Ask ELi: Is the LSJ’s Editorial on Development Accurate?

Above: Rendering for the project being constructed at 565 East Grand River Avenue, across from the Broad Museum.

An editorial in the Lansing State Journal published yesterday says that “East Lansing has developed a bad reputation with developers, [and] needs to get on [the] same page with projects.” The Editorial Board writes that, “Negative perceptions concerning projects that have dragged on, been delayed or were outright cancelled outweigh success stories in East Lansing.”

A number of readers sent us this editorial and asked us about it. ELi doesn’t produce editorials, but we do fact-check, so here’s a fact-check of the LSJ editorial. In short, we find that the editorial has some facts right, and some wrong.

On the Harbor Bay/Ballein Center City District proposal: The LSJ Editorial Board writes, “The East Lansing Planning Commission’s 4-4 split on the latest proposal to bring development to downtown is another entry on a growing list of reasons why developers are hesitant to go to downtown East Lansing. Harbor Bay Real Estate Advisors of Chicago is the newest name on a long list of developers that have attempted high-profile work with the City of East Lansing and met resistance from the city council, planning commission, or both.”

East Lansing’s Planning Commission did vote 4-4 on this project, which is a formal vote against. We reported what happened at that meeting, including the reasons given for and against by Commissioners. Planning Commission’s vote is advisory to Council, so it does not stop a project from moving on for potential approval at Council.

As for City Council’s approach to the project, Mayor Mark Meadows (who is on Council) did a special press conference to announce the project in late February, something we’ve not seen before. Without waiting for Planning Commission to complete review, City Council went ahead and scheduled the Council public hearings for the project on April 18. It’s fair to say Council was moving right along on this.

Planning Commission wasn’t done with review before April 18. The project is large, complex, and involves the use of what is generally considered the City’s most important piece of downtown real estate: Parking Lot #1. Planning Commission was simultaneously dealing with several other large proposals, including the Park District redo and the Trowbridge hotel redevelopment, along with many smaller issues. One thing Planning was dealing with during this time was reworking Ordinance 1400 to ease parking requirements for downtown developments, like Center City, to make development easier.

When the Center City project wasn’t ready to go to City Council on April 18 because Planning hadn’t completed review, City Council rescheduled the public hearings for the next possible date: May 9. Council had the public hearings go on even though the developer didn’t have an updated site plan or TIF plan for Council. Council couldn’t move the project on then, because the developer had announced he wasn’t ready.

Council did express initial split views on the project on May 9, for reasons we reported. That project is set to come to Council again on June 13, assuming the developer is ready. If the vote happens then, that would be about three months between when Planning Commission started review and Council votes on it. We don’t know when or how Council will vote.

East Village, City Center II, and the Park District: The LSJ Editorial Board names “City Center II; Park District; East Village” as “projects that have dragged on, been delayed or were outright cancelled.”

East Village wasn’t stopped by the City of East Lansing. The real estate crash of 2007 caused the developer to withdraw plans for redevelopment there.

“City Center II” is the old name for the project that was to be built at the blighted corner. That project collapsed not because the City of East Lansing stopped it—Council had been approving that project fairly steadily. It collapsed when the developer lost the properties to foreclosure, following the developer’s involvement in a long spate of lawsuits and failed projects. In fact, City officials only backed out of the City Center II project when the properties were sent to foreclosure.

Once DRW got control of the now-blighted properties through a sale of the property following foreclosure auction, and DRW/Convexity produced a proposal, Planning Commission and City Council started working on that pretty much immediately. In January, Council did end offering DRW/Convexity a tax increment financing (TIF) plan that DRW called “unworkable.”

But once DRW/Convexity went back to the drawing board to revise the plan according to what Council wanted to see, within four months, Council and DRW/Convexity reached a deal. Since that time, Council has been working with DRW/Convexity to delay demolition of the buildings so that DRW/Convexity can try to obtain a state-level tax credit that the developer says would be jeopardized by premature demolition.

The LSJ editorial board says about the Convexity deal, the “developers were forced to resubmit plans three times while the gateway to East Lansing and MSU remained blighted.” Review of DRW’s proposals for the site began in October of last year and the deal was reached in April of this year. In that span of seven months, the plans were revised three times.

By the time the deal was reached on the third pass, no one raised any objection at or from Council to the site plan, Peoples Church (next door) fully endorsed the project, and Council voted unanimously for it. The development agreement has not yet been finalized, but Council has passed a Memorandum of Understanding about it.

So of these three redevelopment proposals that the LSJ says were “dragged on, delayed or outright cancelled,” in one case the developer had financial and legal problems all over the country that led to the prolonged blight and foreclosure auction in East Lansing, in another case the developer withdrew because of the recession, and in the third case, there’s a deal reached in seven months with which all major parties appear happy, and Council is cooperating with that developer on the state-level tax credit.

The blighted buildings remain: The LSJ says, “Last year the city promised all of the blighted properties would be torn down by Dec. 31…and yet nothing significant has changed.” That’s because Council is cooperating with the developer to get the state-level tax credit. Tearing down the buildings would, according to the developer, throw the whole project into jeopardy.

Center City “deadlocked”? The LSJ says on the Center City District project, “the East Lansing Planning Commission is deadlocked and failed to recommend its approval to city council members last month.” As noted above, the Planning Commission voted (past tense) 4-4, which is not a “deadlock,” because the project still moves on to City Council. Planning Commission is advisory. (It’s possible that those who voted “no” might have voted “yes” to move it to Council if they weren’t only advisory.)

East Lansing’s reputation as difficult to work with: The LSJ says East Lansing has been “tagged…with a reputation as a municipality that can be difficult to work we.” We reported on this last year after talking with a development specialist who believes this is true, because we have also heard this from other developers.

With the White Oak Place project, City Council strictly limited the tax deal to environmental cleanup, which came to much less money than the developer had asked. Council also changed the site plan of the building in significant ways. That project is consequently not moving forward.

That said, this City Council has reduced the requirement it had had for non-student-rental housing in new downtown development and has recently provided tax increment financing deals for the new Costco project and the Trowbridge hotel project. (Meridian Township refused to go all-in with East Lansing on the Costco TIF, suggesting Meridian Township saw East Lansing as too generous to the developer on the TIF.)

Additionally, City Council just passed an amendment to Ordinance 1400, reducing how much parking is required of developments downtown. Since we reported on that yesterday, a development professional wrote in to ELi to offer the unsolicited comment that this was a big step forward for redevelopment: “It is the kind of a change that many people do not realize is a huge deal for East Lansing. Lots of communities talk about this, but few have gotten it done.”

No new redevelopment downtown? The LSJ Editorial Board makes it sound like there’s no new redevelopment happening in downtown East Lansing. In the last few years, downtown East Lansing has seen the construction of The Residences (the HopCat building), St. Anne Lofts (not without its many issues), 300 Grand, and now 565 East Grand River. All of these involved tax increment financing deals with the City.

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