Here’s An Update on the MSUFCU Downtown Office Tower Plan

Yes, plans are still on for the Michigan State University Federal Credit Union to build a new office tower just south of Dublin Square in downtown East Lansing.

But the design has changed a bit, and environmental testing shows some contamination at the site. Whether there will be a tax increment financing (TIF) plan for the project remains to be seen.

On Tuesday night this week, East Lansing’s City Council voted through a rezoning of the project property at the northwest corner of Abbot Road and Albert Avenue to B-3, the highest intensity allowed in East Lansing. City planning staff told Council they were expecting submission of the credit union’s site plan the next day.

But that next day, Wednesday, MSUFCU CEO April Clobes told ELi we can now expect a submission on June 22, with the proposal coming to Planning Commission on July 22.

“Due to the Safer at Home Orders,” Clobes explained in an email to ELi, “much of our on-site work for soil testing was delayed.”

“The building design has not changed from our renderings,” said Clobes. “The one change is that at this point we anticipate 7 stories and not to exceed 112 feet. This decision is based on increasing the ceiling height on each of the floors.”

The plan had previously been described as including 8 stories not to exceed 112 feet.

Clobes says the team is making “Small tweaks to enhance the visual appeal. We are incorporating all city approved outdoor amenities for bike racks, trash cans, and benches.”

The project involves the credit union purchasing the land for the project from the City for $810,000. In March, voters overwhelmingly approved the sale to the MSUFCU at that appraised price for this purpose.

At yesterday’s meeting of the Downtown Development Authority, East Lansing Director of Planning Tom Fehrenbach said that “some contamination” had been found at the site following environmental testing.

He said that staff was working with the credit union’s representatives to assist in a clean-up grant application to Michigan’s Department of Environment, Great Lakes, and Energy (EGLE, formerly known as the DEQ).

In a follow-up with ELi, Erin Bowdell, MSUFCU’s Vice President of Infrastructure Planning and Facilities, wrote, “We have completed our Baseline Environmental Assessment and still have some soil borings to complete in order to determine the extent of work. The Phase I and Phase II studies have documented the presence of soil contamination on the property, and the site is considered a brownfield.”

This is not surprising, since the property includes a parking lot and roadway, and such sites typically show up with at least minor environmental contamination. City staff have previously said that they considered tax incentives appropriate for any needed environmental cleanup.

Said Bowdell, “Our consultant is still working on our Due Care Compliance Plan, currently in draft form.  We are currently working through digesting and updating the draft Due Care Plan. We are still evaluating the extent of  activities that may be eligible. We are still determining whether or not it makes sense to pursue a Brownfield Plan based on the extent of contamination and the value of what the Brownfield Authority would consider appropriate for reimbursement, which is primarily soil contamination and related utilities in the right of way [and] we are not sure if it would include public infrastructure.”

Bowdell emphasized that no decisions have been made yet about possible requests for tax incentives.

City staff have not responded to questions about whether they intend to seek a tax increment financing (TIF) plan to help fund new public infrastructure in the area. Staff have noted this fast-redeveloping area of downtown needs considerable work in terms of utilities and roads, particularly along nearby Evergreen Avenue in terms of water and sewer infrastructure.

If a TIF plan is established, it would divert additional taxes due on the developed property to reimburse specifically-approved development costs. The TIF plan, like all TIF plans, would be capped for a particular dollar figure and a specific number of years.

Recent City Council policy has been generally to allow TIF for environmental clean-up and public infrastructure.

But the heavy use of TIF in East Lansing has had a significant impact on the City’s finances, as big new projects are built and immediately require city services but often involve years of diversion of new tax dollars to pay for development-related expenses, and not for general fund expenses like police and firefighting. The consequence is that other property tax payers foot the growing bill for city services for years.

That said, what MSUFCU is offering is considered truly exceptional and highly desirable – office space operated by a top local business that would bring white collar workers downtown at least five days a week, potentially helping shops and restaurants with regular patronage.

That may make Council and the state particularly interested in giving grants or tax incentives for this project.

And in spite of the pandemic, Clobes believes building new office space still makes sense.

“While we anticipate that people will incorporate work from home into their daily work,” she wrote, “we also recognize that many people enjoy working in the office environment.”

She believes the credit union still needs the project: “We anticipate that our teams will continue to grow and that over the next 10 years we will need this space, just not as much as previously planned. This building will house our branch, office space for interns, and call center teams, which are all still in alignment with our strategic plans.”

Update, 4 p.m.: Planning Director Tom Fehrenbach tells ELi, “There is not currently a plan to utilize TIF from the MSUFCU project to pay for public infrastructure.”