EAST LANSING– City officials are trying, again, to find a developer for downtown property they bought 10 years ago.
East Lansing's Downtown Development Authority bought around1 acre that comprises various parcels in the 300 block of Evergreen Avenuefor a little more than $5 million in 2009.
City officials have been searching for a developer ever since, most recently rejecting a proposed project known as Park Place.
Thehandful of properties on Evergreen Avenue were supposed to give city officials an opportunity to kick-start downtown development.
After a decade of failed efforts, the properties instead have become a problem the city mustsolve as the bank starts calling in larger debt payments.
"We’ve hung onto this property because the recession lasted such a long time and … it was hard to get the Grand River development mixed in with that property." Mayor Ruth Beier said during a meeting last week to discuss what officials might want to see the properties become. "What started off as an investment and an asset to create growth on that side of town has turned into sort of an albatross because we owe $5 million on it."
They're now trying again, having started another formal search last week when they sentout a request for qualifications and proposals, a tool cities use to solicit and vet potential projects.
The hope is that the public process will produce a development that can come to fruition— and at least one expert told city officials it's the best route.
City owes $5.5 million
The East Lansing Downtown Development Authority bought four parcels totaling 1.082 acresfrom various owners in 2009.
The purchase was meant tosupport a major project from developer Scott Chappelle, who was working through Strathmore Development and Park District Investment Group. That project fell through after the purchase, despite years of efforts by officials to make it work.
The city-affiliated board took on debt to buyfour older houses and a more modern, brick building. The properties still serve as rentals, mostly housing but with some commercial space in the more modern building.
Until this year, the DDA had only been paying interest on the debt. The rental income had covered or help cover those payments, but it isn't enough to cover both interest and principal— especially once the payments triple in 2024.
That means if city officials want a sale to cover the remaining $5.5 million in debt, they need to find a developer who's willing to pay significantly more than the property is actually worth.
While several members of the DDA have signaled that price is their top concern, City Councilmember Aaron Stephens, who's serving as mayor pro tem, said he doesn't want that to be the focus.
The high asking price has meant developers proposed larger, taller projectsto make sure they can cover their own costs.
Stephens said he doesn't "want to subjugate the neighborhood to a grander project because we want to see all that debt eliminated."
He and the other City Council members indicated they don't just want another massive apartment building if it isn't best project for the community.
But what does the best project for the community look like?
Request offers possibilities, broad goals
According to the RFQP,"any development has to be inclusive of, and attractive to people of all walks of life," and the best project will "complete the activation of the western edge of our downtown" and balance "the desires of the community with the demands of the marketplace."
The document doesn't expressly say what kind of project officials want, but it lists possibilities: An innovative office space, a high-quality restaurant, a theater or museum or another creative use to "create place and activate public spaces."
Some officials have expressly said what they do— or don't— want to see on the site.
Nearly all of the City Council and the DDA board members agreed they don't think first-floor retail is crucial, but opinions beyond that varied.
Beier doesn't want another "12 stories of student housing."
"I want to see something else there," she said. "I want to see daytime traffic. I want to see offices there. I want to see doctors. I want to see banks."
Housing would be fine, too, but it should be "something that adds to what we have instead of adding more of what we already have."
Councilmember Mark Meadows also doesn't want to see "another apartment building" catering to students.He'd be open to owner-occupied housing, offices or low-to-moderate income housing, among other options.
Newly elected Councilmember Jessy Gregg said her ideal project is "pretty darn close" to a project Convexity Properties, the developer in the Park District project, submitted in a letter of intent.
The Chicago-based developer offered to purchase the property with the intent of building an apartment building that would be 10 stories tall on one side and step down to seven stories on the other. As part of the project, the developer also would donateanother building that's part of the Park District project for the city to add to Valley Court Park.
Gregg encouraged Convexity to submit their project as part of the RFQP process.
Peter Dewan, who chairs the DDA, said he also liked a lot of things in Convexity's letter of intent and is hopeful the city gets similar ideas in responses.
He described the properties as a "once in a lifetime opportunity" for officials.
"This is a really critical time in our city’s history," Dewan said. "We are completely changing the landscape of our downtown, and we have an opportunity to do something really special in this area of the city."
With all of that on the line, officials stressedthat it's important for them to have a public process.
Expert recommended open process
That's following some direct adviceVan Martin, president and CEO of Martin Commercial Properties, gave to the DDA during a recent meeting.
Martin told the board to find the right developer, it's critical to have a process with integrity and representation, especially from people with experience.
That isn't what city officials have done in the past, he said, and it's meant developers getting better deals on properties than they otherwise might have.
He encouraged them to go through a big, competitive process and to be specific about what they want.
"You need to really identify what you want there," Martin said. "It’s not this open, subjective thing at the end of the day – unless you want it to be, but that’s convoluted."
Contact reporter Megan Banta at (517) 377-1261 or mbanta@lsj.com. Follow her on Twitter @MeganBanta_1.
