White Oak Place Developer Going Ahead Despite Decreased Tax Deal
Note: The following article was based on the developer's representative approaching the City of East Lansing to ask for an amendment to the Brownfield TIF agreement in October. From this, City Planning staff and our ELi reporter logically concluded the project was going forward, as reported below. We were subsequently informed on November 2 by the developer, Joe Goodsir,"Our purchase of the gas station on October 28th is correct. Because of all the delays and expenses we incurred we had no choice but to purchase the gas station." But, he says, "At this point we have no intention of moving forward with the approved brownfield plan or with the site plan because of changes the city council made at the site plan approval council meeting." He says the TIF amendment request went to the City in October simply because "The engineer was just finalizing all the docs he got paid to handle." When asked if this means he is killing the project, throwing out the site plan and TIF plan, Goodsir replied, "At this point we are not moving forward with the current approved site plan and brownfield [TIF] plan." We will continue to follow this story.
After five months of waiting, the City of East Lansing has learned that the developer of White Oak Place at Spartan and Grand River Avenues will go ahead with its planned 213-bed project aimed at student renters.
Why is this news? Because in May of this year, East Lansing’s City Council agreed, by a unanimous vote, to only about 60% of the tax incentives the developer requested. The developer had asked for a Brownfield Tax Increment Financing (TIF) plan worth up to $5.5 million to the project, but Council agreed to only a $3.2 million TIF deal.
Under a TIF agreement, the developer is reimbursed over time from taxes assessed due to the increased value of the property following redevelopment. (Hence the term “tax increment financing.”) The Council limited the reimbursable expenditures for the White Oak Place project to those directly needed for environmental clean-up. Most of the needed clean-up is due to contamination from a former gas station at the site.
It was then up to the developer to decide whether to pursue the project with this lower subsidy. The developer is Joseph Goodsir, Jr., operating under the business name Next Generation Investment Properties, LLC. Goodsir is already a major student apartment developer and manager in East Lansing under the company name Community Resource Management Company (CRMC).
East Lansing’s Community and Economic Development Administrator Lori Mullins told members of the Downtown Development Authority Executive and Finance Committee on October 20, 2016, that her department had learned that the White Oak Place developer was completing its purchase of the former gas station property at the corner of Spartan and Grand River Avenues.
It is common for developers to enter into agreements to purchase property that are contingent on completion of its plans, approvals, and financing. Only then do they finalize the contract to buy the needed land.
Reimbursements to the developer under the TIF plan will come from 28.5% of the incremental taxes captured over 30 years. The remaining 71.5% of the property taxes due on the increased value of the property will come to the City. After the TIF plan is complete, the City will obtain each year all of the taxes it is due according to the assessed value.
The unusual vote, in May 2016, to significantly reduce this TIF plan from what was proposed indicated that a majority of members of the City Council believe that the City needs to push to maximize how much property taxes it obtains from new development in the City. In December 2015, Finance Director Mary Haskell told the newly-installed Council that the numbers in the City’s financial audit were “staggering,” as the City now faces a ballooning debt of almost $200,000,000.
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