Vlahakis Misrepresents MSU Endorsement as His Project Heads to City Council

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Monday, October 7, 2019, 7:30 am
Alice Dreger

Above: A rendering of the Park Place West project, looking north from above Peoples Church.

After an extraordinary year-long saga in which the normal development process has been turned upside down, shaken and stirred, East Lansing’s City Council will hold a public hearing Tuesday night on the Royal Vlahakis “Park Place West” project’s site plan and Special Use Permit (SUP) application.

Developers Royal Apartments and Vlahakis Development want to build a nine-story building on the east side of Evergreen Avenue just north of Peoples Church, on properties owned by the Downtown Development Authority (DDA). Below, the area marked in red shows the DDA's properties.

The developer has proposed to move the farmers market from Valley Court Park to a new walkway next to the new building, along what is now Evergreen Avenue, but the City has not agreed to this concept. That part of the plan remains in limbo, even as the project goes to a public hearing.

If built as proposed, floors 2-9 of the Park Place West building would consist of rental apartments, with 25 percent of them being income-restricted, fulfilling East Lansing’s downtown diverse housing requirement. On the ground level, the developers would like to build an “indoor urban market,” possibly with a restaurant incubator.

ELi has learned in advance of the public hearing that lead developer Paul Vlahakis misrepresented an endorsement of this project to the DDA.

Writing to the DDA on September 4, Vlahakis claimed, “our indoor market received the full endorsement of The School of Hospitality Business at Michigan State University. MSU is excited at the prospect of occupying space in Downtown East Lansing in collaboration with [Project for Public Spaces] and the Urban Market.”

But Carl Borchgrevink, Director of MSU’s School of Hospitality Business, says that isn’t true.

Answering a question from ELi, Borchgrevink wrote on September 30, “The School of Hospitality Business has not endorsed or committed to anything on behalf of the college or university. The extent of our involvement is our Dr. [Jeffrey] Elsworth meeting with Paul Vlahakis and his team and expressing support for their ideas.”

This September 4 communication from Vlahakis, with the misrepresentation about a partnership with MSU, came between a vote-reversal at the DDA.

On August 22, after extending three times the exclusive purchase agreement given to Royal Vlahakis, the DDA finally voted 7-4 to let it expire.

At the same meeting, the DDA also voted 10-1 against recommending that Council approve the modified site plan and SUP application. The DDA also voted 10-1 against recommending Council “review and/or approve” a Development Agreement with Royal Vlahakis.

Below: The DDA meeting on Aug. 22, 2019; photo by Raymond Holt.

It appeared likely at the end of that August DDA meeting, particularly given previous statements by Council members, that, after this, the City Council would reject the site plan and SUP permit. It seemed likely that the DDA would then issue a Request for Proposals (RFP) to see what other developers would pitch for the property it owns.

If that happened, Royal Vlahakis’ exclusive deal for the properties would be over, although they would still have the option to try to “win” through the RFP by pitching the best viable project.

But after the DDA’s 7-4 vote against extending the exclusive agreement, on September 4, Vlahakis sent his email to the DDA, claiming MSU’s endorsement.

Vlahakis and Royal Apartments’ Michael Henneman then followed up with another attempt to rescue their project, showing up at the DDA’s September meeting to tell the DDA that the financing and partnerships (including the supposed partnership with MSU) were aligned.

Above: Henneman with his lawyer, Brent Titus, at a September committee meeting of the DDA. (Photo by Raymond Holt)

Their project, they insisted, was the best bet to pay off the DDA’s $5.6 million debt on the land, an argument that several DDA members who voted for a new contract with the developer found persuasive.

In pleading with the DDA in September to give his team a new exclusive agreement, Vlahakis also told the DDA that the Planning Commission’s 7-1 vote against recommending the project happened not because the Commission didn’t like the design, but because they were told that the DDA and the developer no longer had a contract.

In fact, the referral letter from the Planning Commission Chair to Council notes several reasons that explained commissioners’ votes against the site plan, including that:

  • The public market concept is not clearly developed
  • The building height does not bring with it a significant public benefit
  • An RFP could open the project to more development potential
  • The proposed height is inappropriate for its location

Nevertheless, at the September meeting of the DDA, the developers’ sales pitch seemed to work.

Three DDA members — Jeff Kusler, Luke Hackney, and Mike Krueger — moved away from their previous vote to end the exclusive agreement with Royal Vlahakis. Those three joined Greg Ballein, Lynsey Clayton, Jill Rhode, and Eric Sudol in voting to once again give Royal Vlahakis exclusive access by voting in favor of a new purchase and sale agreement.

With DDA Chair Peter Dewan, Vice Chair Jim Croom, and Mayor Mark Meadows voting against, the 7-3 decision means the developers now have another exclusive agreement from the DDA.

Above: Dewan (left), Director of Planning Tom Fehrenbach, and Kusler (right) at a September meeting of the DDA. (Photo by Raymond Holt)

The DDA’s and City’s attorney Tom Yeadon was absent from that meeting and there was no substitute attorney from his firm present.

In advance of the meeting, Yeadon had sent a lengthy memo expressing several concerns about the new agreement and advising that the DDA “wait to see how Council reacts to this project” on October 8 before entering into a new agreement.

But City staff did not highlight that recommendation from Yeadon to the DDA at the meeting.

And a new agreement was attached to the agenda, to which Yeadon had made some changes the night before in the event that the DDA wished to vote on it. With this version on the agenda, and hearing the pitch from the developers, DDA members voted 7-3 in favor of the new agreement.

That leaves City Council with a decidedly mixed message: a 10-1 vote against from the DDA in August, then a 7-1 Planning Commission vote against, then a 7-3 vote in favor by the DDA.

Before that September 7-3 DDA vote in favor of another exclusive agreement, Dewan got the DDA’s support to insert into the agreement an amendment saying that if the Council fails to approve a site plan on or before October 30, the agreement terminates.

The idea is that if Council votes “no” on this project this Tuesday night, the new contract as amended will allow the DDA to get out of the latest exclusive agreement on that date and finally open up the properties to a Request for Proposals.

But for over a year, this scene has been unlike anything we’ve ever seen. It’s therefore impossible to predict with any confidence what comes next at City Council or the DDA.

Want to weigh in?

City Council’s meeting starts at 7 p.m. Tuesday, October 8, in the courtroom on the second floor of City Hall. You can speak near the beginning during the “public comment” portion of the meeting or wait for the public hearing. You can also write to Council, although speaking is generally much more effective.


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