ASK ELi TO INVESTIGATE: Has Hotel Indigo Pulled Out?

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Friday, November 21, 2014, 12:52 am
Alice Dreger

Each week at ELi, we take a question from a reader, investigate the answer, and bring you the result on Friday.

This week’s question from a reader: Did the failure of the parking lot sale authorization on Election Day cause Hotel Indigo to pull out of its plan to be a tenant in the proposed “Building A” in the Park District?

Background: The large building planned for the corner of Grand River Avenue and Abbot Road, known as “Building A” (shown in the architect's rendering above) is designed to have a hotel tenant, and those bringing forward proposals on behalf of Park District Investment Group (PDIG) have said the tenant will be Hotel Indigo. Hotel Indigo is a chain that features upscale "boutique" lodging.

A reader who has been following the Park District redevelopment proposals closely heard, prior to the elections, that if the parking lot sale authorization failed to pass, Hotel Indigo would pull out of the Park District because the area would not be fully redeveloped and wouldn’t have enough parking. So the question came to ELi: Did the failure of the parking lot sale authorization on Election Day cause Hotel Indigo to pull out of its plan to be a tenant in the proposed “Building A” in the Park District?

How I researched this for our readers: Earlier this week, I called the corporate office of Hotel Indigo to inquire whether the plan to put a Hotel Indigo in “Building A” would be proceeding. The person I spoke to there said there were no plans to have a Hotel Indigo in East Lansing.

I then emailed Jim Anhut, SVP Americas Design and Quality for InterContinental Hotels Group (IHG), the parent corporation for Hotel Indigo, who explained in an email on November 18 that “we do not develop hotels. Our franchise owners develop and own the hotels. The answer you received from my [corporate] office was likely the result of the fact that we have not reviewed final building plans yet. Jerry [Loveland] and Scott [Chappelle] need to provide you with their go-forward plans.”

On November 19, Jerry Loveland answered my inquiry by saying “I am the hotel developer and can confirm that the Hotel Indigo is still very much a part of the Park District project. It was unfortunate that the DTN proposal [involving other properties in the Park District] did not move forward [because the parking lot authorization failed] however that has nothing to do with the Park District Investment Group’s plan to redevelop the real estate it controls in the East Lansing Central Business District. The proposed Hotel Indigo is providing its own parking as part of the redevelopment that was approved by the East Lansing Planning Commission several weeks ago.”

The answer: So the answer to our reader’s question is no, the failure of the ballot question has not caused Hotel Indigo to pull out. The plan is still to have Hotel Indigo be part of Building A. My research, though, turned up someting else . . . .

But wait: Who is the Park District Investment Group?

Just when I thought all this was sorted out, Loveland added a note to his message that has created confusion on another front:  “Although Scott Chappelle was one of the original Hotel Indigo licensees, Mr. Chappelle is no longer an owner in the project and you are free to direct any questions you have regarding the Hotel Indigo to me.”

This wrinkle matters because Scott Chappelle is the controversial principal of Strathmore Development Company, the company that was supposed to bring City Center II (involving the same area as Building A) to fruition several years ago, only to leave a number of properties—many of which had been occupied and in use—boarded up and derelict. Citizen watchdog Eliot Singer has been tracking, and sharing with City Council and the Public, information on numerous tax liens and contractor liens, lawsuits, foreclosure actions, mortgage defaults, and other financial risk factors related to Strathmore Development and its affiliates and successors.This record could have an impact on the ability of PDIG to proceed with the project, depending on Chappelle’s legal relationships with PDIG. (See this PDF containing a summary of Strathmore's troubles.)

So I asked Loveland to clarify: “Do you mean that Mr. Chappelle is no longer an owner of the hotel license (or franchise that owns the license), or no longer an owner of the properties on which Building A will be constructed, or no longer an owner in PDIG?”

Loveland responded on November 19:

“Mr. Chappelle was involved in the project in 2008 but it is my understanding he has sold his interest in the project to Park District Investment Group. He has been extremely helpful to the new owners assisting to move the project forward but has no interest in the new owner or the property.”

I have asked Chappelle by email whether he is a principal in PDIG, and he has not responded.

So what do we know? At this point, while it seems clear that the people who own the license to the hotel franchise plan to put a Hotel Indigo in Building A, (a) it is unclear who owns the properties on which Building A will be built and in what percentages, (b) it is unclear who owns Park District Investment Group and in what percentages, and (c) it is unclear what Mr. Chappelle’s role in all of this is.

The big question we can’t answer at this point: With whom is the City doing major development business when it seems to be doing business with PDIG? City staff does not at this time appear especially concerned about this question, as they continue to work to move this project forward.


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