Council Unanimously Rejects Royal Vlahakis’ Park Place Project

Attorney Brent Titus (foreground) and developer Michael Henneman of Royal Apartments at last night's City Council meeting. (Photos by Raymond Holt)

In an unusual show of unanimity, last night all five East Lansing City Council members voted against the site plan calling for a nine-story, 110-foot-tall mixed-use building on the DDA’s Evergreen Avenue properties.

The “Park Place West” project had been proposed by a team including members of Royal Properties of Illinois and local developer Paul Vlahakis, a collaboration formally operating under the name HVS ParkPlace LLC.

The tone last night was somber, as Council members explained why the project did not provide enough public benefit to warrant their support.

Council member Shanna Draheim explained that the Council must (by law) make a finding that the project provides a “public benefit” in order to grant it the Special Use Permit (SUP) required to exceed eight stories.

“There is not enough ‘there’ there,” Draheim (above) said, to make a finding that it will be a public benefit. “I’m not confident” in their plans, she said, and, “if it doesn’t work, we’ll end up with a franchise food court.”

Furthermore, Draheim said, the building is too tall for this location so close to Valley Court Park.

Mayor Pro Tem Erik Altmann focused on the inability of the developers to provide proof that the project was really viable.

“The lesson of the last ten months is that we aren’t seeing the details,” Altmann said. “I view this project as incomplete. I can’t take that risk.”

The developers presented their case, now featuring a “food hall”

The Park Place project proposed to be built on properties along the east side of Evergreen Avenue owned by East Lansing’s Downtown Development Authority (DDA) had been presented multiple times over the past year in various forms at the DDA and Planning Commission. In August, the Planning Commission voted 7 to 1 against recommending the project to Council.

At last night’s meeting, it was Brent Titus (above), the developers’ lawyer, who presented the site plan to the Council. Titus described the building as having 22,400 square feet of commercial space on the first floor, 184 apartments on floors 2-9, and two levels of underground parking.

Twenty-five percent of the apartments were to be designated for low- to moderate-income renters. This was needed so the project would meet the minimum percentage of diverse housing required by the City in large downtown mixed-use developments.

The concept for the first-floor commercial space became the centerpiece of the developers’ argument that this project would provide a significant public benefit.

The task of explaining this concept was given last night chiefly to Jeffrey Elsworth, faculty in MSU’s School of Hospitality Business. Elsworth described the concept as a “food hall,” although previously it had been referred to as an urban market.

ELi reported a day in advance of yesterday’s Council meeting that Paul Vlahakis misrepresented the role of MSU’s School of Hospitality Business in his deal by writing to members of City planning staff and the DDA that the project had received the “full endorsement” of the School of Hospitality Business.

Vlahakis also wrote that “MSU is excited at the prospect of occupying space in Downtown East Lansing in collaboration with [Project for Public Spaces] and the Urban Market.” Responding to questions from ELi, the director of the School of Hospitality Business indicated that his unit had made no such endorsement or commitment.

Elsworth told the Council clearly last night that he was speaking simply as an individual looking at the possibilities for the space. He explained that a role for the School of Hospitality Business in this project could be to educate students who might have experiential learning opportunities in the food hall.

Below: Elsworth (left) and Vlahakis at last night's meeting.

Elsworth told Council that 180 food halls had been built around the country, of which, he said, only three had failed. One nearby example that he cited as being very successful was the Downtown Market in Grand Rapids.

Elsworth said repeatedly that he did not know about the developers’ specific plans. For example, when asked by Altmann what he understood about how the commercial space would be built out, Elsworth responded, “I don’t have any understanding until it’s done. I try not to get my hopes up until I’ve seen the actual space approved and we start working on it.”

The development team did not send anyone else forward to the podium to provide specifics about the commercial component of the project.

Draheim said she likes the food hall concept in theory and has visited many of them, but she had very serious concerns about whether this concept will work here in East Lansing.

She pointed to the downtown market that had failed in Lansing and noted that the Grand Rapids Downtown Market is heavily publicly subsidized, including for its ongoing operations.

Evidence that was lacking

Concrete plans for the commercial space were not the only project details missing in the developers’ presentation to Council.

The developers had no agreement from an operator to run the food hall. When asked by Altmann about evidence of a partnership commitment from Project for Public Spaces (PPS), East Lansing Planning Director Tom Fehrenbach confirmed that he had submitted notes of a phone call with PPS about their conversations with the developer, but that he had seen no contract.

Titus, the developers’ lawyer, told the Council, “I know they [PPS] provided materials. I know we sent those materials with a letter,” but he added, “I don’t want to be in ELi for misstating that there was a letter or memo … So I apologize if that was misleading.”

Below: A rendering of the project.

The lack of a definite commercial partner on the Park Place project contrasts with the two other major downtown projects that Council approved recently. Before the Council voted, it received evidence of Target’s commitment as part of the Center City District project, and the Park District project had a written commitment from The Graduate Hotel.

Another missing piece for the Park Place project was proof of funding.

The Royal Vlahakis development team presented an email exchange with a representative of a Chicago firm that had engaged with a pension fund in Canada that said they are interested in potentially funding this project.

When Mayor Mark Meadows suggested that this did not constitute a proof-of-funding letter, Fehrenbach said that was correct.

Overall, Altmann (below) concluded, “What I don’t see is a plan for making the concept work. And I haven’t seen that since the beginning of the project.

Altmann continued, “It has been ten months since we’ve been talking about this project. There have been some terrific concepts floated along the way — owner-occupied condominiums, a movie theater, office space, automated parking. They are all great concepts. They never made it to the implementation phase. That track record concerns me — it concerns me a lot. I think the project had some attractive features, but I’m afraid I’m not confident in the developers’ ability to build this project.”

What comes next for the DDA’s Evergreen Avenue properties

Only two weeks ago, a 7-3 majority of DDA members favored a new agreement with HVS ParkPlace LLC, largely because it would have paid $5.6 million for the land if it had all come together.

However, last night’s unanimous Council vote against the project appears to put an end to this latest chapter in the saga of what to do with the land the DDA purchased ten years ago for redevelopment. (The DDA bought the properties to support the failed Center City II project of developer Scott Chappelle.)

The DDA is likely to move next to issue a Request for Proposals (RFP) for its Evergreen Avenue properties after its latest contract with HSV ParkPlace LLC expires on October 30. We won’t know for sure what the DDA decides until it meets next on October 24.

New proposals for the community to consider may come from other developers in response to an RFP.

Proposal for nearby land coming soon

Meanwhile, developers DRW Convexity are preparing to redevelop vacant land at 341 Evergreen Avenue, across the street from the DDA’s properties. Currently the land of 341 Evergreen is being used as a construction staging area for DRW Convexity’s projects along Grand River Avenue: The Abbot and The Graduate hotel.

DRW Convexity previously obtained approval to build a five-story, entirely income-restricted apartment building at 341 Evergreen Avenue as part of its Park District project. The site plan for 341 Evergreen Avenue has recently been revised and resubmitted.

ELi ordered copies of the new site plan from the City under the Freedom of Information Act on September 27, but the City has notified ELi that it needs more time to locate the site plan.

You can read more about the Royal Vlahakis deal from Megan Banta at the Lansing State Journal. For our report above, Alice Dreger contributed the three paragraphs on 341 Evergreen Avenue. See a complete rundown of ELi’s reporting on the Royal Vlahakis Park Place project along with a timeline of the proposals here.