Building with Complicated Political History to Be Destroyed

Wednesday, June 22, 2016, 7:03 pm
By: 
Alice Dreger

Plans to demolish the publicly-owned commercial building at 303 Abbot Road, known as “the little bank building,” are moving along. According to City staff, the current plan calls for a contractor starting asbestos abatement next week and the major demolition of the building starting the week of July 11.

The property has a long and complicated history, including as part of the major redevelopment plan that was known as “City Center II.” (“City Center I,” successfully completed, includes the downtown building that houses CVS and Omi Sushi on the ground floor, with condos above.) Some local commentators have seen the story of 303 Abbot Road as a cautionary tale of public-private redevelopment partnership.

Fifteen years ago, East Lansing’s DDA decided to purchase the property at 303 Abbot Road to help redevelopment of the area near Peoples Church in a key section of East Lansing’s downtown. The developer who was supposed to do the $100 million project, Strathmore Development and its affiliates, never pulled it off, in spite of acquiring (and then vacating) many of the privately-owned properties in that area.

To support redevelopment of the area, in 2001, East Lansing’s DDA had purchased 303 Abbot Road from the company of a member of the DDA, Brad Ballein, for $700,000. (Ballein recused himself from the decision to purchase his property.) Research by Eliot Singer showed that the City used state-level assistance to finance the property’s purchase, and that the City was eventually forgiven the debt on the loans.

The original plan had been for the property to be sold rather quickly by the DDA to a developer. But because City Center II never happened, East Lansing has been stuck with the property and fifteen years of associated costs.

In addition to entangling taxpayers’ funds for the last fifteen years, the building played a key role in likely prolonging the death of the City Center II project.

In 2012, Strathmore’s principal Scott Chappelle got permission from a majority of City Council to demolish the building at the property, even though it was publicly owned. This permission helped preserve his company’s legal position by effectively making it official that the company had started work on the redevelopment project, for which it had borrowed substantial amounts of money.

Documents obtained via FOIA by Phil Belfy showed Chappelle then pleading with City staff Tim Dempsey to get him permission to demolish 303 Abbot, so he could meet his contractual obligations: “We have to make this work,” he wrote to Dempsey on March 30, 2012. “No extensions are possible – it would be illegal.”

Dempsey responded that he was coordinating various governmental units “to ensure that all the permits are approved and crews are available” so that Chappelle could meet his legal deadline.

Four members of Council voted to help Chappelle at this time by giving him permission to do the demolition of the publicly-owned building. These were Diane Goodeeris (then Mayor), Nathan Triplett (then Mayor Pro Tem), Kevin Beard, and Don Power. They did not suggest Chappelle instead move to demolish his own properties.

In 2012, then-Councilmember Vic Loomis alone refused to vote to let Chappelle touch 303 Abbot, saying “he would like to defer any substantial demolition of structure until City Council has concluded its due diligence period and can then make a final determination of how to proceed” on the City Center II project.

Once given permission to do the demolition, Chappelle had indicated he would handle the asbestos abatement. Apparently he never did, because the City is now expending funds to manage the asbestos. This week Council approved contracts with Trust Thermal Abatement Inc. and SC Environmental Services to deal with environmental concerns, as well as approving a grant contract for $99,000 with the Michigan Land Bank Fast Track Authority for demolition.

As we reported, Strathmore’s principals recently lost the properties they had acquired, including the “big bank building” on the main downtown corner, in a foreclosure action.

As far as the publicly-owned building at 303 Abbot Road, what Chappelle’s company does seem to have done is to go in and salvage usable materials from the building. He told Dempsey on June 4, 2012, “We have completed the salvage of all recyclable and reusable materials from the building. We have awarded the asbestos abatement contract, asbestos monitoring contract, and demolition contract. The asbestos remediation will start within the next two weeks….”

Chappelle estimated “the entire process” would take “between 90 and 120 days from the date it was approved by Council” in 2012.

Until Chappelle was given permission to do the demolition, the property was still in use by the City. But Chappelle’s hired workers rendered the building unusable, leaving another building in the area vacant and blighted.

Now the City says demolition should be done by the end of this July. The contracts indicate what will be left is an empty lot, mulched and seeded with grass. The sign that has long hung on the building, “Future Redevelopment Site,” will be gone.

 

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