In Change of Plans, The CITADEL Project Makes the Parking the City’s Problem

The “Evergreen Properties Project Team” met for the first time yesterday, and as a result we picked up a few more hints at what father-and-son developers Kevin and John McGraw are thinking will – or will not – work for redevelopment of the DDA’s debt-ridden properties along Evergreen Ave.

Operating as River Caddis Development, the McGraws are still currently planning to propose a very large office building, on the order of about 250,000 square feet. That’s what they sketched in their response to the DDA’s Request for Proposals from developers. Everyone seems to be excited about the idea of hundreds of office workers coming downtown every day.

But now, rather than having the River Caddis office building hold about 250 interior parking spaces as was described in the original pitch, parking would be provided chiefly by the City in a new publicly-owned ramp, built as part of the project.

This means that significant space on three floors of the River Caddis office building are being redesigned from high-cost parking that would yield no income to the developer to high-revenue office space the developer could lease.

What else would the new building offer?

According to the current conception, the ground floor of the River Caddis office building would hold what was described by Kevin McGraw yesterday as a food court – a single kitchen selling a variety of foods to tenants of the building as well as to visitors. In a previous discussion with homeowners in the Oakwood Neighborhood, John McGraw described this as being similar to what is offered in MSU’s Brody Complex cafeteria.

There would also be ground-level public gathering and art space, along with “street art” and attractive lights in the alleyway. A sketch provided showed a well-lit mural on the wall and a hopscotch game on the ground.

The right way to approach this project, according to the McGraws, is to create a “master plan” for the whole area. John McGraw said their company is “not looking to do a ‘one and done,’” but rather to keep developing here.

That said, many of the properties around these are already spoken for – so it’s unclear where more development and a new public parking garage would go.

Is big office space really viable?

At the start of the meeting yesterday, John McGraw gave a presentation on the CITADEL project concept and noted that the name had been trademarked by River Caddis. It stands for “Central Innovation Technology & Arts District of East Lansing,” and the McGraws say this building is conceived as being the first step in a grander design for more business development downtown. Later phases have not been described.

John McGraw said the idea is “community-driven development” and promised that the company would not come back later with a revised plan for student- or market-rate rental apartments.

“We are not switching our plans on this,” he said.

This pleased Mayor Ruth Beier, who has said she has no patience for a bait-and-switch proposal.

When Beier asked about “the viability of office in the next five years” given the coronavirus, John McGraw answered, “That’s the crystal ball question.”

The McGraws would not say who their potential tenants are, but Kevin McGraw indicated the River Caddis team would be speaking with the potential tenants more this week to gauge whether – given the pandemic – they are still on board at all or for as much space as they had originally indicated.

Kevin McGraw told those at the meeting that to keep this process going, he needs to see “a level of commitment” from the project’s still-unnamed anchor tenants.

But to get those anchor lease commitments, he made clear, the City will need to commit to providing parking very near The CITADEL. River Caddis can’t get the leases without that.

The McGraws have yet to specify how much they will be looking for in terms of parking provision, tax increment financing (TIF), and other public incentives. In talking about how much the building would be worth – a great deal as conceived – they made clear they expect much tax money to be available for TIF to reimburse River Caddis for eligible development expenses.

Pressed on whether they intended to pay the DDA for the properties in an amount that would pay off the DDA’s debt on the land – somewhere in the neighborhood of $5.4 million – Kevin McGraw said he expected that “full price offer” might be named in the purchase agreement between River Caddis and the DDA.

But, he suggested, the developers would seek to be “made whole” via the larger deal.

That would happen in part by being granted millions in tax incentives locally and at the state level. In other words, they might on paper pay full price, but they would expect to make up at least some of the cost via public incentives.

Parking is seen as something the City should provide

The McGraws opined at the meeting that many of the buildings now under construction or planned in this area will be short on parking for their own occupants.

The Abbot (under construction at the main corner at Abbot Rd. and Grand River Ave.) will have 89 parking spaces for hundreds of apartments plus ground-floor retail. Convexity’s moderate-income housing building, to be built across the street from the DDA’s land, will have 34 parking spaces for 99 apartments. The Graduate Hotel (under construction) and the MSUFCU building (not yet approved) will have no on-site parking.

Why so little parking in these buildings? Partly because – like River Caddis – developers of these projects know in-structure parking is incredibly expensive to build and maintain. They’d rather the City take on that burden.

