Downtown Development Proposal “In Limbo” Following Council Inaction

Friday, May 11, 2018, 7:38 am
By: 
Alice Dreger

In an unusual move and without stating any reasons, three members of East Lansing’s City Council refused to take action on a downtown redevelopment proposal at their meeting this Wednesday night, leaving the project in apparent limbo.

The project called “Albert Town Homes 2” had been recommended to City Council for approval by the East Lansing Planning Commission (in a unanimous vote) and by the Downtown Development Authority (in a 5-3 vote with 1 abstention). No member of the public came forward to object to the project in writing or in person for the public hearing. According to City staff, the project meets the requirements of the zoning code and requires no variances.

The developer asked for no tax incentives and the project would quadruple what the City is bringing in on property taxes on the parcels. The project also would have doubled or tripled the density of occupancy of the properties, something Council has typically supported for downtown. It would have provided ample parking for the residents, something Council has sometimes been concerned about with projects.

But at Wednesday night’s City Council meeting, three members of Council—Mayor Mark Meadows, Mayor Pro Tem Erik Altmann, and Council Member Ruth Beier—declined to support a motion by Council Member Aaron Stephens to vote on the project. Council Member Shanna Draheim was out of town on business. Without anyone willing to “second” Stephens’ motion, the matter essentially died without a vote.

In response to questions from ELi, Stephens and Draheim indicate they're frustrated with this outcome. So is the developer. So, what happened, and what comes next?

The proposed project

The developer, Hagan Group, LLC, is a local family business that owns and operates a large number of student rental properties in East Lansing. Brian Hagan tells ELi that the project was specifically proposed in a fashion that would accord with the zoning code in order to maximize odds of approval.

The Albert Town Homes 2 project, if approved, would replace two older student rental houses at 525 and 533 Albert Avenue (between Bailey and Division Streets) with three townhouse-style student rental structures. The trio of townhouses would be very similar to a set previously constructed by the same developer on the adjacent property, Albert Town Homes 1, shown here:

 

These properties are all across Albert Avenue from the parking lot behind Peanut Barrel and Chipotle. They are in an area dense with commercial properties and rental housing.

The previously-built project includes three townhouses with seven bedrooms each, with a license for each to rent to a total of seven people. The proposed project would again involve three townhouses with seven bedrooms each, but each would be licensed for eight residents. Under existing law in East Lansing, the proposed project requires not only site plan approval by Council, but also Council’s approval of a Special Use Permit, because each unit has more than four bedrooms.

Based on tax assessor records, the two existing houses on the proposed site brought in a total of $10,797 in real estate taxes in 2017. The Hagans’ Albert Town Homes 1 next door brought in $43,460 in the same period, making it likely that the Albert Town Homes 2 project, if it happened, would quadruple the tax revenue from site proposed for redevelopment.

Council Members raise questions

At Wednesday’s meeting, Beier said the existing houses are “beautiful craftsman homes,” and wondered about whether they had been maintained. Planning staff member David Haywood said he did not know the answer to that question. This photo shows those houses:

 

Altmann questioned whether East Lansing’s forthcoming comprehensive plan would suggest something taller and denser for those parcels than what is proposed. Haywood said it does, but noted the new comprehensive plan has not yet been passed. (Asked about this issue by ELi, Hagan points out that even if the new comprehensive plan were passed, that doesn’t change the zoning of the actual property, something that could take years to happen. The comprehensive plan is aspirational, not prescriptive like the actual zoning code.)

Meadows asked whether this proposal was really for a “rooming house” and said the City doesn’t allow such a thing. But Haywood replied that the Code does allow for what is proposed at this site with a Special Use Permit.

Beier said she thought the area required that new projects be at least four stories tall, but Haywood noted that that was incorrect. The zoning code actually limits new projects on these sites to three stories, which is what the Hagans proposed.

There was confusion about a number of points during the very brief Council discussion with staff, confusion that might have been cleared up by allowing the applicants themselves to come forward and speak. But because no one would second Stephens’ formal motion to vote on the project, the applicants were not allowed to speak.

What Council Members tell ELi now

Asked by ELi yesterday via email about why they didn’t second the motion by Stephens and allow the matter to come to further discussion and a formal vote, Meadows and Altmann did not respond.

Beier told ELi, “I was not ready to vote on the proposal. I want to do more research about the ordinance we changed after the last 8-bedroom rooming house was built on Albert before I vote on another one.” (The last project was actually for 7-bedrooms, like this one.)

Why didn’t she ask in advance or at the meeting about that ordinance? Beier says, “I did ask about it. I was told that the ordinance change did not apply to this area of the City, which is what confused me, since it is right next to the rooming house that led to the ordinance change.”

Below: 521, 525, and 533 Albert Avenue as seen from the parking lot behind Peanut Barrel.

According to Hagan, Beier appears to be referring to the ordinance change that now requires the Special Use Permit for projects with more than four bedrooms in each unit. He reiterated that the project his company brought forward absolutely met what is allowed in the code, a viewpoint supported by City staff in written and oral comments to Council.

“We go out of our way to find projects that meet the code,” Hagan told ELi.

Stephens told ELi he “was surprised I didn’t get a second on that motion.” He notes the project “falls within our comprehensive plan” and provides for “a different kind of housing. It's an in-the-middle type use that's not huge tower apartments and not single family homes, so as we have described in the comprehensive plan, we would have a transition area between the two” other kinds of rental housing (tower and single-family home).

Stephens added that the project would provide an “increased tax base with no incentives given out. It was also [given] a unanimous recommendation from our Planning Commission.”

Reached yesterday by email, Draheim says that if she had been at the meeting, “I would have voted to support it. I'm disappointed it didn't even get a second.”

She named the same reasons for support as Stephens, and added, “I think the Hagans have done a nice job maintaining the similar properties just to the west of these parcels. Also, I think it’s disrespectful to the developer, who is a long-time local business owner, our City staff, and our volunteer Planning Commission—all of whom spent a considerable amount of time on this project—that [it] couldn't even be moved to the Council table for discussion.”

What’s next?

Hagan says he was surprised at what happened at the meeting and describes the project as “kind of in limbo.” He had expected at least a clear statement of possible objections to the project and a chance to address those objections. His company is still hoping to bring the project to fruition, and he tells ELi his company is in consultation with Planning staff to figure out what comes next.

Note: This article was updated at 8:54 a.m. to include vote information and links for the DDA and Planning Commission recommendations.