Delay on Park District Project Could Be Long

Image: Arrows indicate some of the PDIG Park District properties facing foreclosure next week

As we reported for ELi, yesterday East Lansing’s Downtown Development Authority (DDA) and Brownfield Redevelopment Authority (BRA) voted to hold off on doing anything more with the developer PDIG’s proposals for the Park District, in part because PDIG is facing a possible foreclosure sale of its properties next week. Contrary to what is suggested in the opening line of the Lansing State Journal’s current story on this matter, the ultimate resolution of this matter will necessarily stretch well beyond next week’s scheduled foreclosure sale.

Here’s what the DDA voted unanimously (7-0) yesterday, according to City Administrative Assistant Terri Soliday:

“…to defer consideration of the Park District Development Agreement until resolution pending the sheriff's sale of the properties, resulting in either redemption or permanent transfer of ownership.”

The motion was not just to wait for the sheriff’s sale but to wait for “redemption or permanent transfer of ownership,” which can take a lot longer than just the sale.  Under Michigan law, foreclosure auctions are followed by a redemption period of six months to allow borrowers who are in foreclosure time to try to redeem, or buy back, their property. This six-month redemption period is explicitly included in the June 29 notice of the mortgage foreclosure sale on these properties.

Whether the foreclosure sale actually happens next week will depend on the outcome of legal wrangling now occurring between PDIG and the entities to which money is owed on the properties. The public auction on the foreclosed properties is currently scheduled to be held on July 30, 2015 at 10:00 a.m. at Veterans Memorial Courthouse, 313 West Kalamazoo Street, Third Floor, Lansing,

There are seven parcels included in the foreclosure sale: the vacant “Big Bank Building” at the corner of Abbot Road and Grand River Avenue, the five vacant commercial parcels on Grand River Avenue between that lot and People’s Church, and the vacant Evergreen Arms (tan brick) apartment buildings at 341-345 Evergreen Avenue. (The two vacant Evergreen Arms buildings count as one parcel.)

At yesterday’s DDA meeting, the motion to defer consideration of the Development Agreement with PDIG was made by Douglas Jester, former mayor of East Lansing and now Vice-Chair of the DDA. Following another motion from Jester yesterday, the DDA also voted 7-0 “to defer any further due diligence work until the sheriff's sale is resolved, and to instruct the City Attorney and National Development Council to stand where they are until we ask for further work.”

We asked Jester this morning by email, “What you moved (and what was voted) seems to go further than waiting to see how things might work out next week. Do we have it right?”

Jester replied, “You are correct. There are only three ways this comes back to us from PDIG: they get a final court ruling blocking the foreclosure, they redeem property from the Sheriff's sale, or they are the winning bidder in the Sheriff's sale. Only the last outcome is quick.“

At the meeting of the Brownfield Redevelopment Authority (BRA) immediately following yesterday's DDA’s meeting, similar motions were passed with regard to PDIG’s request for Tax Increment Financing (TIF).

At the BRA, James Croom moved “to defer consideration of Brownfield Plan #19 until the foreclosure process and the redemption process are resolved to the satisfaction of the City and the DDA.” The vote was again 7-0.

With regard to the Reimbursement Agreement for the same Brownfield Plan, Croom similarly moved “to delay consideration until resolution of the foreclosure proceedings and/or resolution of the redemption proceedings in a manner satisfactory to the City and the DDA.” This also passed 7-0.

Finally, Croom moved and the BRA unanimously passed a motion “to delay consideration of the PDIG Development Agreement until such time as the foreclosure proceedings are satisfactorily resolved or the redemption period ends, as long as the property has been redeemed to the satisfaction of the City and the DDA.”

UPDATE, July 24, 7:45 pm: The two paragraphs beginning at "We asked Jester this morning..." were added. At the time this article was first published, we did not have Jester's permission to use his answer on the record, but we later received it.

Disclosure: At the DDA meeting yeserday, Alice Dreger spoke during public comment against continuing trying to broker a deal with PDIG on this project.