Big DDA and Council Meetings Set to Happen Tuesday

East Lansing’s Downtown Development Authority (DDA) and City Council are both set to make some big decisions this Tuesday, July 11.

The DDA will decide whether to let expire an exclusive agreement with a developer whose ideas for the Evergreen Properties keep changing, while the Council will decide whether to put three significant charter changes on the November ballot. Council will also be making significant decisions related to two downtown properties targeted for affordable rental housing.

The DDA has decided to hold a special meeting to deal with the Evergreen Properties.

Normally, the DDA meets only once per month, on Thursdays. But with an exclusive redevelopment agreement with River Caddis Development set to expire on July 17 – before the next regularly-scheduled DDA meeting – the DDA has decided to meet this Tuesday (July 11) at noon. (Find the agenda and location information here.)

The agreement in question involves the Evergreen Avenue properties (314-344 Evergreen Ave.), which the DDA purchased for $5.1 million in 2009 to support a failed redevelopment project with local developer Scott Chappelle.

Since Chappelle’s deal fell apart in 2015, the DDA has been through one failed proposal after another. Through the years, the structures that once stood on the land have been steadily demolished by the DDA, eliminating the rental incomes that helped deal with the $5.6 million debt accrued in the purchase. That’s meant the economic challenges of these properties have only increased over time.

River Caddis first talked the DDA into an exclusive deal in early 2020 – nearly three and a half years ago. At the time, River Caddis was proposing a big new office building for downtown to be called The CITADEL.

When that original exclusive agreement was signed, then-mayor Ruth Beier said she was excited about the project, but told River Caddis she didn’t want to be promised a big office building only to be told years later the only thing that would be viable on the property is student housing. In May of this year, that’s exactly what River Caddis came back to tell the DDA – that the centerpiece of their latest concept is a big student-attracting apartment building.

DDA members appeared less than thrilled with this news in May and, when they took no action at the May and June meetings, it looked like they would just let the agreement finally expire. But now, the DDA is holding a special meeting to act before the expiration date.

Seemingly against the odds, River Caddis has hung  on to the exclusive right to redevelop the properties despite no progress forward on a redevelopment project and ever-morphing concepts. So far, the DDA has elected to renew the agreement with River Caddis again and again and again and again.

In March of this year, facing a “catastrophic situation,” according to the city’s bond advisor, the Council voted to allow refinancing of the DDA’s Evergreen Properties debt yet again, this time at a fixed rate of 4.86%. The current bond will cost another $4 million in interest if it isn’t paid off early.

The DDA has been hoping for all these years to have a developer somehow solve the purchase-related debt with a big new project. But no developer has been able to figure out how to make that work, despite a number of them having obtained exclusive agreements with the DDA.

Many of the DDA board members are relatively new to this scene, and the staff memo for Tuesday’s agenda is thin on details about all this history. For example, it doesn’t even include a copy of the Memorandum of Understanding (MOU) from April 2020 – the agreement River Caddis Development is asking to extend. (It only includes the January 2023 extension agreement.)

The staff memo also doesn’t mention anything about the debt, including the important point that the big bond debt associated with the original purchase is not tied to the land. It’s a municipal bond, not a mortgage on the land. This means the DDA could opt to sell the Evergreen properties to the highest bidder, putting whatever cash is obtained toward the debt, reducing the interest paid and making the land someone else’s redevelopment problem.

If a development company were to buy the land outright, it would still have to go through all the normal review and approval processes and be restricted by the city’s zoning regulations. Those regulations include Ordinance 1384, a requirement that any big new market-rate (student-attracting) project downtown dedicate at least 25% of its units to owner-occupied condos or low-income rentals or senior housing (age 55+).

The staff memo doesn’t mention Ordinance 1384 and McGraw hasn’t explained how his latest concept would meet that requirement.

Fourteen years into the purchase of the land, with the debt’s principal still standing higher than the original purchase price and millions in public money already having gone to pay interest and bond-related fees, and with all of the structures now or soon to be demolished, only one thing seems certain: the conversation on Tuesday afternoon will be lively.

