Mayor and DDA Chair Vote Against Royal Vlahakis Extension

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Thursday, May 23, 2019, 7:43 pm
Chris Root

Above: Mayor Mark Meadows (left) and developer Paul Vlahakis at today’s meeting.

A tense discussion in East Lansing’s Downtown Development Authority today culminated in a 5-2 vote in favor of giving the Royal Vlahakis development team an additional 30 days to make significant progress on their project on Evergreen Avenue at the west end of the downtown.

The two “no” votes came from key players: Mayor Mark Meadows and DDA Chair Peter Dewan. The five “yes” votes came from DDA members Jeff Kusler, Lynsey Clayton, Greg Ballein, Michael Krueger, and Luke Hackney.

By the next meeting of the DDA, the developer will be near the end of the newly granted 30-day extension.

Kusler (below), who introduced the motion to grant the extension at Thursday's meeting, said he was not in favor of the proposal that was now before them and said he would support only this one extension to see if the developer could absorb comments by the Council and submit a more acceptable revised site plan.

Had the extension not been granted today, that would have ended the exclusive Purchase and Sale Agreement that Royal Apartments and Vlahakis Development currently have with the DDA for the purchase and redevelopment of the DDA’s properties on Evergreen Avenue.

Both Meadows and Dewan argued that it is now time for the DDA to issue a Request for Qualifications and Proposals (RFQP) that would open up the DDA-owned Evergreen Avenue land to proposals from other developers.

Meadows also said for the first time publicly that the City may need to lower the sale price of those properties – below the $5.6 million DDA still owes on them – in order to get a project that will be of more interest to the City and that will also be economically feasible.

This change in expectations could be conveyed to developers who might want to respond to a RFQP.

Dewan (below) noted the desire for a transformational project at this location, given that it is across from Valley Court Park and borders the Oakwood Historic neighborhood.

Dewan said that the original proposal from Royal Vlakahis was transformational: it contained a large floor of office space, a destination multiplex theater to attract people to the downtown, condos on the top floors, and automated parking.

Meadows echoed Dewan, saying, “Those are all gone – all gone.”

With that original proposal, and a promise to pay $5.6 million for the DDA-owned properties, Dewan said it would have been irresponsible not to have signed an exclusive deal with this developer to put forward a proposal.

But, he said today, the latest proposal was basically a student apartment building, albeit one that promised to meet the City’s diverse housing requirement.

The status of the Royal Vlahakis proposal

ELi reported that City Council showed little love for the Royal Vlahakis project at last week’s discussion-only meeting. Along with Meadows, Council members Shanna Draheim, Ruth Beier, and Aaron Stephens all indicated said they did not support the proposal in its current form.

Draheim, Beier, and Stephens all pointed to the developers’ desired building height – at 140 feet – as something they were unlikely to support for that location.

The Council’s discussion was a key reference point at the DDA meeting. Paul Vlahakis and Royal’s attorney Bryant Titus (below) said the thrust of the changes that would be made to the site plan would be to meet the concerns of the City.

The Purchase and Sale Agreement amendment approved by the DDA at its special meeting on May 2 gave the developer until June 21 to submit a revised site plan. This is their next crucial deadline.

The partial site plan that Royal Vlahakis gave the City on April 24 included a tall apartment building with a market and restaurant space on the first floor, along with two levels of underground parking. The first-floor space for the market and restaurants was reduced significantly in the developers’ latest version of the Development Agreement.

The City requires that at least 25percent of residential units in large downtown projects be reserved for diverse housing, specifically either owner-occupied condominiums, low- and moderate-income units, or senior housing.

Royal Vlahakis have promised that this will be met by apartments in the Evergreen Avenue building being designated for low- and moderate-income residents. They plan to apply for housing tax credits from Michigan State Housing Development Authority (MSHDA) to finance 25 percent of the apartment units, which, by MSHDA guidelines, must be disbursed throughout the building.

There was considerable back-and-forth at the DDA meeting about the developer having now split the project into two parts – one only on the DDA’s Evergreen Avenue properties (“Park Place West”) and a second one (“Park Place East”), to be submitted later, along Abbot Road on the Dublin Square site and the city-owned parking lot at Abbot and Albert Avenue. Vlahakis’ company owns the Dublin Square site.

Vlahakis (below) explained that splitting the project into two was intended to help them move more quickly so they could meet the timetable of the Purchase and Sale Agreement.

He said that each building – Park Place West and Park Place East – would meet the 25 percent diverse housing rule independently. So, they could be considered separately from each other; they did not have to be two phases of a proposal within one Development Agreement.

The status of the Development Agreement

A comparison of the approval processes for major downtown projects by the Planning Commission, DDA and Brownfield Redevelopment Authority (BRA), and City Council shows that a Development Agreement is normally acted on at the very end of the review and approval process.

But the agreement between Royal Vlahakis and the DDA set an initial deadline of May 25 for a Development Agreement to be entered into by the developers, the DDA, and the Council. That’s why the developers had to seek the extension. The developers paid $15,000 for that extension today, as per previous agreements.

Titus, the attorney for the developers, acknowledged that it is unusual for a Development Agreement to be negotiated so early in the process.

At today’s meeting, DDA members were asked if they had any comments on the second version of the Development Agreement, but there were none. The City staff will send a list of revisions to the developers in the next week or so.

The way the timing is playing out – putting the development agreement before a site plan – leaves many blank spaces in the development agreement.

Many of those blanks will still be there at the time of the next DDA committee meetings on June 20 and full DDA meeting on June 27.

Photos by Andrew Graham.

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