River Caddis Loses Exclusive Development Agreement; DDA Will Seek New Proposals for Evergreen Properties

East Lansing’s Downtown Development Authority decided Tuesday (July 11)  to let expire an exclusive redevelopment agreement with River Caddis Development for the DDA’s Evergreen Properties. The plan now is to put out a Request for Proposals (RFP) to see what ideas other developers have for the properties at 314-344 Evergreen Ave.

The exclusive agreement with River Caddis is officially set to expire next week, on July 17. The DDA held the special meeting today specifically to entertain the question of renewing it.

Before the DDA’s decision not to extend the agreement, John McGraw of River Caddis Development again presented to the DDA. He told them he was seeking another 12-month extension – enough time, he said, to work out agreements with the city, DDA and private landowners, and to work out a site plan and the financing.

His presentation focused again on the geographic challenges of the oddly-shaped parcel and on his company’s track record for redevelopment, telling the DDA repeatedly about his local roots and how much he cares about the wellbeing of the city, the DDA and the stakeholders with property around the parcel. River Caddis’ main offices are located on Trowbridge Road in East Lansing.

“You have a local partner that is essentially born here,” he said of his company. He added, “I understand it’s been a really long time, it really has,” since the exclusive agreement with the DDA started.

Three and a half years ago, River Caddis pitched an eight-story office building for the properties in a proposal branded as The CITADEL. 

But McGraw’s latest concept calls for two very different structures – one, a big apartment building aimed at student renters to be built on the DDA’s land, with the second building to include a parking ramp and food hall and to be constructed along Grand River Avenue on land that currently houses the Peoples Church parking lot and the Showroom Shine car wash. 

McGraw’s description of the new concept was vague and included not much more than chief uses and identification of the parcels to be involved. He did not present a site plan or details about the height, size or capacity of the two buildings he now wants to build. How many apartments? How many parking spots? How many stories? None of that was clear.

“We’re still trying to accomplish a holistic and intentional development that focuses on the problems now and the problems of the future,” he told the DDA. 

He identified the chief problems as the DDA’s $5 million debt, acquired in 2009 for the purchase of the properties, and the lack of parking, especially west of Abbot Road. 

“I live here and I don’t visit downtown restaurants because of parking,” McGraw said. “I can’t.”

Attendance was lighter than for most regular meetings, with DDA board members Luke Hackney, Reuben Levinsohn and Robert Aydukovic absent. 

City Manager Randy Talifarro (who is a member of the DDA by virtue of his office) and DDA member Jeff Smith had to come late, while Mayor Ron Bacon (also a DDA member) had to leave for another meeting before the decision. In attendance throughout the meeting were DDA members Mike Krueger (the chair), Greg Ballein, Dave Ledebuhr, Justin Hewson and Jacqueline Babcock.

During public comment, East Lansing resident and realtor Elinor Holbrook came forward to talk about Artspace. Holbrook has been a strong advocate of having Artspace – a Minneapolis-based nonprofit developer that develops and operates live-work housing for artists on limited incomes – do a project in East Lansing.

Holbrook noted the DDA, Council and Art Commission had put together a $35,000 commitment to pay Artspace to do a second phase of analysis for a project. But the city’s planning department is lacking so many staff, she told the DDA, the project is stalled. 

In July 2021, the DDA actually changed its agreement with River Caddis to allow the DDA to talk to Artspace about doing a project on the Evergreen Avenue properties. But, Holbrook said, she called Artspace’s leadership the day before the DDA meeting and they told her they never heard from the city or DDA about the Evergreen Properties. She indicated disappointment at that.

Holbrook said if the DDA wants a developer to pay $5 million or more for the land (which is understood to be worth far less than that on the open market), Artspace would not be able to do an affordable housing project there. She suggested the DDA could decide to help Artspace do a project on the Evergreen Properties and deal with the debt in some other fashion.

DDA members did not take up discussion of Artspace at today’s meeting, nor did they discuss how they plan to manage the debt.