Council has its own big decisions on the docket.

City Council’s meeting starts at 7 p.m. at the Hannah Community Center, and we can’t help but note some things not on the agenda, including an anticipated request from the East Lansing Public Library Board of Trustees to deal with the problem of having to run the library without a director and assistant director. ELi recently reported the two women in those positions have quit and the board is struggling to find interim directors.

Also not on Council’s agenda: an update on the search for a new city manager – we still don’t even know how many people have applied, no less their names – and an update on the work of the special counsel hired in April to investigate an anonymous complaint charging the mayor with violating the City Charter.

Tuesday’s agenda is showing a closed session “to discuss an attorney-client privileged memorandum.” But the subject of that memo is not being revealed. So, it’s anyone’s guess (outside of the Council, city attorney and city manager) what aspect of the people’s business will be discussed in that closed-door session.

On the open-session agenda are discussions of three possible charter amendments. Council will be voting on whether to advance these proposals to the November ballot for voters to decide.

The proposals include a change in the total number of council members from five to seven, institution of a lame-duck session to deal with new state election regulations and, most controversially, moving council elections from odd-numbered to even-numbered years.

ELi recently gathered up voting rate data and spoke with Interim City Clerk Marie Wicks, who has nearly two decades of experience with East Lansing governmental administration, about what she sees as these three proposals’ pros and cons; find that report here.

Also in open-session, Council will discuss whether to sign a new development agreement with PK Companies for the privately-owned vacant land at 333 Valley Court Drive (until recently known as 341-345 Evergreen Ave.).

PK companies is looking for a deal that would allow them several years to try to construct an affordable-housing rental apartment building on the “Parcel C” lot, a project that was supposed to be constructed by DRW Convexity under the requirement of Ordinance 1384 and according to a 2018 agreement with the city.

DRW Convexity currently owns the land. If the new development agreement is signed, DRW Convexity will sell the property to PK and be relieved of all its obligations under its agreement with the city. If the new agreement isn’t signed, DRW Convexity will have to quickly build an affordable-rental building at 333 Valley Court Drive or deed the land over to the city – for free –  as parkland.

If the new development agreement is signed and PK can’t get the project to work, under the drafted agreement’s terms, the city will have the right to buy the land for $1.5 million. If at that point the city doesn’t buy it, PK can sell it.

PK is also looking for Council to approve a Payment in Lieu of Taxes (PILOT) agreement. That would allow PK to pay a predictable sum each year much lower than the usual property taxes for an apartment building of the planned size. PILOTs are part of how affordable-housing developers/landlords like PK achieve economic feasibility.

If the deal is approved, PK will also seek financial help from the Michigan State Housing Development Authority (MSHDA) for the project. The new apartment building would provide at least 72 “affordable” units for people earning 80% or less than the area median income.

ELi reported that, at the last Council meeting, Mayor Ron Bacon and Mayor Pro Tem Jessy Gregg signaled support for the requests. But PK will need at least three “yes” votes.

Council is also set Tuesday to extend a lease agreement that will allow the city to keep the entirety of surface parking lot #11 open downtown a year longer. That’s the lot at the southwest corner of Bailey Street and Albert Avenue, behind Peanut Barrel and Campbell’s Market Basket.

As ELi previously reported, about two-thirds of that parking lot is privately owned, and now the owners are looking to sell it to American Community Developers (ACD). ACD wants to build a “workforce housing” (income-restricted) apartment building on the private land.

The agreement on Tuesday’s agenda will allow the city to keep using the land for a parking lot through at least August 2024 while ACD moves its proposed project through the review and approval process.

Tuesday’s agenda also shows additional items, including: a resolution of “Solidarity with the Congregation of Shaarey Zedek Synagogue” following violent threats made against the congregation; referral to the Planning Commission of a request from BWL to rezone four properties along Burcham Drive and Stoddard Avenue; an agreement related to the reconstruction of the Lake Lansing Road/Towar Avenue/Birch Row Drive intersection; and more.

Find the full agenda here.