Council Members Approve Site Plan for Marijuana Center and Hotel, with Three Defending the eBay Land Sale

Clockwise from upper left: Mark Meadows, Erik Altmann, Shanna Draheim, and George Lahanas. (Photos by Raymond Holt.)

East Lansing’s City Council voted unanimously last night to approve a site plan and Special Use Permit application from marijuana industry developer Kodiak Landarc LLC for publicly-owned property on Merritt Road near the new Costco. The developers will pay East Lansing $1,000,900 for the land, which has sat vacant for years.

The developers plan to construct three new buildings on the approximately six-acre property. First to be opened will be a 7,000-square-foot medical marijuana provisioning center. Then will come a four-story, 107-room Holiday Inn Express hotel, plus an 8,690-square-foot retail strip mall for approximately five businesses.

Before the vote, Council members Erik Altmann, Shanna Draheim, and Mark Meadows said it would have been better if the City had told more than “approximately twelve interested parties” about the eBay auction of purchase rights to the land early this year.

But all three insisted the outcome had been a very good one for the people of East Lansing. Ruth Beier and Aaron Stephens also voted in favor of the proposed project, but did not speak to how potential bidders were or were not notified.

Defense of the eBay land sale, and “hindsight” that it should have been made more public:

The eBay auction of the land, for purchase rights to the property, ran from January 7 to February 6, 2019. After ELi broke the story in March, the City issued a statement recounting the history of trying to sell the land. The City did not explain why there was no press release or other announcement about the auction.

The City has never released a list of who knew about the auction before it ended. A Freedom of Information Act by ELi aimed at finding out who told who revealed fewer than twelve outside entities notified. Draheim and Meadows have said they knew about the auction before it ended, while Stephens has said he did not. Altmann and Beier have not answered questions about this.

Kodiak Landarc, the marijuana industry developer who won the eBay auction, does not appear to have been in the group notified about the auction by Planning Director Tim Dempsey. (Dempsey left his job at the City at the end of last month to take a position with a private consulting firm.)

Last night, City Manager George Lahanas (below) said the eBay auction allowed an “orderly process” to deal with the numerous marijuana industry bids coming in for the land, which has significant environmental contamination from having housed the Department of Public Works for years. He called the use of eBay a “cost efficient and somewhat fair” approach.

“All in all,” said Lahanas, “I think the small body of people who would be interested in that exact parcel of land, considering the environmental challenges, were known to the City and they were the ones who approached the City to purchase it.”

“To pretend like this is some sort of secret, last-minute deal is just not true,” said Lahanas. He added that “sixty-five percent of the voters voted yes to this” in 2006 when voters agreed to the sale of the land.

Lahanas then praised this Council for driving up the value of the property by rezoning it for medical marijuana provisioning last year. (About that move, Altmann has said previously, “Imagine the headlines if we didn’t take an opportunity to drive its value up.”)

Draheim (below) followed Lahanas’s remarks by saying it is common for cities to approach developers who are known to be interested in a possible project. She said that she wished it had been advertised. But “to imply that there was something underhanded or nefarious is just false – just patently false.”

Altmann added that people wanted the City to sell the property, and “now, through creative zoning, thoughtful zoning, and a creative approach to selling the property, we have a really good outcome for the taxpayers and have a good outcome for people who need medical marijuana.”

Said Altmann (below), “Yeah, we should have put a press release on the City website and blasted one out to all sorts of people in case somebody had maybe $1.2 million in pocket change that they decided would want to drop on this particular property on the spur of the moment, but we didn’t do that, and it didn’t matter, because it wasn’t going to change the value of this property or the outcome. We’ll do it next time.”

Meadows agreed, saying, “Everybody on Council in twenty-twenty hindsight says ‘yeah, gee-whiz, we should have put out a press release about the sale of the Merritt Road property,’ and the fact that somebody can jump on eBay and make a bid on it – it didn’t happen. So why are we even talking about it? The real issue is whether we got the result here that was an excellent result for the people of the City of East Lansing.”

Meadows (below) said the redevelopment will result in new income tax and property tax revenue as well as employment opportunities, and noted that the developer will have to pay for the environmental cleanup. He said the site plan was “way more than I expected” in terms of what’s being done with the site.

Conditions altered and added before vote:

Before the final vote, Council revised several conditions of approval, clarifying inclusion of bike racks and electric vehicle charging stations (the hotel site requires four according to a new ordinance), and making sure certain limitations meant to apply to the provisioning center – like limiting hours and prohibiting the sale of alcohol – were not accidentally applied to the hotel.

Below: Developers' rendering of the hotel.

Questions were raised about how the construction would be staged. The submitted plans are vague about this.

Dianne Holman, owner of Red Cedar Spirits just south of the property, came to the public hearing to express her concerns that the construction could have a significant negative impact on her business, as she said happened during the construction of the Costco store.

Holman said she felt it had been hard to get information about this project, and raised questions about why there was not more plan for green landscaping on the land, as she said had been required with the property on which her business operates.

Below: Developers' rendering of the provisioning center on Merritt Road, just north of Red Cedar Spirits.

In response, attorney Mike Bahoura told Council the developers intended to be good neighbors during and after construction, keeping construction on the site. Meadows noted if there were going to be road closures for construction, Council would have to approve those.

Meadows assured Holman they would keep an eye on the issue and that he would “drink at your place always from now on to make sure you don’t go under.”

As for the environmental problems, the developers indicated they have submitted a “due care” plan with the State of Michigan to deal with the environmental problems on the site.

The materials provided on the Council’s agenda include no fire marshal review. ELi has previously reported fire marshal review is required by City code for site plan review.

For this project proposal, East Lansing’s Fire Marshal told the Planning Department on April 18 that the materials provided to him were “illegible,” and added, “I will want to see the site plan before commenting please.”

During the public hearing last night, I asked why there was apparently no fire marshal review, and Council Member Aaron Stephens reiterated the question. Ruth Beier objected to his seconding of the question, saying if he was interested in it, he should have asked the question himself. Meadows stopped Beier from saying more.

Below: Beier and Stephens.

Planning and Zoning Administrator David Haywood responded to the question about lack of fire review by saying, “I don’t have an answer to that. I know that my recollection is that we clarified the plans but we just never received comment, and I can’t explain why.”

Haywood said the Fire Marshall “certainly will review these once they come in as construction plans.” That additional layer of review is also required by Code.

Below: City Attorney Tom Yeadon (right) consults with David Haywood about the zoning law in conjunction with the discussion.

Much-needed revenue will come as a result:

ELi previously reported on City Council’s discussion of what it might decide to do with the $1,000,900 in revenue from the sale of this land.

This income will undoubtedly help East Lansing, which continues to face significant financial problems. City staff believe it is possible that the income tax will be netting about $1.5 million less in the first year than originally projected.