again next month.

Altmann explained, “We did commit to a process and I think fair to let that play out, but I can’t see myself supporting” another extension beyond this one.

City Attorney Tom Yeadon assured the DDA it is permissible to take the developers’ money for the extensions, even if the DDA or City Council might ultimately kill the project. Yeadon also said more extensions could always be brokered if that’s what the DDA wants.

If the deal goes through, the developers will pay $5.6 million for the properties, which is what the DDA owes on them. The debt exists because, a decade ago, the DDA decided to buy the properties to try to get a deal done with developer Scott Chappelle.

The idea of separate lobbies for different income levels is questioned and defended

Royal Vlahakis is proposing a 10-story building above ground, including 23,000 square feet of retail space on the first floor, two floors with 46 moderate-income rental apartments, six floors with 138 market-rate rental apartments, and a top floor fitness center for the approximately 376 residents.

Below ground would be two floors of private parking for 138 cars. This is fewer than what the City’s law allows for a development of this scale, so that would have to be worked out.

The proposal follows the wish of the City to extend Albert Avenue through what is now Lot 8, resulting in the elimination of about 30 public parking spaces. Vlahakis told the DDA it might ultimately turn out more like a loss of 25 spaces. No additional public parking will be added.

Next to the new building, Evergreen Avenue would be turned from an active roadway into some kind of pedestrian-friendly area, possibly with a City-owned pavilion structure. There would also possibly be additional improvements at Valley Court Park.

The developers say that MSHDA (the Michigan State Housing Development Authority) is interested in providing financial support to the project because the developers want to attract moderate-income recent college graduates for the 46 income-restricted apartments.

The developers told the Planning Commission on Wednesday night that there will be separate lobby entrances and separate elevators for people in the moderate-income apartments versus the market-rate apartments.

Vlahakis said MSHDA wants this because it would be more attractive to the income-limited tenants. Some Planning Commissioners expressed surprise at the idea of separate lobbies and elevators.

Below: DDA members Lynsey Clayton and Jim Croom look over the latest plans.

But DDA Member Lynsey Clayton said Vlahakis’ explanation made good sense and that “this is not about trying to separate people” but about making the building more attractive to non-students.

Altmann pushes for proof of proposed partnerships

At the DDA meeting, Altmann pressed the developers to provide proof that MSHDA is actively interested in this project, “something concrete” that could be “independently verified.”

Altmann also wanted proof that Project for Public Spaces, a national nonprofit development firm, is going to be managing the retail space on the first floor.

Developer Paul Vlahakis (above) says that Project for Public Spaces will run the “urban market” space in his building and that it will include “artisanal local vendors,” like year-round public markets in other cities.

He likened his first-floor plans to the Grand Rapids market, which Vlahakis says is mired in debt because that project over-borrowed.

At the DDA, the developers’ attorney Brent Titus (below) shared a vision of having MSU’s School of Hospitality run tasting kitchens in the space, perhaps with food trucks on Evergreen Avenue.

Titus made no mention of this at Planning Commission the night before. The developers generally indicated that details on the retail space have yet to be worked out.

Planning Commission votes against recommending permanently rezoning the properties

Wednesday night marked Planning Commission’s first review of the new site plan from Royal Vlahakis.

Before getting to that review, the Commission voted on whether to recommend that Council permanently rezone the properties to B3 – something that would allow a simple majority (3 members) of Council to approve the proposed project’s height of 110 feet on Evergreen Avenue. Permanent B3 zoning would also pave the way for alternative proposals up to 140 feet. (That height would require 4 votes of Council.)

The Planning Commission voted 5-3 against recommending permanent rezoning, with those against indicating they thought the height allowance of the B3 district was inconsistent with what the recently passed Master Plan calls for in terms of shorter buildings near Valley Court Park and the Oakwood Historic Neighborhood.

Voting in favor were Commissioners Jack Cahill, Dale Downes, and Joseph Sullivan (who lives in Oakwood). One consideration was the DDA’s $5.6 million debt on the properties.