DDA members had lots of questions for McGraw and in the end seemed unsatisfied with the answers.

Responding to a question from Krueger, McGraw assured the DDA he has worked out the economics of the project and said it is definitely feasible. But, he said, he was reluctant to share the numbers because of competitors potentially gaining an advantage. 

Answering follow-up questions, he also said the numbers could all change depending on what the project looks like and what the city and DDA are willing to provide in terms of tax incentives, height limits and the like. Costs could change depending on how long it takes to get approval, he said, and construction costs are presently very unpredictable, as are interest rates on construction financing.

Pressed for details by City Attorney Tony Chubb, McGraw said he had a purchase agreement with a private property owner for the newest plan. But, he said, it wasn’t with Peoples Church. He said Peoples Church was comfortable with him presenting the basic concept he had put forth, but they had not committed to anything.

“Another reason for my – I don’t want to say vagueness, but lack of detail and design and what are you going to see,” McGraw said, “I’m working with groups that aren’t really sure this is what they want to do yet.”

Ballein asked if McGraw expected to pay the DDA $5 million for the properties. McGraw answered that had yet to be determined as part of the planning and negotiating process he would foresee happening in the next year.

Krueger asked how the project would satisfy Ordinance 1384 – the city’s diversified-housing zoning regulation that requires that at least 25% of units in new big downtown housing projects be for seniors age 55+ or owner-occupied condos or people earning less than the area median income.

In response, McGraw sighed and said that was “obviously a looming factor that is going to be challenging.” He told the DDA, “I can’t guarantee it works. I will try to do it.” But “if I can’t do it, I’m not going to pretend.” 

Answering a question from Babcock, McGraw said he anticipated the housing being 100% for students. 

Ballein noted that even if the DDA likes what McGraw is pitching, “really your hurdle here” is the City Council, which would have to approve any project proposed. Ballein said there was no point in proceeding with a project that would be considered a no-go by the Council.

Ballein called what McGraw envisioned for the next 12 months as “more getting to a concept than a project.” 

Talifarro asked why the DDA shouldn’t put out an RFP and hear from other developers. He added he did not see “urgency on this with the debt” because “the debt has been there and we’ve been managing it.” (The debt on the property was recently refinanced to prevent the DDA from running out of money.) He asked, “Why would we limit ourselves to just one vision or concept as opposed to exploring what else is out there.”

Answering Talifarro, McGraw referred to his company’s reputation and said, “I’m from here, I really want to do something here.” He added, “If I’m not the guy [you choose], I get it. However, there’s not a lot to do here” in terms of the limitations of the land, the debt and the parking problem.

In the end, no member present seemed interested in continuing the exclusive agreement. 

DDA member Justin Hewson strongly advocated for opening up the properties to other proposals. He did not meet resistance from other members.

“I’m used to seeing pro formas [detailed financial plans] before making decisions,” Hewson said. 

He acknowledged, “This is a very unique and strange location to be developing on.” But, Hewson said, “I don’t know if from the DDA perspective there is a significant enough downside to seeing alternatives along with your proposal.”

Smith asked Interim Planning Director Tim Dempsey if other developers have expressed interest in the properties.

“Yes, there’s other interest,” Dempsey said. “There’s always developers asking about the site.”

To close out the matter, Smith moved approval of a 12-month extension “so we can have a vote.” 

When no one seconded his motion, the motion failed. That means the agreement will expire next week.

Just before the decision not to extend, McGraw assured the DDA there would be “no hard feelings,” no matter what the decision. But he left the meeting room while Krueger was still thanking the McGraw family for the work they had put into the concepts and talks.

The DDA and city staff are currently looking at developing a strategic planning process for the DDA and also working with consultants at the National Charrette Institute at Michigan State University on a global vision for downtown development. A new RFP on the Evergreen Properties is expected to be released in conjunction with those activities.

“We want to keep the pedal on the gas” on the Evergreen Properties, Ledebuhr said.

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