Council Weighs In On What To Do With City-Owned Property In Northern Tier and City’s Financial Future

East Lansing City Council discussed plans for marketing and development of a City-owned  property in the northern tier on Tuesday evening at a discussion-only meeting in addition to considering what the Fiscal Year 2023 budget might look like. 

The discussion from Council will also help inform the Planning Commission at an upcoming meeting on Feb. 23, when that group is expected to discuss potential modifications to the Master Plan and Future Land Use Designations regarding this area of the City. 

The City is hoping to develop a 26.8 acre parcel of land nestled at the southwest corner of the intersection of West and Coleman Roads.

The property in question was purchased by the City at auction in 2018 and approved for sale via a ballot measure in November 2019. 

In September 2020, City staff released a Request For Proposals (RFP) for firms to market the property. Council ultimately approved a listing agreement with NAI Mid-Michigan that was subsequently extended until the end of Fiscal Year 2022, which ends on June 30, 2022. 

At Tuesday’s discussion-only meeting, Director of Planning, Building, and Development Tom Fehrenbach informed the four present City Council members — Council member George Brookover was absent due to out-of-state travel — that the only interest in the property so far has been for potential developments that don’t fit with the planned uses of the land. Mostly, he said, the desire from would-be developers was to build more housing. 

Right now, the property is zoned as “B-4, Restricted Office Business District.” That zoning mainly allows for professional offices, financial institutions, or medical practices/offices, with a 36-foot height limit (two stories) that can go higher — up to 70 feet (five stories) — with a Special Use Permit (SUP). 

The future designated land use, as outlined in the Master Plan, is C-3, which, according to the agenda item attachment prepared by Fehrenbach, “envisions a broader array of potential uses including office, light manufacturing, manufacturing, warehouse, vehicle rental, shopping center, hospital, laboratory, extended care/nursing facility, health club, indoor recreation, retail, restaurants, services, museums.” The height limit in C-3 is also much greater at 84 feet (six stories).

Later in the presentation, Fehrenbach reinforced that the new C-3 designation in the Master Plan is not analogous to any current zoning the City has, and that it is designed around forming “employment clusters.” Fehrenbach also shared a number of potential concepts that featured corporate offices, fitness centers, assisted living facilities, restaurants, hotels and other commercial uses. 

Before opening up the discussion to Council, Fehrenbach posed three main questions:

• Are there particular uses which the Council would prioritize for marketing? 
• Should we feature one or both of the site concepts in our materials? Is the Council comfortable with splitting parcels/ selling portions of the property for various uses? 
• Does the Council have guidance or input for the Planning Commission as they review the Master Plan/Future Land Use Map in the Northern Tier from a housing perspective?

Mayor Pro Tem Jessy Gregg said she was more in favor of bringing some retail and food options to the location, noting that there has been an increase in housing in the northern tier in the last decade but little build up of commercial amenities. She also expressed her (ongoing) desire for parking garages and multi-level parking, as opposed to surface lots. 

Council member Dana Watson asked about interest among developers in building low-to-moderate income housing at the site. Fehrenbach said that there was none and proposed housing would be targeted mostly at people otherwise squeezed out of East Lansing’s real estate and rental market, like young professionals. 

Council member Lisa Babcock said she didn’t think offices would be a smart choice, given the Covid-driven exodus of corporate workers from offices. She said she was aware of some companies trying to get out of leases for office space that they don’t intend to use anymore and doesn’t think the City needs to add more office space right now. Gregg added a similar point about hotels following the decline of business-related travel during the pandemic.

Toward the end of the discussion, Mayor Ron Bacon chimed in and said he’d like to see a project that addresses a need in the community and isn’t being built just because it’s what a developer chooses to build there. He noted the City is ultimately limited in the total land it has to use, and should think carefully about what they’re allowing to be built, where, and how it will affect future planning. He also said that using plans or projections that were created pre-pandemic — like the Master Plan — might be an outdated strategy, since so much has changed.

Bacon also noted that other economic activities are ramping up in the region and wanted to ensure East Lansing was approaching this development with that in mind.

“That’s how we’ve got to approach it, going forward,” Bacon said. “I think it’s time to kind of hold on and get a feel for what’s actually happening here. I know they’re saying the state is down 18,000 housing units and this, that or the other — and Lansing is the fastest growing region in the midwest, yada yada yada — are we set to capture that? Or are we just kind of doing something from five years ago?”

He continued: “I want to make sure East Lansing gets its fair share of whatever is next.”

Watch the discussion here and see Fehrenbach’s presentation here.

What else did Council discuss on Tuesday?

As one of the early steps of the budgeting process, Council got a presentation on the five-year forecast for the General Fund from Finance Director Jill Feldpausch.

The “overall picture” as presented by Feldpausch is that the City will slightly outspend its revenues in the next five years. 

This is due to a number of factors both on the revenue and expenditure side. Revenues from property taxes took a hit from the 2008 recession and took about 10 years to hit pre-recession levels. Then, around that time, the City’s income tax came online — along with a reduction in the property tax rate — and then the pandemic hit. Simply, revenues have been thrown out of whack.

On the expenditure side, as City Manager George Lahanas explained, the City does the best it can to save money but needs to offer competitive pay for employees — especially amid attrition of City employees (police in particular) during the pandemic.

You can read Feldpaush’s slides here.

Council also got a rundown of the proposed strategic priorities for 2022-23. There are six main tenets that break down into smaller goals. The six main priorities are: vibrant economy; strong, safe, diverse community; environmental sustainability; enhanced transportation and infrastructure; recreational and cultural opportunities; and good governance.

You can read more about the proposed strategic priorities here.

Lastly, Council got an update on proposed capital improvements from 2023-28. The biggest proposed items in 2023 that aren’t road or public utility related are, by far, interior renovations to the main fire station ($1,250,000) and a bevy of work on Hannah Community Center ($2,455,000). Both of those projects are likely to be covered with money coming from the federal government via the American Rescue Plan Act (ARPA).

See the full draft schedule for capital improvements here.