Only Two Developers Propose (Very Different) Ideas for the DDA’s Evergreen Properties

The deadline for developers to pitch ideas for the East Lansing Downtown Development Authority’s “Evergreen Properties” came and went yesterday, and today the City released the responses. Now a special committee will review the proposals and accept public comment.

Only two developers submitted proposals – Convexity Properties and River Caddis Development – suggesting that, as some real estate experts have said, this is a tough set of properties to build on, especially because they come with a lot of debt.

The two proposals are very different in design and substance. Convexity is proposing 100% market-rate residential units, with private parking, a big extension of the green space of Valley Court Park, and an elimination of their planned affordable housing nearby. River Caddis is proposing 100% entrepreneurial and office uses with parking for their building, along with an alleyway redesign.

The River Caddis proposal would involve a much more built-up area just southeast of Valley Court Park. That’s partly because River Caddis' building would cover more land, but it’s also because if they “win,” Convexity won’t expand the park and will have to build its 6-story affordable housing project across the street from the River Caddis building.

Beyond that, in many ways, the proposals are difficult to compare.

While Convexity’s proposal for “Albert Commons” is significantly shorter – 22 pages compared to 91 for the River Caddis proposal – the Convexity proposal contains many more details about both the design and financing. Convexity's pitch specifies how the Brownfield tax increment financing (TIF) would work, what would happen with parking in the area, and how the buildings would be occupied – by renters of 230 market-rate rental apartments.

The Convexity plan also has a plan consistent with the City’s long-range vision of the Albert Avenue extension west of Abbot Road, and allows for that big expansion of Valley Court Park – from four acres to five.

River Caddis’ proposal for “The CITADEL” is styled more to speak to a new vision of East Lansing, one that is hip, entrepreneurial, and “partnership” centered. It comes with a lot of branding – “WE are THE CITADEL,” which stands for “Central Innovation, Technology & Arts District of East Lansing” – and even a promotional movie.

The River Caddis proposal refers vaguely to a Brownfield TIF plan but gives no details. It is unclear about whether the onsite parking would be public or private. And while it has a concept of who might occupy the space – artists, entrepreneurs, office and incubator users, restauranteurs – there are no actual tenants identified. It promises this would just be the start of something bigger. But what is that bigger thing? They don’t say.

Before we get deeper into these proposals, here’s a reminder of how the area is laid out.

Right now, just east of Peoples Church along Grand River Avenue, DRW Convexity is building a new hotel for The Graduate chain. Just east of that, on the main corner of Abbot Road and Grand River Avenue, DRW is building The Abbot, a 13-story apartment building with retail on the ground floor. The Abbot is expected to open by late June 2020, and The Graduate by the end of this year.

Just north of there, on what is now Lot 4, MSUFCU wants to build an 8-story office building. If voters authorize the sale on March 10, that is likely to happen, although the entire site plan application and approval process will wait until after the voters’ decision.

West of this land, across a public alley, lie the DDA’s Evergreen properties (314-344 Evergreen Avenue), located on a steep hill. These are the properties on which $5.4 million is owed. Just north of that is 404 Evergreen Avenue, holding a 3-story rental building owned by Matt Hagan, LLC. That is bordered on the north side by a public property called Lot 15.

DRW Convexity owns 341-345 Evergreen Avenue, which they are currently using as a construction staging area. City Council has approved DRW Convexity’s plan to build a 6-story income-restricted rental housing building here. That is how DRW Convexity said it would satisfy the City’s requirement for diverse housing options when it got permission to build The Abbot.

How the area would be reconfigured under Convexity’s proposal for Albert Commons:

With its new Albert Commons proposal, Convexity is looking to turn 341 Evergreen into an extension of Valley Court Park instead of building affordable housing there. The proposal calls for the developers to be released from the diverse housing requirement by virtue of giving the land to the City to use in perpetuity as parkland.

Here's a rendering of how the new project would look from the air. In the foreground is Peoples Church. The park on the left is shown expanded. The new building is brownish, in the center, with faded-out versions of the MSUFCU building (not yet approved) and The Graduate and The Abbot shown nearby.

Under the Convexity proposal, what is now Evergreen Avenue would be turned into pedestrian space, cutting off traffic between the busy part of downtown and the Oakwood Historic Neighborhood north of this area. The new park area could be used, according to the proposal, for a plethora of public purposes, from a space for festival performances to a food truck court to a new farmers’ market space.

On the site of the DDA’s Evergreen Properties, Convexity would build a new apartment building rising to 12 stories (140 feet) on the south side near The Graduate and The Abbot, stepping down to 7 stories (85 feet) on the north side, nearer the park and neighborhood. Here it is, looking east:

This “Albert Commons” building would have 230 market-rate apartment units and 185 private parking spots on the building’s interior, with parking accessed from Albert Avenue on the south side of the project. The Albert Avenue extension that the City has wanted would be constructed under Convexity’s plan, as shown above.

Along what would become the Evergreen Avenue greenway, the apartments would be townhouse-style, to create a neighborhood residential feel, as rendered below. The style of the Albert Common’s building would be in keeping with the other buildings under construction by Convexity – a brick and glass look designed to be modern but complimentary to the surrounding architecture, including the historic district just north of the properties.

A total of 45 surface parking spots would be lost through the park expansion and the new road work, but Convexity says Peoples Church could gain 24 private parking spots with “minor curb work and re-stripe” on their own lot.

How the area would be reconfigured under River Caddis’s proposal for The CITADEL:

River Caddis’ proposal has a bigger footprint, extending further north than the Convexity plan. This is because it includes 404 Evergreen Avenue, the property owned by Matt Hagan, LLC that currently has a three-story apartment building on it.

