Big Decision on Royal Vlahakis Deal Is Coming

Saturday, April 20, 2019, 1:38 pm
By: 
Alice Dreger

Will East Lansing’s Downtown Development Authority vote to effectively extend the exclusive contract on the Royal Vlahakis deal? Or will the DDA decide to move on now, and let other developers propose projects for the area just north of Peoples Church?

Thursday marks that decision point.

If the DDA decides on Thursday to move on, City staff is recommending that the DDA also decide on Thursday what to ask in terms of proposals from other developers.

That means big decisions either way about what’s likely to happen with land that wraps along Albert Avenue just west of Abbot Road and north along Evergreen Avenue.

Developers Royal Apartments and Vlahakis Development currently enjoy an exclusive contract to buy and redevelop the DDA’s properties on Evergreen Avenue. But as ELi reported last week, the deal as it was presented has been falling apart. The developers are now scrambling to rescue the deal with a site plan revision.

The DDA has been hoping the deal with Royal Vlahakis would pay off the approximately $5.6 million owed on the DDA’s Evergreen Avenue properties. This is debt acquired when the DDA decided in 2009 to purchase those properties to support a huge public-private redevelopment project with developer Scott Chappelle.

Hoping Chappelle could remake that part of downtown, the DDA paid two-to-three times the market value of those properties. While the value of them has risen over time, it appears impossible to solve the debt simply by selling off the properties on the open market.

Principal payments on that debt must start on May 1, putting pressure on the DDA and City to act.

On Thursday, the DDA is set to meet starting at noon. The developers are expected to attend and to make an argument for why the DDA should give them more time.

According to a memo attached to Thursday’s agenda, City “Staff has been informed that a new site plan and draft Development Agreement will be submitted by the Developer in short order.” Materials received by the City before the meeting will be made available here, but we don’t know when.

At last month’s DDA meeting, on March 28, developer Paul Vlahakis asked for an extension of the deal.

According to draft minutes of the March meeting, Vlahakis “stated that his organization is now working on redesigning the project, which will include less height to the buildings. He indicated that he and his partners intend to move forward with proposing a development project. He also stated that a shadow study and traffic study would be submitted to the City soon.”

But how much “less height” are they likely to propose?

Thursday’s agenda indicates that Royal Vlahakis has finally submitted a request to rezone the Evergreen Avenue properties to B3. That means they want the Evergreen Avenue properties zoned to allow for 140-foot-tall buildings. (This height limit already applies to the portion of the project on Abbot Road where Dublin Square is currently located.)

At the March 28 meeting, City Attorney Tom Yeadon recommended that the DDA send a notice of default “so that no interpretation can be made [by the developers] that the existing purchase and sale agreement is still in place.” The DDA staff did send such a letter.

But the DDA could still vote on Thursday to keep working exclusively with Royal Vlahakis.

It could also vote to open up the field to all comers.

If a majority votes to do that, the DDA will also decide what that Request for Proposals (RFP) should look like. A substantial draft RFP already exists.

That draft calls for developers to consider using the area for things like flexible office space, high quality restaurants, cafes, or food halls, museums, galleries, theater, and performance and event venues.

One question is which properties a developer might include in a proposal responding to a new RFP.

While landlord/developer Matt Hagan recently told ELi he has decided he will not sell to Vlahakis for what amounts to hundreds more student-attracting apartments, he did not rule out selling his property at 404 Evergreen Avenue, immediately north of the DDA’s properties, for something different.

Right across Evergreen Avenue from Hagan and the DDA’s properties is 341 Evergreen Avenue, a now-vacant lot where DRW Convexity is currently committed to building a five-story moderate income housing project several years from now. The Development Agreement with DRW Convexity holds that developer to that project – but the developers and the City could decide to revise that agreement if something of more interest to both parties comes along.

The original Royal Vlahakis proposal includes the Hagan’s property, the DDA’s properties, and the Dublin Square property owned by Vlahakis’ company, and also the City’s Parking Lots 15, 8, and 4, plus the part of the street that is Evergreen Avenue in the middle of it all. (Royal Vlahakis had proposed turning the street itself, shown in green below, into a kind of pathway park. So that land could be included in a new proposal.)

That’s a lot of land potentially at play.

If the DDA decides to send out an RFP, it’s possible that some developers will find a way to propose something with some or all of these public and private properties that is very different from what Royal Vlahakis has proposed.

The challenge of the scene will continue to be that $5.6 million debt, and the growing urgency of it. That debt came from betting on the wrong developer last time around.

What the DDA thinks is the right bet this time, we will find out on Thursday.

 

Want to weigh in? You can speak during the public comment period at the DDA meeting, which starts at noon in City Hall's Conference Room A (upstairs) on Thursday, April 25. You can also write to the DDA via staff member Tom Fehrenbach

See our complete reporting on the Royal Vlahakis deal.

 

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