City Staff Recommends Another Exclusive Development Agreement on the Evergreen Properties

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Rendering by River Caddis Development

The rendering by developer River Caddis for "The CITADEL," which stands for "Central Innovation Technology & Arts District of East Lansing." This is looking northeast, as if looking from the back of Peoples Church.

East Lansing’s Downtown Development Authority (DDA) is meeting virtually for the first time this Thursday at noon, and the agenda released today shows that another developer is asking for another exclusive agreement for the DDA’s publicly-owned Evergreen Avenue properties.

The developer this time is River Caddis Development. East Lansing’s Director of Planning Tom Fehrenbach is recommending the DDA sign up.

Map showing the publicly-owned properties where River Caddis proposes The CITADEL.

The hope had been that at this point the DDA would be choosing the best-qualified developer from among many applying in response to the open call for qualifications and proposals that went out late last year.

But as ELi reported, only two developers returned proposals on the Evergreen properties – River Caddis Development and Convexity – and shortly after that, Convexity pulled out. (Convexity indicated that the finances of their proposal turned out to be unworkable given the tax assessor’s new approach to big new rental apartment buildings)

Rather than recommending pausing to consider other options, Fehrenbach explicitly recommends that the DDA vote to agree to the “Memorandum of Understanding” with River Caddis.

Fehrenbach’s memo on the subject indicates City staff has been working behind the scenes with this developer to bring forward this agreement.

In response to the call for proposals, River Caddis had said they would build a large commercial building for entrepreneurial and office uses – 8 stories, 112 feet tall, with 250,000 square feet of commercial office space and a ground floor with “restaurant/café/retail, lobby, and flexible spaces.”

This rendering shows “The CITADEL” looking north across Albert Ave. To the left is The Graduate hotel, now under construction. To the right is a sketch of another not-yet-proposed building (where MSUFCU is looking to build a new office building).

The material in this week’s agenda packet makes clear River Caddis doesn’t have the economics of their plan worked out.

River Caddis has said they will need $14.6 million in public support, but, “As this is conceptual…these numbers will change with the design/scope and we will address them transparently with the City.”

River Caddis says they have tenants for what they propose. But they won’t say who they are, and they also say they are working with economic development specialists to find tenants from out of state.

The parking isn’t figured out yet, either.

Another rendering of The CITADEL shown wrapping around Albert Avenue to Evergreen Avenue.

If you feel like this is déjà vu all over again – a developer without a clearly viable development plan asking for an exclusive on these properties – then you have been paying attention.

In the last episode of the saga of the Evergreen properties, the City and DDA went through exclusive agreements and months of discussions with Royal Properties and Vlahakis Development about a proposal that was never fully developed. The deal with Royal Vlahakis ended just before the open call for proposals that led to Convexity’s and River Caddis’s proposals.

Talks with Royal Vlahakis ultimately stretched out over a year. It all ended when the previous City Council voted unanimously to reject the proposal.

At that point, encapsulating the view of most if not all Council members, then-Mayor Pro Tem Erik Altmann said, “The lesson of the last ten months is that we aren’t seeing the details.” “What I don’t see is a plan for making the concept work,” Altmann added.

That project, Council finally determined, was not viable.

This pattern stretches back longer. The Evergreen properties – now saddled with over $5 million in debt – were bought by the DDA back in 2009 to support an exclusive agreement with another developer, Scott Chappelle of Strathmore Development.

By 2015, that deal had morphed multiple times and the DDA ended up in an exclusive agreement with developer DTN. That, too, never came to fruition.

Why would the DDA enter into this Memorandum of Understanding now?

Fehrenbach’s logic is that River Caddis has a reasonable track record and “they are the only active proposal to the DDA properties. As such, it is prudent for the DDA to continue working towards a project with [River Caddis Development], while also seeking feedback from the review committee and public.”

The debt is a real problem, and there is no easy solution. And River Caddis says they can (probably) make their idea work.

It is worth noting that in November of last year, local commercial real estate expert Van Martin strongly criticized the history of big public-private commercial deals in East Lansing. He recommended the DDA step back and work with professionals – like his company – to figure out the right way to get the best deal for these public properties.

Martin did not think the way the DDA was going about the problem, with what he saw as a poorly-constructed call for proposals, as the right way. That call for proposals led to just the one remaining proposal.

Nevertheless, it appears as if City staff believes the right way to go is to try to work with that single proposal currently on the table.

What the DDA decides, ELi will report. Information about the meeting is available here. See the materials from the agenda packet on this issue here.

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