DDA Votes to Evict the Bats and Stay the Course on Office Dream for Evergreen Properties

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Original rendering from River Caddis Development

With the prior plan for The CITADEL failing, River Caddis Development now says what gets built would reflect not the prior pitch, but who would occupy the Evergreen Properties.

Yet again, the publicly-owned Evergreen Properties and their possible redevelopment formed the main topic of discussion at the latest meeting of East Lansing’s Downtown Development Authority (DDA) on Thursday. And, as the required public debt payments ramp up, the parties involved admit they are still not remotely close to a project coming to fruition. 

If anything, the DDA and River Caddis Development — the company that has repeatedly been awarded an exclusive deal to redevelop the Evergreen Properties — have moved even further from the plans that originally brought them together almost two years ago.

Back in February 2020, Responding to a Request for Proposals (RFP) from the DDA for proposals to redevelop the Evergreen Properties, River Caddis submitted their original concept, referring to their idea as The CITADEL. 

The CITADEL effectively became the default project when the only other competitor pulled out of the RFP process because of a change in tax assessment methods. 

In that February 2020 plan, River Caddis indicated they would be paying for on-site, inside parking, among other things. But just a few months later, in June 2020, River Caddis changed its plan, making the building of new parking west of Abbot Road the City’s problem, a significantly different financial proposition. (The new Albert Avenue parking structure downtown is costing about $90,000 in taxes per parking spot, not counting maintenance.)

But the DDA persisted with River Caddis, even after learning in June 2020 that the City would have to provide public parking for the private project.

Then, in January 2021, we learned that the probable anchor office tenant for The CITADEL pulled out due to the pandemic, putting the whole process into a lurch, where it remains to this day.

Now, instead of the City and the DDA approving a project for which River Caddis would be the purchaser and developer of the Evergreen Properties, they are looking to act as joint marketing partners, with River Caddis becoming the City’s marketer and/or broker to try and secure an office tenant for a yet-to-be-articulated project for East Lansing.

The DDA’s properties run from 314-344 Evergreen Ave.

Thursday’s DDA discussion made clear: the intent is still for any project on the Evergreen Properties to consist of office space.

A number of DDA members expressed their desire to see the space be used for offices and not more housing downtown, as housing would likely be very expensive and/or targeted to students.

Speaking to the DDA on Thursday, River Caddis principal John McGraw said there isn’t a real conception of what will be built now, but that any project will “morph” to reflect what a potential anchor tenant needs and wants. 

McGraw also said the project would still be called The CITADEL, with CITADEL being a trademarked acronym for “Central Innovation, Technology & Arts District East Lansing.” McGraw explained to the DDA that, since the beginning of the pandemic, they’ve encountered minimal-to-no interest in office space. 

He said that if companies just want cheap, basic spaces, they can find those all over the region. So, the goal for The CITADEL would be to offer specific, high-quality spaces to companies that need to be in-person and not virtual – something like biomedical labs, McGraw said.

“It’s a tough project,” McGraw said to the DDA. “There are no wins right now.”

Raymond Holt for ELi

John McGraw of River Caddis Development at the Nov. 14, 2019, meeting of the DDA.

Saying he’s seen one nibble of interest in six months, McGraw at times sounded as if he wanted the DDA to tell him to abandon these plans and approach redevelopment in another way.

Instead, several DDA members hammered home their desire to see this plan for office space, in whatever form, come to light. 

“We may be waiting for a long time,” said Robert Aydukovic, a newer DDA member who admitted he is unfamiliar with the decade-plus-long history of the City trying to redevelop these properties. “But other options are basically to leave them as is or build housing.” 

The biggest problem for these properties’ redevelopment predates the pandemic.

The pandemic has been held out as a reason for why tenants have been hard to come by, and that is certainly a factor for why the land has sat without redevelopment. Since the beginning of the Covid-19 pandemic, large swaths of professionals normally going into offices have been working from home. 

A member of the DDA by virtue of his office, Mayor Ron Bacon said on Thursday that, thanks to the pandemic, things have only “gotten more complicated” for office life. 

