Public Land Finally Sells to MSUFCU; Buildings to Be Demolished

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Photography by Gary Caldwell for ELi

One year and one month after voters approved the sale of downtown public parking lot #4 to Michigan State University Federal Credit Union, the sale has finally closed.

Although it was not part of the plan when voters approved the sale, publicly-owned buildings along Evergreen Ave. will now be demolished to support the credit union’s construction work. The demolition of two buildings (at 314 and 328 Evergreen Ave.) will provide a place for the credit union’s contractor to park a crane and other construction equipment.

Back in March 2020, voters approved the sale of the 13,250 square feet of public land on which MSUFCU will now build an office building – including lot #4 plus a chunk of what had been part of Albert Ave. The ballot question called for the credit union to pay the appraised price of $810,000 with the stipulation that the credit union construct an office building there.

In September 2020, the credit union obtained unanimous approval from Council for a site plan for a 7-story office building. But the plan to construct what is a lot of building on a small piece of land has meant that MSUFCU has struggled with how to actually do the build.

The MSUFCU building rendered looking northwest, with Dublin Square shown to the right.

The project’s start has been delayed for months specifically because of objections raised by developer/businessman Paul Vlahakis, who owns the Dublin Square restaurant immediately north of the property. The original plan had called for swinging a crane over Dublin Square, and Vlahakis’ attorneys have steadily threatened legal action.

City staff has not yet responded to questions about when the buildings at 314 and 328 Evergreen Ave. will be demolished to allow Granger, MSUFCU’s contractor, to park the crane and other equipment across the alley from the MSUFCU building site. (The house at 334 Evergreen Ave., also planned for demolition, has not been rented this year because costs of needed repairs exceeding the likely income.)

Staff have also not yet responded to questions about when the leases end at 314 and 328 Evergreen Ave. The properties include residential units and an office currently being rented by Mitchell Research & Communications.

MSUFCU President and CEO April Clobes told ELi by email late last week, “We are planning to host a ground breaking ceremonial event on July 13. Our construction team, Granger Construction, is planning to begin mobilization of the site on July 26. At this time, we expect construction to go through February 28, 2023.”

As ELi reported, two weeks ago, East Lansing’s Downtown Development Authority (DDA) voted 9-2 to allow the demolition of 314 and 328 Evergreen Ave. specifically to support MSUFCU’s build.

The two properties are part of a series of parcels along Evergreen Ave. purchased by the DDA over a decade ago to support a redevelopment project that then failed. Since then, the DDA has seen one project after another fail to come to fruition along Evergreen Ave. – including a failed project put forth in August 2018 by Vlahakis himself.

The DDA took on debt to purchase the Evergreen properties in 2009, and the principal of that debt currently stands at about $5.3 million.

The debt arising from the purchase of the DDA’s properties is not tied to the land itself – it is not a mortgage – but is rather backed by the full faith and credit of the City of East Lansing. What that essentially means is that East Lansing’s taxpayers are responsible for the DDA’s debt.

While the DDA’s intention was always to redevelop these properties along Evergreen Ave., the plan had long been to do the demolitions only after a debt-solving redevelopment project was in place for the DDA’s land. But now, the DDA isn’t waiting to start doing demolitions.

Under the deal approved by the DDA two weeks ago, MSUFCU will pay half the demolition costs of 314 and 328 Evergreen Ave. and will then pay $5,600 per month for use of the land for construction staging. Those in favor of this deal have indicated a desire not to lose the MSUFCU project. Those objecting have raised the issue of the DDA’s unsolved debt and the question of how it will be paid once 314 Evergreen Ave. stops generating big income. That property will also drop in value by about a million dollars as a result of the demolition of the 22-year-old apartment building.

ELi is awaiting results of a Freedom of Information Act request in order to ascertain the financial implications of the DDA’s decision to make a deal with MSUFCU, a complex question that must take into account issues like the way various revenue sources to the City and DDA will decrease or increase.

Right now, the area along Evergreen Ave. is undergoing a major reconstruction as the City rebuilds the sewer, water, and streets. The sewer design has required raising the street level of Evergreen Ave. up to five feet in places. The result for 314 Evergreen Ave. has been to effectively leave that property in a topographic hole, a design experts tell us is likely to result in major water problems as well as challenges for getting in and out of the small parking lot for that building.

The new road level will be 3-5 feet above the current level, leaving 314 Evergreen Ave. in a topographical hole.

That the sewer project was started before the DDA’s vote to demolish 314 Evergreen suggests that City staff had expected 314 to be demolished around the same time as the sewer project. What would have happened to 314 Evergreen Ave. in terms of drainage and parking had the DDA not voted to demolish the building, with this dramatic change in road level, is unclear. Staff has not yet responded to questions about the impact of the sewer project on this property.

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