City Garage Under Marriott May Be Closed, Sold

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Wednesday, December 9, 2015, 9:50 am
Alice Dreger

East Lansing’s City Council heard from City staff last night about various options for dealing with the City-owned parking garage and land under the Marriott Hotel downtown. Investors have expressed some interest in purchasing the garage and/or the land under the whole “University Place” complex, a parking garage and land which the City currently owns.

The complex called “University Place,” at the corner of Albert Street and M.A.C., includes the garage, office tower, and hotel and is a commercial condominium project. There are three portions or “units” in the condominium. Unit 1 consists of the garage, which is owned currently by the City’s Building Authority. Unit 2 consists of the hotel. Unit 3 consists of the office tower and the retail space on the first floor.

The City owns the land on which the whole project resides. Right now, the University Place Condominium Association pays the City only $10 a year for the land lease. But that lease will expire in 2026, and at that time, the lease payments will increase substantially. This as well as income potential from the garage make the two City-owned properties in this project of interest to investors.

The parking garage is in need of significant repairs, with estimates putting the cost of repair at between $3 and $4 million. Last year, City Council approved an extension on the tax increment financing (TIF) plan for the parking garage for thirty years when the existing thirty-year TIF on the project expires in December 2016. (Read more.) The idea is to capture tax money to pay for the needed repairs to the garage, money that otherwise would go to other public entities like CATA and Lansing Community College. But instead of repairing and keeping the garage, the City could try to sell the garage and make it someone else’s problem. (Any sale price would take into account the significant repair costs.)

The City tried in 2006 to get the City’s voters to approve selling the land, and in 2008 to get voters to approve selling the land and the garage. Both times, the vote fell just short of the then-required 60% approval. The Charter has since been amended by the voters to require only a 50% + 1 vote approval threshold for selling City-owned properties like these, so it would now be relatively easier to get voter approval.

Director of Planning Tim Dempsey presented the various options to Council, following up on a detailed memo that lays out the various options, including their potential costs, risks, and benefits.

Dempsey let Council know that it is likely the garage will have to be closed for a year to get the repairs done. Staff member Caleb Sharrow explained that the lower level of the parking garage will likely be closed very soon because chunks of concrete are falling down from the ceiling on that level, creating risk to people and cars, as well as liability risk to the City.

Mayor Mark Meadows asked staff to try to move more of the “unknowns” of the options into the “known” category before Council makes a decision.


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