City Seeks Citizen Input Under Weighty City Center II Legacy

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Saturday, September 1, 2012, 9:24 pm
By: 
Alice Dreger

This week, City Planning staff will host two meetings to discuss "the former City Center II/Park District Planning Area" site with citizens. The City is expected to soon release a Request for Proposals (RFP) to potential developers of the areas. These two meetings (details below) represent rare opportunities for citizens to express their concerns and ideas before potential developers formally become involved in the next stage of trying to deal with the blighted area just northeast of Peoples Church.

But citizens must understand the major baggage that comes with this project.

The City does not own the major anchor site, the "big bank building" located at the northwest corner of Grand River Avenue and Abbot Road. It also does not own the property immediately to the west, nor the now-boarded-up apartment building once called the "Evergreen Arms." A map provided by the city shows in blue what is owned by the city or the Downtown Development Authority (DDA), a public entity, and in red what is privately controlled.

This means that either the City must limit its RFP to the properties it does own, or again attempt to enter into negotiations with the owner(s) of the privately-owned properties in the area. If those privately-owned properties are still controlled by Strathmore Development, any move to include those properties in the RFP will again bring to the surface discussions of the problematic record of Strathmore Development and its principal, Scott Chappelle.

That record includes a lawsuit brought against Bear Creek Township, an Ann Arbor development once set to soak up millions of taxpayer dollars but never built, and, as reported by Ian Kullgren in the State News, an IRS personal lien against Chappelle in the amount of $496,659.20.

By October 2011, East Lansing citizen Eliot Singer's research turned up 12 Strathmore-related projects of which, "All [...] appear to have lost 'other people's money,' all told lots and lots and lots of it." Singer's findings were published on Public Response and caused much taxpayer alarm.

When the City staff finally started the "due diligence" study of the proposed City Center II project, Singer provided staff an updated version of his findings with related documentation. By June 2012, City Planning staff had to report to City Council that the City Center II project as envisioned in partnership with Strathmore was not financially feasible, and City Council passed a motion indicating that the project "poses substantial and unacceptable financial risks to the City of East Lansing."

Yet even if the City avoids further relations with Chappelle and Strathmore in the next steps for the "City Center II/Park District" area, the City faces the substantial problem of owing far more on the DDA-owned properties along Evergreen Avenue than those properties are worth. In an August 8 report to Public Response, Singer reported that "East Lansing citizens owe $5,655,000 in principal on the debt for the Evergreen properties," although the properties now have only "an assessed market value of $1,479,400."

Meanwhile, the financial status of the "little bank building" at 303 Abbot Road -- the major DDA-owned property at the City Center II site -- remains murky, as previously reported in ELi. Before pulling out of the development agreement, City Council in a 4-1 vote (with Vic Loomis voting against) allowed Strathmore to begin demolition on the publicly-owned building in April, apparently leaving the building in significantly worse condition than it otherwise would be.

How the City can overcome these substantial hurdles to move forward on rehabilitation of this area remains unclear.

The two open-to-the-public meetings on this matter will be on: Thursday, September 6, at 7 pm; and on Friday, September 7, at 9 am. Both meetings will be held at the Hannah Community Center, 819 Abbot Road.

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