Their proposal calls for an 8-story, 112-foot nonresidential commercial structure consistent in height all the way from Albert Avenue to what is now the City’s lot 15, where there are currently wooden stairs that go from the City’s parking lot off of Abbot Road to Evergreen Avenue. Here's how the rendering appears looking northeast, from near the back of Peoples Church:

The design is sleek modern glass, housing 250,000 square feet of commercial space and about 250 parking spaces, accessed from the north, possibly from both Evergreen Avenue and from the parking lot that runs off Abbot Road. The proposal refers to the parking as “either public or privately owned.”

The CITADEL proposal does not appear to call for turning part of Evergreen Avenue into a greenway, nor does it seem to involve the Albert Avenue extension. Again, this proposal would involve a lot more built-up space in the area, because not only is its footprint bigger, it would mean a 6-story building across the street instead of a park expansion.

Where the Convexity design cuts off access to the Oakwood Neighborhood, the River Caddis design anticipates traffic coming and going along Evergreen Avenue, north and south.

River Caddis suggests that what they’re proposing would be followed by more of this kind of development: “The CITADEL is more than one building, it is a district, a place, an idea. The idea behind the CITADEL cannot be held under one phase, it will involve multiple phases. We are presenting the CITADEL in this proposal in its infancy and first phase. We have designs and plans for multiple phases that will cover other adjacent properties to allow steady and responsible growth in the City we call HOME.”

Right now, though, it is one building being proposed, one which they say would “combine much needed uses within East Lansing such as office and structured parking, along with complementary uses such as restaurant and food/beverage experiences.”

The alley, just east of the DDA’s properties, would be “activated into a vibrant, art influenced, public space that will provide a unique destination and distinct character for the district overall.” It’s not clear how this would work given that the buildings east of the alley use the alley for access to their parking and service entrances. The proposed MSUFCU building, shown here at the right (with The Graduate Hotel to the left), would need the alley for vehicle access, as would the neighboring buildings to the north.

The CITADEL building would include a two-story lobby, “seasonal indoor/outdoor spaces that invite collaboration and further help reduce the scale of the building on the exterior,” with offices on the upper levels.

What about the money?

This is where it is really difficult to compare the two proposals, because Convexity’s just has so much more detail.

Convexity is looking to pay $3 million for the DDA’s properties, promising that Convexity will make the DDA’s increasingly onerous debt payments from closing (after all the approvals) until six months after the Albert Commons building is complete and has its Certificate of Occupancy. Those interim payments would come off the $3 million purchase price.

In addition, the City would get the land of 341 Evergreen Avenue for the park – property worth at least a million dollars.

The TIF would be used to pay off the rest of the DDA’s debt as well as to pay for the park extension and park improvements, the City infrastructure, and some of Convexity’s private development costs, including demolition of the existing structures on the DDA properties.

Because the TIF could rely not just on the new Albert Commons newly-generated tax value but also on the coming added taxable value of The Graduate and The Abbot, the Convexity TIF would be paid off pretty quickly – in 12 years, extending by just 4 years the TIF plan already in place for DRW’s current projects. The total would be about $16.8 million.

River Caddis refers to The CITADEL standing as a “brownfield redevelopment benchmark,” but it says nothing about how big a TIF they seek, how long it would last, or what they would want to pay out of it.

River Caddis is offering a purchase price of $5.5 million for the DDA’s properties. That sounds like more, but it’s possible they’re intending to be reimbursed for that out of tax incentives. Their proposal says there will be $14,641,200 in “state and local incentives,” without providing any specifics.

The River Caddis proposal is simply too vague compared to Convexity’s to compare the financials.

What other differences are there between these proposals?

River Caddis offers letter of support from a number of local major players, including MSUFCU, Delta Dental, and Lansing Economic Area Partnership (LEAP). None of them say they would occupy the building. Convexity offers “certainty and speed of execution,” by which they seem to mean a lot of experience, connections and deep pockets.

At this point, both groups have substantial experience working in development and with various branches of East Lansing government, including the Department of Public Works.

Convexity wants to get this project done fast. They ask for only 60 days for “due diligence” to do the work needed to make sure the property holds no surprises before they commit, with the possibility of one 20-day extension. They seek to have the approvals and the whole deal in place by August 11, 2020 – an ambitious schedule. River Caddis asks for 180 days and up to four 60-day extensions to make sure the properties hold no surprises and also to get the approvals.

Based on the proposals, Convexity is closer to having a site plan ready to submit – no surprise since they’ve been working in this area for far longer and are consequently familiar with the land, the infrastructure, and the limitations.

Below: East Lansing's Director of Planning Tom Fehrenbach at the Feb. 18 City Council meeting (photo by Raymond Holt)

Next Steps for reviewing the two proposals:

East Lansing Planning Director Tom Fehrenbach told the DDA at its February 20 meeting that staff would start to review the proposals as soon as they were submitted. The City has set up a website for information about these proposals and a public comments email address.

An Evergreen Properties Proposal Review Committee will be formed and will hold public meetings, as required by the Open Meetings Act. Its membership is expected to be similar to the “Marketing Committee” of stakeholders that created the first draft of the Request for Qualifications and Proposals (RFQP) for the Evergreen properties.

A City press release indicates that a joint meeting of DDA and Review Committee will be scheduled in March. At that, the developers will make presentations and take questions from the Marketing Committee and DDA members.

The Review Committee will then deliberate and provide their scoring of the proposals using the matrix in the RFQP. Then, the DDA will consider the proposals and the Review Committee’s recommendations and will make their recommendation to the City Council.

See the River Caddis proposal by clicking here, and see the Convexity proposal by clicking here.

Chris Root contributed reporting on the next steps. Disclosure: Alice Dreger and Chris Root own homes in the Oakwood Historic Neighborhood.