Council Votes 4-1 to Approve PDIG's Plans

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Wednesday, April 22, 2015, 8:00 am
Alice Dreger

Image: City Council last night (from left: Ruth Beier, Diane Goddeeris, Nathan Triplett, Kathy Boyle, Susan Woods)

Three hours into its meeting, City Council voted last night 4-1 to approve the site plans and special use permit for PDIG’s proposal to redevelop the blighted corner where Abbot Road meets Grand River Avenue. The four voting in favor—Mayor Nathan Triplett, Mayor Pro Tem Diane Goddeeris, and Councilmembers Kathy Boyle and Susan Woods—said they saw this as a necessary first step in a long and deliberate approval process, while dissenter Councilmember Ruth Beier said it was the wrong decision because the plan requires a public-private partnership that she believes will leave the city at too great financial risk.

Approval of the site plans and special use permit for “Building A” and “Building B” does not mean the projects will in fact be built. Doing so still requires hashing out and approval of a complex and controversial development agreement between the developer and the City. It also would require a tax increment financing (TIF) plan providing upwards of $30,000,000 in public give-back to the developer from the project’s future property taxes—also controversial.

Planning staff Darcy Schmitt reminded Council the main building, Building A, went to Planning Commission and was approved as a different plan, for a ten-story building including a three-floor hotel with 120 rooms, six floors of rental apartments, and underground valet-only parking for 283 cars. (The parking will use a special car elevator which requires trained valets.) The plan has since been amended to involve only eight stories, including a two-story hotel with 83 rooms, five stories of rental apartments, and underground valet-only parking for 273 cars. The first floor was designed as and remains intended for retail space.

Council seems to be unanimous in believing most or all of the apartments will be student rentals, and many on Council expressed frustration that the project will not diversify housing in the downtown area.

The approval last night included a condition that if the hotel space is not "maintained and used as a hotel," then "the Special Use Permit for the hotel restaurant selling alcoholic beverages is no longer be valid" (typo exists in original). It is unclear what would happen, in practice, if the building were constructed but the hotel pulled out or failed. Council has talked about making the public subsidies of the project (tax increment financing) contingent on a hotel being established and maintained, but again, it is unclear what would happen if the hotel failed and the public subsidy was thus withdrawn. These questions are likely to be addressed in next steps.

Another condition added since Planning Commission’s review specified that all the hotel balconies be available only to the rooms with which they are associated. Council—especially Goddeeris—previously expressed serious concerns about a mass-grouping balcony that would allow people to access rooms that are not theirs and might lead to large parties. A third added condition said that recycling containers must be made available.

Goddeeris made all the motions to approve the three relevant resolutions, with the votes consistently going 4-1 in favor with Beier against. Goddeeris said she thought the process had been long and detailed and that they had arrived at the point where the design needed to be voted on so that it could move to the next steps. She expressed an interest in trying to use the special condition about the hotel bar to ensure that there be a hotel at the site.

Those voting in favor said they thought it important to move the project forward for in order to get to the next steps in the process. Goddeeris, Triplett, and Boyle said they thought it necessary to limit themselves last night only to consideration of the building plans, not to the finances, the trustworthiness of the developer, etc.

Beier disagreed, saying that she thinks it is not possible to separate out the finances of the project from the building plans. She stated that “the further down the road we get, the clearer it is this is a public-private development” that will require “a lot of public money.” She said that the public benefit would not be worth the public financing. She said, “This is basically student housing with a bar and hotel.”

Beier also expressed concerns about the underground parking, saying it was going to be paid for “100%” by the taxpayers through subsidies and that it would—as she said has happened with the Marriott Hotel—become a permanent economic drain on the City. Beier said she thought that the approval of these site plans and special use permit would prolong the City’s blight rather than fixing it because she doubted this project will get built given the financial realities.

Before the vote, Woods asked whether there would still be “the development process and due diligence and everything else” if they approved the site plans and special use permit. She asked, “it isn’t like we’re giving a carte blanche, right?”

City Attorney Tom Yeadon said that approval did not mean Council had to later approve the public funding sought by the developers. He said that the buildings being approved in the site plan would be unlikely to be built without approval of a development agreement that benefitted the city, and noted that the project could not be built without a development agreement that included a plan to transfer certain public properties over to PDIG, something that hasn’t yet been worked out.

In other words, Council can still throw a wrench in the process even after last night’s approval, if Council finds some reason to decline to approve the development agreement, tax increment financing, etc, or to produce them in a way that fails to make the project financially viable for the developer.

Goddeeris said she felt it was her job as a councilmember to move this project forward at this point, considering it had gone through lengthy review and discussion. Beier said she thought it was not the job of councilmembers to pass site plans “that won’t end up working” and will hurt the city financially.

Boyle said she was not at this point considering sustainability of the project or how it would be funded. She said she was inclined to agree with Beier that this would be a poor use of tax increment financing because it consisted mostly of more student rentals.

Triplett said he thinks the project will add to the vitality of downtown, especially because of the hotel. He also said he thought it was good that residential parking would not come with rental leases but would cost extra, a move that might discourage renters from having and using cars rather than greener forms of transportation.

Woods said that she thought the 30 conditions were acceptable and that rejecting the site plan and special use permit would send a discouraging message to other developers.

While the Council was deliberating, Todd Arend, representing PDIG, signaled to Triplet that he wanted to speak. Triplett said it was not normally allowed at that point in the process, but Arend was allowed to speak.

Arend thanked Council but objected to condition #18, which said that the hotel bar could not serve alcohol after midnight. He wanted Council to change this or leave the issue to be worked out in the development agreement. Council did not follow his request. Arend had indicated he thought it important to allow a hotel to serve alcohol after midnight, implying this could challenge the developer’s ability to secure an agreement with a hotel tenant.

Building B was also approved on the same 4-1 pattern. This involves a four-story, mixed-use building along nearby Evergreen Avenue, including retail space on the first floor and 42 rental apartments above.

In discussion of this, Goddeeris again said she thought the plan had met the concerns of those who had weighed in, and Beier again said she thought the whole PDIG project would have a significant negative economic impact on the City as a whole because of the significant public monies that will be redirected to subsidize the project.

Boyle said again she’s support the approval at this point but had significant reservations about using tax increment financing for this project because it does not serve an unmet housing need in downtown. Triplett said wanted to vote in favor and cited the unanimous recommendation of Planning Commission on Building B.

According to the City staff’s flowchart plan of the process, the City will next pursue investigation into the financial and legal aspects of the project in an effort to protect the City from risk. (Read more.) PDIG is an unusually controversial developer because of the track records of those who appear to be involved with the company.

The leaders of Peoples Church, which sits next to the site for Building A, never weighed in on the project plan in spite of numerous requests from the City planning staff.


UPDATE, April 22, 2015, 11:45 am: A previous version of this article said "Estimates of the cost of the process of "due diligence" external consultant review have been running in the five-figures, and those costs will be borne by City taxpayers regardless of the ultimate outcome of the project." Chris Root has informed me that the developer is paying half of the cost of the due diligence consultants. © 2013-2020 East Lansing Info