Planning's Mullins Answers Common Questions about Park District/formerly City Center II

This morning, City of East Lansing Senior Project Manager Lori Mullins helpfully answered questions I've been hearing from many citizens regarding the area formerly known as City Center II, now known as the Park District Planning Area. The City and the DDA own several properties at the site, as shown in blue on the map above. The properties marked in red are owned privately, so we do not have any control over those properties. Last night and this morning, the City hosted public discussions of what to do next with this area.

Here is the conversation, during which I checked with Lori after each answer to be sure I had transcribed her answers correctly:

Alice Dreger: A lot of people are asking why the rush to get the RFQ/P [request for qualifications and proposals] out? Why are you trying to have it finalized by late October?

Lori Mullins: One of the participants last night [at the public discussions about the area] said it would be easier to have this conversation once we have an idea of what a developer wants to build here, and I think that is true in some cases. If we have someone with an idea, and they know how to finance it, then others can weigh in with their ideas of what is good and not good about that and that helps shape the conversation.

Do you know who owns the buildings in the area that are privately owned?

There are the assessor records that show us which LLCs own them. I don’t know who the partners are that make up the LLCs.  To my knowledge the ownership has not changed hands.

How will you decide which developer is qualified before you have a sense of what the project would be?

We’re going to ask them to submit a general idea of what the project would be along with general qualifications and then work through finalizing the concept with the community.

Is it putting the cart before horse to plan on what to do with these publicly-owned properties before we know what the developer will do with their properties?

In some ways it is, but given that we don’t have an option of controlling those [other, privately-owned] properties at this point, we hope that moving forward on this process will encourage that to move forward and we’ll have more information sooner.

Will we be able to recoup the costs on the DDA properties, the money that we spent buying the properties in support of City Center II? How could we?

Generally if someone is going to buy land to develop it, they need to have a development worth about five times the value of the land to justify the land costs. So on those properties, on which is owed about $5.6 million, we’d be looking at $25-30 million to justify paying that cost. That’s my understanding of how the development community looks at this. I’m not saying that we’re going to be able to recoup all of that. Maybe it is recouped in different ways, like a combination of selling the land for lesser cost, some TIF that comes in through the project, to recoup the costs. That all has to be ironed out, depending on the projects.

How does selling the properties we own for less than we owe on them recoup our costs? I have trouble understanding this.

If the land were to be sold for $3 million, that [$3 million] would pay down some of the [$5.6 million] bond, and the remainder of the debt would be paid thru revenue stream of TIF from the project built there.  

How does using TIF recoup the money? I thought TIF is just essentially taxes that we don’t collect because it goes back into an improved site.

The TIF has to go to eligible expenses like public infrastructure and it can be used for land preparation. You’d have to identify eligible expenses and direct TIF to go towards that. The DDA TIF can be used for land acquisition. So the [tax] increment would be shared between different places to pay for eligible expenses. If it is a DDA TIF, it can be used to pay back the bond.

Note from Alice Dreger: After I asked her to check this post, Lori wrote to add, "One other thing that I was reminded of after our discussion is that the Brownfield Legislation was amended to include land acquisition as an eligible expense.  Therefore, both DDA and Brownfield TIF revenue could be used to repay the bond."