But, beyond the pandemic and its tangible effects on in-person office work, a major challenge to redevelopment is that the DDA continues to insist that any project on the Evergreen Properties must pay off the approximately $5.2 million in debt incurred in the purchase of the properties. 

That’s not actually required, because the debt isn’t tied to the land; there is no mortgage, as the debt exists as municipal bonds backed by the City’s credit. But the DDA feels they should try to solve this large debt with a project there.

This debt dates back to 2009, when the City and DDA were trying to make a deal with local developer Scott Chappelle for his City Center II project — a project that failed. ELi reported four years ago that the debt problem was making redevelopment of these properties virtually impossible.

A sampling of developers’ proposals for the Evergreen projects: The CITADEL (2020-2021), Royal Vlahakis’ Park Place (upper right, 2018-19), and DRW Convexity’s original Park District Plan (2017).

That hasn’t really changed. Project after project has fallen apart.

And the debt has not really gotten smaller, because for years the DDA opted to pay only interest on the debt — with the DDA having now directed nearly $2 million in public money just to pay for the interest on the bonds.

The DDA is staying the course, again.

On Thursday, longtime DDA member Greg Ballein asked if the DDA should consider a hard stop on its Memorandum of Understanding (MOU) with River Caddis, instead of using the approach they have in place now — an agreement in perpetuity until one party (the DDA or River Caddis) specifically pulls out. That agreement was put into place in July 2021.

Ballein pointed out that, by Fiscal Year 2024 (which starts only a year and a half from now), the DDA will be in a position where it must pay almost $500,000 in principal and interest in one year. That will be more than double what the DDA is paying on the Evergreen Properties bonds now.

Basically, Ballein’s point was that the DDA and River Caddis should keep pushing forward for the next six months or a year to get this project secured, but be open to other options — even using the land for more downtown housing — so as to not corner themselves. He didn’t want to get to 2024 and be stuck with no development with the DDA paying out so much of its budget just to this debt.

Alternatives like Ballein’s, however, did not really get discussed. Instead, the DDA members present unanimously approved a letter to be signed by Mayor Bacon and DDA Chair Mike Krueger — a letter intended to help with the marketing of the project. 

That letter reads, in part, that “As the economy shifts to a new normal, we will be collaborative and proactive in our approach. It is important for our future stakeholders to understand our welcoming nature and our straight-forward planning and zoning approval process. We will explore the use of the economic development tools at our disposal and utilize our experience in creative deal structuring to strike a balance of realizing the public benefit we seek while also providing a home for new industry that can benefit from our mix of amenities downtown.”

Economic Development Administrator Adam Cummins told the DDA that the City is also working on a broader marketing plan for the downtown, which will come in the spring. He said marketing of the Evergreen Properties for redevelopment is part of that bigger plan. 

So, what about the bats in our headline?

At Thursday’s meeting, the DDA voted to approve a $2,250 expenditure for removing bats and bat-proofing the houses at 344 Evergreen Ave. These are a pair of small, older rental houses, the only structures that today remain standing on the DDA’s Evergreen Properties. The DDA paid $1.7 million just for this parcel in 2009.

When the DDA bought the Evergreen Properties in 2009, all held income-producing structures. Now, just these two small rental houses remain at 344 Evergreen Ave.

The DDA voted earlier this year to destroy the buildings on three other income-producing properties on the strip of land, chiefly in order to give MSUFCU a place to park their construction equipment for their new office building next to Dublin Square. One motivation for doing that was the fact that the MSUFCU project will bring in new property taxes that will be diverted away from the usual taxing authorities and captured by the DDA, under a special Tax Increment Financing (TIF) plan, to be spent as the DDA sees fit.

According to Cummins, a number of bats were found at 334 Evergreen Ave., and Michigan Animal Control “recommends the basement sill plate, ventilation gaps, air return gaps, and other gaps located in the basement be filled and sealed to prevent bats from entering the premises.” 

That request was approved unanimously.

So, for the time being, the bats will go, the few remaining human tenants will stay, and the rest of the land will stay vacant in the hopes that a big commercial anchor tenant shows up.

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