The Wait Is Over: Construction Will Start on Vacant Corner

Tuesday, November 27, 2018, 12:43 pm
By: 
Dan Totzkay and Alice Dreger

Today marks a day some in East Lansing thought would never come. The redevelopment project for the vacant corner downtown has officially obtained all approvals required for the deal, and construction will soon start.

It happened not with a bang, but with a five-second reading of a motion to approve a consent agenda. That’s how this morning the Michigan Strategic Fund Board unanimously approved millions of dollars in state and local tax incentives for the East Lansing “Park District” redevelopment by DRW/Convexity.

The vote paves the way for site prep to start in December, with foundation work beginning in January.

Below: MEDC CEO Jeff Mason at today’s meeting

The plan, known as “The Park District,” is set to include three new buildings, to be constructed on the series of vacant properties just northwest of the corner of Abbot Road and Grand River Avenue.

  • At the main corner, the developers will construct a 12-story building (“Building A”), including 14,000 square feet of retail space, 218 apartments housing about 370 people, 89 indoor (private) parking spaces on two levels, and a rooftop terrace for residents.
  • Just west of there, a 10-story hotel from The Graduate chain will be sited between Evergreen Avenue and The Peoples Church on the other piece of vacant land on Grand River Avenue (“Building D”). This is set to include 194 guest rooms, a ballroom, 3,300-square-feet of retail space, hotel meeting rooms, and a rooftop restaurant and bar.
  • Coming a few years later will be a 5-story residential building (“C”) located at the southwest corner of Evergreen Avenue and Valley Court Drive. This is set to include 72 income-restricted rental apartments, with one level of private on-site parking for 26 cars. This building will satisfy the City’s requirement for housing diversity required of large downtown projects.

After years of back-and-forth of attempts to line up all the parts, East Lansing’s City Council approved this site plan for the development back in September. Three members of East Lansing’s government were in the audience at the meeting today: Mayor Pro Tem Erik Altmann, Director of Planning Tim Dempsey, and Community and Economic Development Advisor Tom Fehrenbach.

Using today’s consent agenda, the Strategic Fund Board approved two sets of tax incentives.

The first are Michigan Business Tax credits worth about $9 million. ELi previously reported these credits as coming to $10 million, but the way the current tax law works, according to DRW/Convexity’s representative, it will really come to about $9 million.

Those credits require that the largest building in the project at the main corner (and shown at the right in the rendering below) be completed by May 2021. The developer’s timetable actually calls for July 2020 completion, in order to have occupancy ready in time for the 2020-2021 academic year.

The hotel (shown at the left in the rendering above) is expected to have construction start a few months after construction on the corner building starts.

Under the development agreement with the City, the developers must submit applications for permits for the moderate-income rental building (shown below) within 18 months of the corner building’s completion. The moderate-income building must be completed by January 1, 2025.

If it is not, the land for that property near Valley Court Park will be transferred to the City for use as “public open space.” The developer has said that won’t happen because they’re not interested in giving up property that valuable.

With the consent-agenda vote, the Strategic Fund Board also approved a second type of tax incentive, namely a tax increment financing (TIF) plan for the project. That plan will divert about $6 million in new property taxes from the project to pay for public infrastructure needed to support the project, including roadwork and sewers, and site clean-up.

After about 9 years of tax revenue diversion, all of the property taxes will flow to the usual local taxing authorities, making this one of the shorter TIF plans in East Lansing’s recent history.

Pierson has estimated that over the next thirty years, the City of East Lansing will see about $19 million in additional revenue from this project from real estate taxes, “personal property” taxes (which are really a tax on businesses), the City's new income tax, and utility connection charges.

Below: Chris Oakley of Convexity and MEDC Senior Staff Rob Garza just after the vote today.

The developers’ attorney, David Pierson, told ELi previously that DRW/Convexity would have to reach agreement with the prior developer of the properties, Scott Chappelle, to get him to release claims to tax incentives to which he had argued he was still entitled. On the last round in the tortured history of these lots, Chappelle prevented redevelopment by convincing state-level authorities that they couldn’t approve the tens of millions of dollars in tax incentives without his consent.

According to DRW/Convexity, the redevelopment couldn’t happen without the tax incentives, so this version of the plan has had to build in getting Chappelle’s consent. DRW/Convexity won’t say how much it has paid Chappelle to release the claims.

The Park District and all of its associated drama has a long history because of Chappelle. He left them blighted after years of public-private deal-making, mostly during the period when the City was run by then-City Manager Ted Staton.

Chappelle once called his project “City Center II,” because the successful downtown project that now houses the CVS was known as City Center. The area was later renamed the “Park District.”

When Chappelle started working on the deals, various buildings in the project area were still occupied and in active use. But under Chappelle’s companies’ ownership, one building after another went vacant and blighted (as shown below), and redevelopment never happened.

Chappelle lost the properties to foreclosure in 2015 and DRW subsequently purchased them and eventually demolished the blighted structures. You can read more about the saga at ELi’s dedicated page on the project.

In a statement delivered through Pierson, DRW’s David Nelson tells ELi, “We are excited to see the efforts by all these parties reach a positive conclusion.”

 

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