$100M Development Deal Keeps Moving, Still with No Site Plan - UPDATED

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Wednesday, November 14, 2018, 9:07 am
Alice Dreger

[See end of article for update.]

While the Mayor and Mayor Pro Tem continue to participate in closed-door negotiations on a key contract for the $100 million public-private redevelopment idea known as Park Place, two members of East Lansing’s City Council tell ELi they have not participated at all in these negotiations. The fifth won’t say what her role, if any, has been.

This is happening even as the developers and East Lansing’s Downtown Development Authority (DDA) are moving toward signing a final Purchase and Sale Agreement, possibly as early as the DDA’s meeting midday on Thursday.

Meanwhile, tonight (Wednesday, Nov. 14), Planning Commission is set to take up the question of whether to change the zoning code to allow 140-foot-tall buildings along Evergreen Avenue, on land now holding a series of three-story buildings north of Peoples Church.

The major zoning change is being specifically introduced to accommodate the Park Place project, even there is no site plan formally indicating what the developers want to build there.

What’s the deal?

Along with his partners, Illinois-based Royal Apartments, local developer Paul Vlahakis is looking to strike a deal with the City and DDA to redevelop a group of privately- and publicly-owned properties downtown.

The project site would be between Evergreen Avenue and Abbot Road, just north of Albert Avenue. It would include the Dublin Square property, City-owned land, and a series of DDA-owned properties along Evergreen Avenue.

The ongoing negotiations have focused on a detailed Purchase and Sale Agreement that includes terms ordinarily decided chiefly or exclusively by City Council, including, for example, a 49-year lease of City-owned land to the developers, a multi-million dollar tax increment financing (TIF) plan, and project labor agreements. (See the last publicly-available version, from October 25.)

These issues are usually contained in a Development Agreement, which is normally the final step in the process of approving a development project that includes public land. Ordinarily all members of Council participate in the Development Agreement negotiations.

Who’s in charge?

Asked by ELi who is leading the closed-door Park Place negotiations – given that City Council has never met openly to discuss what they might want to see in the deal – Mayor Mark Meadows responded that DDA Chair Peter Dewan is in the lead.

Meadows says he and Mayor Pro Tem Erik Altmann are “sitting in.”

But asked at a recent DDA Committee meeting to confirm his being in the lead in the negotiations, Dewan responded at first by saying, laughingly, “That’s nice to know.” Others in the room laughed with him.

Dewan then described the negotiating team as “a group of people – City staff, the Mayor, the Mayor Pro Tem – that has been having conceptual conversations with the developer.” He acknowledges that the “conceptual conversations” include terms of a development agreement between the City and the developers.

Said Dewan, “ultimately it will be the City and citizens of the community” who work through a site plan, if one is submitted. The deal, he and the others have said, will be contingent on all the normal review processes happening by the Planning Commission, Transportation Commission, DDA, and Council.

The draft agreement, however, appears to come to specific terms with the developer – terms that, again, ordinarily would be agreed to by City Council at the end of the review process, not before it begins.

At the last DDA committee meeting, Vlahakis (above left) showed a new series of renderings to Dewan, Altmann, and City staff. But these plans have not been made available to the public or been submitted formally.

Draheim and Stephens left out of negotiations:

Council Members Shanna Draheim and Aaron Stephens have not been privy to the ongoing negotiations. Council Member Ruth Beier has not responded to questions about whether she has been.

Draheim tells ELi, “I have not been part of any negotiations around this project yet.”

Draheim adds, “I have received very brief updates on potential plans for the site and land lease from the city manager as part of our routine check in meetings, and have talked with Peter Dewan briefly about the project (we did not discuss any details of the development and/or sale agreements - only that I'm hoping whatever gets proposed there will preserve some of the history of the site and the [Dublin Square] building).”

Says Stephens, “I don’t know what has been discussed in these negotiations. As a Council Member, I would like to know what’s happening in my City with regard to a major development. We should be talking about it at the Council table, or at the least all Council members should be in the know about what is happening.”

Developers sometimes meet separately with Council Members before the Council votes – that is allowed under Michigan’s law – but we have never before seen an agreement like this, to be signed in advance of any of the normal review processes, without any real participation of at least two members of Council.

Planning Commission considering significant height change for project:

Tonight, Planning Commission will be holding a public hearing on Ordinance 1443, designed “to make changes to the building height limitations in the B-3, City Center District.”

The ordinance as it is drafted calls for allowing 140-foot-tall buildings for all areas zoned B3 City Center, as shown in red below, with a favorable vote of four or more members of Council.

The recently-approved new Comprehensive Plan for the City calls for the area along Evergreen Avenue to have buildings not more than six-stories or 84-feet in height. But Vlahakis and his partners want to build a 12-story building along Evergreen Avenue, with movie theatres on the bottom, indoor parking for hundreds of cars, rental apartments, and condominium apartments on the top floors.

The debt problem:

City Council, staff, and the DDA have been anxious to do something about the $5.6 million owed on the Evergreen Avenue properties owned by the DDA. The properties were purchased by the DDA for a failed project known originally as City Center II, and principal on the debt is coming due soon.

City staff and advisors are working on restructuring the debt to give the DDA and the City more time to deal with the problem of these properties. In fact, the DDA has recently voted to a restructuring that allows five more years in which to manage the debt.

But in the meantime, Vlahakis and his partners have offered to purchase the properties for $5.8 million if they can get what they see as a favorable agreement. And it appears that at least the Mayor, Mayor Pro Tem, and the DDA think this is a deal worth pursuing, rather than opening up the Evergreen Avenue properties now to proposals from other developers.

Update, November 15, 1 p.m.: 

The Planning Commission discussed the ordinance and heard public comment, and deferred action until its next meeting on December 12. The City did not receive a formal response from the developer on the Purchase & Sale Agreement so no action was taken on this matter at the DDA. (Disclosure: This reporter spoke during public comment of these two meetings, largely to convey the material reported above and to provide additional context, including from the Oakwood Neighborhood, just north of the properties, where she owns a home.)


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Note: This article was amended on November 14 at 9:45 a.m. to clarify that the area along Evergreen Avenue is marked under the recently-called Comprehensive Plan for buildings up to 6 stories. We also re-dated and reworded the article to indicate the Planning Commission meeting is tonight (November 14).

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