Said Downes (above), “Everyone knows what’s going to happen there, in a general fashion. It’s going to be a big building.”

Those who voted against (Dan Bollman, Kathy Boyle, Dana Watson, Cynthia Williams, and Chris Wolf) said they preferred upzoning here via conditional rezoning, which would tie the rezoning to a particular project, and revert the zoning if the project fell through. Wolf noted that all previous versions of plans for this site used conditional rezoning.

Below: Kathy Boyle, Joseph Sullivan, and Cynthia Williams

Council will make the final decision on this rezoning, and plans to do so at the August 13 meeting.

Use of park land for the developers’ stormwater treatment?

Vlahakis told the DDA yesterday that it was Department of Public Works staff who suggested Valley Court Park be used for the retention pond for stormwater runoff from the private property for this project.

Asked if that was true, Director of Public Works Scott House said, “When we saw the first plan with the pond on the park, we were surprised, especially as it was not vetted with us and nor had there been discussion with Parks and Recreation. However, it is a viable technical solution, subject to the appropriate approvals, agreements and consideration.”

But House notes his department doesn’t own the land. The City does. And the Parks & Rec Department has indicated they think the plan is not politically viable.

Vlahakis has said he might still try to pursue at least a public ice rink in the park, perhaps funded with donated dollars from area corporations, a popular idea with Planning Commission and DDA members.

The developers appear to be continuing to pursue the idea of a publicly owned pavilion on Evergreen Avenue, although City staff expressed dissatisfaction with the current design. Vlahakis says Peoples Church is interested in renting the pavilion space from the City, and that the pavilion can be used for festivals and the like.

Planning Commissioner Wolf (below) asked why the City would take on so many expensive-to-maintain new public amenities with this project. Vlahakis answered it would attract people downtown.

“One of the drawings shows someone playing piano,” he said, suggesting that could be an activity in the area.

At the Planning Commission meeting, the developers’ architect Tom Tooley answered questions about why so many materials are still missing by saying the team is being “pulled in multiple different ways.”

Tooley (below) said he still wanted to meet with neighbors, including developers of nearby properties, to figure out what to propose for the public spaces.

Tooley said this week, as he has in the past, that he’s essentially “working in a vacuum” and needs to talk to more people about what they want.

Vlahakis said at both Planning Commission and the DDA that not much is missing from his team’s application at this point.

At the present time, the following is not available: the traffic study, photometrics study, lighting plan, landscaping plan, construction staging plan, land use statistics, an engineering plan for the stormwater retention, review by the fire marshal, review by the housing department, review by the building department (those reviews require more information first), details about how the apartments will be arranged, clarity on the contents and use of the retail space, elevations showing the buildings at grade, and a plan for the public spaces.

A Brownfield TIF plan would pay for public infrastructure

The developers have now submitted a draft TIF plan for this version of their project. They propose that for 30 years, 70 percent of new taxes be captured from the project and be used to pay the developers back for construction of public infrastructure related to the project.

The total would come to about $18 million in taxes diverted for this use, including about $8 million to pay the developers 5 percent interest for putting up the money for the public infrastructure work.

Altmann told the developers he wants to see a 100 percent tax capture, which the TIF consultant indicated would last more like 15 years before paying back the $18 million.

Below: Brent Titus, attorney for the developers (left), and Erik Altmann.

Altmann explained that the benefit in this would be that more taxes would be diverted away from other local taxing authorities to be used for infrastructure development like sewer and road work in East Lansing. The plan would divert new property tax revenue away from other local taxing authorities including Ingham County, CATA, the Lansing Airport, Lansing Community College, the East Lansing Public Library, and Ingham County Intermediate Schools.

In terms of scheduling, City Council might discuss the Development Agreement on August 13. But whether City Council opts to put this project on that agenda remains to be seen.

Normally a Development Agreement is not discussed until after a site plan and TIF plan are settled. But in the case of this project, the process has been extraordinary from the start.

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