Redevelopment of the City Land Sold on eBay Appears Back On Track for Marijuana Dispensary Plan

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Screenshot from Zoom meeting

Andy Andre of Avanti Development Group at the Oct. 27, 2021, meeting of East Lansing Planning Commission, speaking for the owners of the Merritt Road land sold via eBay.

Redevelopment of the land of the former East Lansing Department of Public Works headquarters at 2040 Merritt Road appears to be back on track after City Council approved a new “letter agreement” with the would-be developers, outlining the project and its future. Council also approved a legal split of the parcel into three, following the developers’ request.

The proposed development, which includes a medical marijuana dispensary, a four-story hotel, plus a small strip-mall retail building, will be carried out in phases, according to the developers. First, the dispensary will be constructed, then the retail space, and finally the hotel. 

It appears the developers’ primary interest continues to be in building the pot shop — not surprising considering that they are marijuana industry players. The split of the land makes it easier for them to potentially sell off the parcels that would in theory eventually hold the hotel and the retail space. 

This is the property that the City quietly sold via eBay in 2019, drawing scrutiny from both City Council and residents after ELi broke the story on the unusual sale.

The letter agreement — which Council approved unanimously on Nov. 23 — stems from a dispute between the City and the developers, Kodiak Landarc LLC, about whether certain conditions were met prior to an Aug. 13, 2021, deadline, and whether that date was the true deadline.

Kodiak Landarc was originally approved for the site plan and Special Use Permit (SUP) on Aug. 13, 2019, and subsequently got two six-month extensions to the approvals — fairly pro forma approvals issued by the Planning Commission. Those extensions ultimately moved the expiration date of the approvals to Aug. 13, 2021. 

According to the new letter agreement, “the Project’s approval was subject to 27 conditions. The Developer and the City disagree as to whether the Developer timely satisfied those conditions and further disagree as to whether the Site Plan Approval and SUP expired on August 13, 2021.” 

To avoid litigation (at least for now), the City and Kodiak Landarc reached the agreement outlined in the letter, including the plan for redevelopment phases. 

Once the developers receive a building permit from the City, they will “proceed expeditiously” to construct the medical marijuana dispensary for Phase 1. 

Phase 2 will involve the construction of the retail building — 8690 square feet and with a fast-food drive-thru — and required information for a building permit for that project must be submitted by Sept. 1, 2022. 

Phase 3 is to see construction of a four-story, 107-room hotel, and materials for a building permit must be submitted to the City by March 1, 2024. 

If Phase 1 is done and the developers fail to meet the deadline for Phase 2, the SUP and site plan approval for Phase 2 will be deemed expired as of that date, and the same applies for Phase 3.

Two other notable requirements are established in the letter. The developers need to submit an “access or easement agreement for utility access to the Property” by Dec. 15, 2021, and ensure all of the newly-formed parcels — which came via the lot split — have access. 

Dividing the whole lot into three individual parcels was the other condition imposed. The letter basically said that if Council didn’t approve the legal division of the site, the phased project outlined in the agreement was nixed.

Council did vote unanimously to approve the letter agreement and to split the property at 2040 Merritt Road into three parcels. The letter agreement was originally an item on the consent agenda but was moved onto the business agenda by Council member Lisa Babcock, because she wanted open discussion of it.

When it came time to discuss, Babcock asked about the conditions that needed to be met, seeking clarity on what Council was being asked to approve and what still needed to happen. Babcock was the Council member who had originally pushed for an investigatory report back in 2019, after the eBay sale came to light. 

At the Nov. 23 meeting, new Council member George Brookover, an attorney, asked City Attorney Laura Genovich from the Foster Swift law firm if the City or developers were forfeiting the option of any future legal action. Genovich said they are not, which means this project could still lead to a lawsuit if further disputes occur.

Brookover also sought clarity about the deadlines, asking Genovich if they’re self-executing. Genovich said she wasn’t entirely clear what Brookover meant, but explained that if and when a deadline came to pass and the developers’ actions weren’t adequate, the City would inform the developers of such, and that the SUP and site plan approval would concurrently expire.

Babcock, also an attorney, then asked about environmental concerns with the site, and Peter Menser, Planning and Zoning Administrator, deferred to the developers. Andy Andre of Avanti Development Group came to the podium to represent the developers. He explained the various lengths that the developers had gone to in making a “due care plan” which will be approved by the state. He also said that there wasn’t contamination discovered in the ground water at the site, but some in the soil. 

When the lot split came up after the new agreement had been approved, Mayor Pro Tem Jessy Gregg said her only potential opposition to the move was the risk of only one or two phases of the project getting done. She asked Menser if the City had any measure to ensure all the buildings were constructed or if it is just up to the developers. 

Menser explained, along the lines of the letter agreement, that if Phase 1 (the dispensary) was completed and the deadline was missed for Phase 2 (the retail space), it would just be an expiration of the SUP and site plan. The current or future owners could then propose whatever they might want to do on those parcels, whether the same plans or something different, and would have to go through the approval process.

Menser had by that point explained that the approval of the lot split was really a legal formality, because Council had no real power to say “no” to the request if the legal requirements for the split were met, which they were.

But Gregg pressed on before voting on the lot split, saying, “I want to make sure that this is being represented accurately to what we will eventually see built on this site. Unfortunately that means questioning the developers integrity a little bit. I hope that they will not take it personally.” 

She continued: “I guess I’m asking the developer to offer me some surety there.”

Andre came back up and answered.

“That, I think, goes to the heart of why we looked at the phasing of it,” he said.

He said the intention was always to develop the property in a sequential manner — they were not going to construct three buildings at once. The new agreement in place helps spell that out. 

“As part of that phasing plan that will be memorialized with the agreement, it kind of goes hand-in-hand with the lot splits,” Andre said. “Our adherence to the letter agreement kind of binds us to moving forward in that manner.”

But in fact nothing in the agreement or approvals will stop the developers from selling one or more of the parcels, if they wish to do so. Approvals will run with the land until they expire, if the conditions of the approvals are met. The owners are free to develop the parcels as approved or to propose different uses.

During the discussions, Council member Dana Watson expressed concern about another marijuana operation opening so close to Pleasantrees, a provisioning center that is open just down the street. She likened the situation to Whole Foods moving in so close to Foods For Living, taking business away.

But Andre said marijuana is like fast food and gas stations — that clusters of those types of businesses are normal and not necessarily bad for the competitors.

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