East Lansing Voters Will Decide in March on Downtown Property Sale to MSUFCU

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Wednesday, December 4, 2019, 7:30 am
Chris Gray

Above: East Lansing city administrator David Haywood presents a map of the project with the proposal area outlined in green. (Photos by Raymond Holt)

East Lansing voters will be asked to decide as part of the March 10 election whether to authorize Council to sell a City-owned property so that another tower can go up downtown, this one a five-to-eight-story office building to be built and owned by Michigan State University Federal Credit Union (MSUFCU).

How much of the actual plan will be available before voters are asked to decide on the land sale authorization remains to be seen.

East Lansing’s City Council voted 4-1 last night to put the land sale question on the March 10 ballot. Council member Lisa Babcock voted against, not because she is against the proposal’s outline but because she said the process was too rushed from the public announcement last week to the vote this week.

The property at the northwest corner of Abbot Road and Albert Avenue currently includes Lot 4, a small City-owned parking lot next to the Dublin Square pub. The project as designed would also involve the City deeding over a piece of land that has until recently included a part of Albert Avenue, street-side metered parking spaces, and a sidewalk. (Albert Avenue is currently being shifted slightly south.)

MSUFCU says this new building would have a branch location on the first floor, replacing the branch on Grand River Avenue next to Peanut Barrel. The building would also hold MSUFCU offices.

“We see this as a diversification of the uses downtown, adding offices to the mix,” said Tom Fehrenbach, the Director of East Lansing’s Department of Planning, Building and Development, at Council’s meeting last night.

Fehrenbach said that East Lansing officials began negotiating with the credit union for the sale of the 0.3-acre lot in July. Staff ordered an appraisal last month, with Valbridge Property Advisors estimating the value of the land at $810,000.

Surface Lot 4 currently has 33 parking spaces for cars. Approximately 11 angled street parking spots are also being eliminated along Albert Avenue as part of that street's current reconstruction.

“We’ve been trying to market this space for some time,” Fehrenbach told Council. “We learned [MSUFCU] did in fact have an interest in a building downtown” in July.

The full Council was supportive of working on downtown office development with the credit union. Several Council members said they personally bank there. They also said it helped meet their goals for downtown.

“I’m very, very happy with the idea of offices in our downtown,” said Mayor Pro Tem Aaron Stephens. He said he wished other, more controversial developments also required a public vote. “When do you get an opportunity to vote on a development as a citizen?”

Council member Lisa Babcock — who along with Jessy Gregg just began service on Council three weeks ago — cast the sole vote against placing the land sale authorization on the March 10 ballot alongside the presidential primaries. Babcock said that City staff should have made the deal public sooner, rather than rushing it through in one meeting in order to meet a Dec. 17 deadline for ballot measures.

“This deal was done with months of advance legwork, but it came to the public the Monday or Tuesday the week before Thanksgiving,” Babcock said. “I think we should not do business this way. We should have more than one meeting to discuss this.”

Above: Jessy Gregg (left) and Lisa Babcock at last night's meeting.

In addition to $810,000 (before administrative costs) entering the City’s coffers, the redevelopment would annually generate property tax revenue for the City’s general fund as well for as other taxing jurisdictions. Right now, the land produces only revenue for the City’s parking fund.

“This is essentially found money,” said Council Member Mark Meadows. “If this is approved by the voters, it will be $810,000, almost a million dollars, that goes in and helps us meet our objective.”

But it’s not a done deal. Meadows noted voters had turned down other land sale authorizations in the past, including authorization for a sale of City-owned land for the downtown University Place project, which includes the Marriott Hotel. Meadows said the City had to lease out the land to get that project done. (The City Charter doesn’t require voter approval if Council wants to long-term lease City land.)

The new credit union building would help the City achieve a longtime goal of bringing more office workers downtown. The idea is that downtown office workers would function as year-round consumers for downtown shops and restaurants, diversifying the consumer base that now consists largely of the seasonal student population.

“When [City Manager George] Lahanas came back and said we might be able to get MSUFCU on that corner, I was beside myself with joy, because it is going to be [MSUFCU] who will be there twelve months of the year during the day, and that will start to change the face of the downtown,” said Mayor Ruth Beier last night.

Below: Aaron Stephens and Ruth Beier, last night.

The credit union has said it plans to have space available to the community in the new building, along with space for training interns.

But the Council amended the proposed ballot language at last night’s meeting to make community-gathering space, a credit union branch, and other features permissible uses rather than mandatory uses.

The proposed language had said the sale would be for the purpose of MSUFCU constructing “a five to eight story commercial office building, not to exceed a height of 112 feet, which will include an MSUFCU branch office, intern center, office space, and a community room that will be utilized to host MSUFCU, MSU, and non-profit events” (underlining added).

At the suggestion of Meadows, the two uses of “will” were changed to “may,” in order to allow the credit union more flexibility in design and use.

The credit union has provided “conceptual” sketches of a five-story building with large windows (below), but has not yet finished site plans with the architect.

Responding to a request from Stephens, Erin Bowdell, the credit union’s Vice President of Infrastructure Planning and Facilities, said last night that her team will strive to have more detailed plans ready for the Council’s public meeting on Feb. 18, as absentee ballots will already be going out to voters by that date.

But it’s possible voters will be deciding on the sale authorization before a site plan is available.

City staff and credit union personnel have not yet said whether the project would include the use of Tax Increment Financing (TIF). Putting the proposal to the voters in March may mean that a TIF plan is also not announced until after the ballot vote on the land sale authorization is complete.

At last night’s meeting, Meadows (below) wanted to further amend the ballot measure to promise to dedicate the net proceeds of the sale to the City’s unfunded liabilities for retiree pensions. He noted that the annual required payments to the pension fund are consuming more than half the City’s annual property tax revenues. But his motion did not receive support from any of the other Council members.

Instead, if voters authorize the sale and the Council elects to carry it out, proceeds of the sale would go to the general fund, where they could be used to pay down these debts or other City expenditures.

To help this project, Council also voted 5-0 last night to begin the process of considering whether to rezone Lot 4 and the adjacent Albert Avenue right-of-way land to B-3. That rezoning would allow buildings up to 112 feet in height with a simple majority approval of Council or up to 140 feet in height with the support of four or more Council members.

Related reporting:


Note: This article was amended after publication to clarify that the ballot language asks whether to authorize City Council to sell the land.

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