And, in fact, the City code current requires that big new commercial buildings downtown provide no parking, so that users park in the City’s lots. The City adopted this rule partly because it needs the income. The City has overbuilt parking garages by its own calculations and it’s been trying to push new users into the garages.

So building another big new ramp – while it could help redevelopment and drivers on the west side of downtown – could mean more expenses to an already financially-stressed city.

Several members of Council last night said they want real numbers to understand what another parking garage would mean financially.

But Council member Mark Meadows strongly favored a big new lot in this area, possibly on the order of 700 parking spaces, partly to support Peoples Church. Peoples Church’s representatives have stated clearly that they need and expect the City to provide parking near the church to make up for surface parking that is being replaced by redevelopment.

Who is on the “Project Team” and what do they think?

The “Evergreen Properties Project Team” that met yesterday for the first time was chosen and convened by DDA Chair Peter Dewan. It includes three other members of the DDA: Mayor Ruth Beier, DDA Vice Chair Jim Croom, and Mike Krueger (owner of Crunchy’s).

The team also includes Planning Commissioner Jack Cahill, real estate professionals Dave Ledebuhr (Musselman Realty and member of Peoples Church) and Terri Fitzpatrick (Boji Group), former mayor and downtown resident Doug Jester, Peoples Church pastor Shawnthea Monroe, Oakwood resident Karessa Weir Wheeler, and MSU Vice President for Government Relations Kathy Wilbur.

At yesterday’s meeting, Jack Cahill said that, rather than having Convexity build a 6-story affordable housing building between The CITADEL and Valley Court Park as is planned, it would “a great amenity” if the office tenants had a “clear view to the park.”

To this, Mayor Ruth Beier noted that under current law, Convexity has to build the affordable housing as part of their Park District deal, which includes The Abbot. But Cahill suggested City Council could change the law and that it would “be much nicer” for the office tenants to look at a green space rather than at the affordable housing.

John McGraw said his team didn’t disagree, and that they are “turning stones to see what is available” in terms of land in the area.

Shawnthea Monroe, the pastor of Peoples Church, said her church members are “very impressed with the design and scope of the project” and she is happy to see the issue of parking being addressed. Church members previously urged a vote against Convexity’s affordable housing project because of their own parking concerns.

Dave Ledebuhr praised the DDA for its “vision” a decade ago in paying what he said was three times the market value for these properties, given that office space may result. He said it was “comforting to see that gamble is working out.”

Karessa Weir Wheeler asked about how traffic would be handled during and after construction. She expressed concern about the residential Oakwood Historic Neighborhood. Without providing details, the developers sought to assure her the traffic and parking would turn out okay.

Kathy Wilbur said MSU would certainly like to see more office space and occupied retail space downtown because it would enhance the community and provide opportunities for students including in terms of internships and externships. “Proximity helps,” she said. “We are very keen” on businesses being near campus.

Wilbur said that MSU administrators have been dealing with “various issues” for the last two years, and that the problem on the part of MSU collaborating with East Lansing redevelopment wasn’t “lack of interest, it’s just our reality of late.”

Mike Krueger asked Kevin McGraw about his prior business relationship with Scott Chappelle. Chappelle was the developer for whose project the DDA’s Evergreen Ave. properties were originally purchased at well over market value. Chappelle was recently indicted for tax and bank fraud.

Kevin McGraw responded, “I haven’t talked to that guy in over twelve-and-a-half years.” He added that his experience with Chappelle “made me stronger and got me to the point I am now, and I’d go through it again to get where I am today with my faith and my family.”

What’s next?

The DDA decided in April to give River Caddis an exclusive agreement on these properties. That agreement – which basically holds off all other potential developers while River Caddis explores a public private-partnership – expires next month.

Historically, the DDA has voted through extensions for these exclusive agreements as the parties try to come to terms. Because everyone wants office space downtown, the DDA, Project Team, and Council are likely to be patient.

That said, Kevin McGraw told the group that “if the preliminary commitments [from office tenants] back out, we will call and say we can’t go and do this.” He said if he doesn’t have “iron-clad leases” with these tenants soon, River Caddis will not continue to spend money on developing the proposal.

Kevin McGraw also indicated that River Caddis will not continue down this path without a commitment soon from the City and DDA on “economic incentives,” including TIF. Those incentives are what will enable the developers to provide feasible rents to big corporate tenants and to make a profit.