Multiple Developers Interested in Evergreen Properties; DDA Debates Getting Its Own Lawyer

Tuesday, October 29, 2019, 10:27 am
By: 
Chris Root

Above: Trowbridge Lofts, a project of a developer now interested in the DDA’s Evergreen properties (photos by Raymond Holt)

UPDATE: The DDA's special work session will happen on Nov. 14 starting at noon; see agenda.

Now that the Royal Apartments/Vlahakis Development team no longer holds an exclusive deal on the Downtown Development Authority’s Evergreen Avenue properties, two more development teams have stepped forward to express interest in that parcel of real estate near Valley Court Park.

But members of the DDA have yet to agree on a Request for Proposals (RFP) that would be used to formally solicit and grade future proposals. The challenge continues to be how to attract viable projects when the land carries a $5.6 million debt, millions more than the properties are worth on the open market.

At last week’s meeting, the DDA tied up the loose ends of the legal agreements that had given a 10-month exclusive opportunity to local developer Paul Vlahakis and the Illinois-based Royal Apartments to propose a project on that site. This follows the City Council’s unanimous vote not to approve the Royal Vlahakis proposal on October 8.

The appearance of additional interested developers is the latest turn in the long storyline of what will happen with the properties that the DDA bought 10 years ago to develop between the area extending from the heart of downtown to Valley Court Park.

In response to what happened during negotiations over the Royal Vlahakis deal, the DDA is also debating whether to hire its own lawyer instead of always seeking counsel from Tom Yeadon, East Lansing’s City Attorney.

River Caddis’s development team say they have been working on a plan.

The newest developer to express an interest in putting forward a proposal is Kevin McGraw of River Caddis Development. During public comments at the DDA meeting on October 24, McGraw said he “can’t wait ’til you read our response to the RFP.”

He said he has been working on a proposal with other as-yet-unidentified stakeholders in the community. McGraw told the DDA that River Caddis has been working on projects elsewhere in the country and he is wanting to come back to his hometown to take on another project.

In 2014, River Caddis obtained Council’s approval for the four-story gray apartment building along Trowbridge Road just west of Harrison Road and in front of Fresh Thyme. For that project, there were controversies over McGraw returning to Council for a bigger TIF (tax increment financing) agreement and for more parking spaces.

The Chicago-based DRW Convexity team is also interested in the Evergreen properties.

Construction is now underway on DRW Convexity’s “The Abbot” building at the northwest corner of Grand River Avenue and Abbot Road and, just west of that, The Graduate Hotel. Those properties now being redeveloped are immediately to the south and southeast of the Evergreen Avenue properties.

The day before the DDA’s meeting last week, David Nelson of Convexity Properties, LLC sent a letter to East Lansing Planning Director Tom Fehrenbach about the DDA’s Evergreen properties, formally requesting an “eight (8) week exclusive period to evaluate the Site instead of issuing the RFP.”

Nelson’s letter continued, “Within this period Convexity will work with the City of East Lansing (the “City”) and the DDA to propose a plan and purchase price agreeable to all parties.”

But at last week’s meeting, Convexity’s lawyer, David Pierson, suggested that with the DDA’s delay in issuing the RFP, Convexity has the time it needs to pull together the proposal it intends to bring.

Below: Chris Oakley of Convexity and David Pierson, Convexity’s attorney

This would not be the first proposal from Convexity for this location. Years ago, the DDA’s properties were part of different plans than what DRW Convexity ultimately decided and was approved to build in the area.

Chris Oakley, Director of Design at Convexity, commented to the DDA that “there are some ideas that we think still have merit” from their earlier proposals. We do not yet know which iterations of previous proposals Convexity may want to pitch now or how it might be modified.

You can read here about the twists and turns in Convexity’s large-scale proposals for the “Park District” area that began in early 2016. The City and DRW Convexity failed to come to agreement on two different proposals partly because of the conundrum of what to do about the large debt burden the DDA faces on these properties.

In addition to the Abbot and The Graduate hotel, DRW Convexity has an agreement with the City to build a five-story building of moderate-income apartments at 341 Evergreen Avenue, just across Evergreen Avenue from the DDA properties.

The affordable units planned for 341 Evergreen Avenue is how the entire, three-building DRW Convexity project meets the City’s 25 percent diverse downtown housing requirement.

A revised site plan for 341 Evergreen Avenue is currently being considered by the Planning Commission. That revision would take the building one story higher, adding a story of market-rate housing. But plans for that building could be changed again in conjunction with a larger plan that would include the DDA properties across the street, if Convexity were to be selected to develop the DDA properties.

It is also possible that the TIF plan in place for the Abbot and The Graduate Hotel could be revised, enlarged, and extended as part of a way to deal with the debt on the DDA properties.

The Royal Vlahakis is down but not out, as the RFP is still being debated.

Paul Vlahakis and Royal Apartments, operating under a joint LLC called HSV ParkPlace, are not to be counted out for the next round either. Vlahakis told the Lansing State Journal after the Council’s unanimous rejection that his team did not plan to put forward another proposal before an RFP is issued, but that they might be back with another proposal when the RFP comes out.

All these developers were at the DDA’s October 24 meeting (below), knowing discussion of the latest version of the RFP was on the agenda. But the discussion that ensued showed that members of the DDA are not yet close to an agreement about what should be in the RFP.

Indeed, differences about what to convey about what the DDA wants to see in proposals have widened recently.

The DDA unanimously approved a version of the RFP 10 months ago. This was at the December 2018 meeting, at which the DDA also entered into an exclusive Purchase and Sale Agreement with Royal Vlahakis. The reason for approving the RFP at that time was to have it ready to release quickly in the event that the Royal Vlahakis deal didn’t cohere.

In the intervening period, however, various members of the DDA have come to see what needs to be in the RFP differently.

At last week’s meeting, DDA member Jill Rhode urged that a $3 million minimum purchase price for the Evergreen properties be inserted in the RFP so developers will know that the DDA will not consider lower bids. Rhode sees the DDA’s fiscal responsibility as paramount and had favored the Royal Vlahakis proposal because of its promise to pay the full $5.6 million owed on the land.

Below: DDA members Jill Rhode and Greg Ballein

Rhode asked that other DDA members also identify issues that they believe need to be included in the RFP that are not there now so that, at their next meeting, the DDA would be able to approve an RFP.

DDA member Lynsey Clayton said that an allowable building height should be included in the RFP. This is one element of a larger point Clayton made at the October meeting that the RFP should spell out a proposal that both the DDA and the Council will support.

DDA member Luke Hackney expressed a similar view about the wide gap between the DDA and the Council. “It’s pretty clear we are not seeing eye-to-eye on a number of issues,” he said.

Hackney apparently was pointing to the disjuncture between the DDA’s vote of 7-3 in favor of the Royal Vlahakis deal on September 26 and the Council’s unanimous vote against it on October 8.

Voting in favor on the DDA were Rhode, Clayton, Hackney, Greg Ballein, Michael Krueger, Jeff Kusler, and Eric Sudol. Voting against were DDA Chair Peter Dewan, DDA Vice Chair Jim Croom, and Mayor Mark Meadows (who gets a vote on the DDA by virtue of being mayor).

Some of the DDA members in favor of Royal Vlahakis’s plan in September have expressed frustration that the DDA’s views about what should be built on the property they own are not being agreed to by the Council.

Clayton (below left) urged that the City Council join the DDA for a meeting to try to hash out their major differences.

Croom (above right) expressed a preference for giving less direction in the RFP in order to be more open to ideas that developers might bring forward. Dewan, too, wants to focus on the best use of the land at this location so near to Valley Court Park and wants to hear creative ideas from developers.

Discussion of DDA retaining its own legal counsel

The rift that some DDA members feel between themselves and the Council has also led to discussion, initially raised by Greg Ballein, of whether the DDA should have its own legal counsel that will represent its interests exclusively rather than relying on City Attorney Tom Yeadon.

Meadows expressed the view that Yeadon’s job is to provide his views about legal questions, and that he will advise what the law requires, regardless of the client.

Ballein, however, said that Yeadon had recently offered an opinion to the DDA that was not really about the law per se, and that it reflected the interests of the Council rather than the DDA.

Ballein was referring to Yeadon’s procedural recommendation in September that the DDA postpone its vote on a new buy/sell agreement with Royal Vlahakis until after the Council’s vote on the Royal Vlahakis site plan. Hackney wondered aloud whether following Yeadon’s opinion in this case had left the DDA more vulnerable.

Dewan (above) and City Manager George Lahanas pointed out that the DDA already has the option of hiring separate counsel on a specific issue, which the Council also does regarding certain types of legal cases.

Several DDA members, including Dewan, Meadows, and Ballein, expressed concern about the possible increased cost to the DDA of having its own counsel. At Ballein’s request, Dewan agreed to keep this item on the agenda of the DDA meeting scheduled for November 21.

Special meeting planned for the RFP question

At last week’s meeting, the DDA decided to hold a work session on November 14 (probably starting at noon) to discuss and suggest amendments to the RFP and to aim for a vote on the RFP at their next regularly scheduled meeting on November 21, starting at noon.

DDA meetings are open to the public and are held in Conference Room A on the second floor of City Hall. As with other board and commission meetings, the public can comment near the beginning of the meeting.

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