A request from River Caddis Development to extend their agreement with East Lansing’s Downtown Development Authority to last 180 days more and amend it to provide automatic extensions will be considered by the DDA at its upcoming meeting this Thursday at noon.
The agreement River Caddis wants to amend and extend is a Memorandum of Understanding (MOU) between the DDA and River Caddis for the redevelopment of the DDA-owned Evergreen Properties at 314-344 Evergreen Avenue. River Caddis had proposed the construction of an eight-story office building at this location, but has not been able to land an anchor tenant.
The latest MOU extension and supplement continues to give River Caddis a high degree of exclusivity to fine-tune their proposed project, land an anchor tenant, and try to execute a full deal with the DDA and City Council.
But now, for the first time, the proposed agreement between River Caddis and the DDA includes a specific exception for the DDA to work with another potential developer, Artspace, on a potential project there.
Artspace has expressed interest in potentially building an affordable live-work space housing project in East Lansing. Earlier this year, Council and the DDA together agreed to pay Artspace $30,000 to explore that possibility.
The new version of the River Caddis agreement suggests the Evergreen Properties could be a place where Artspace builds.
The proposed MOU amendment and extension reads: “The exclusivity granted to RCD [River Caddis Development] in the MOU shall not apply in any respect to limit, restrict or prohibit the DDA from exploring or concluding potential relationships, projects or transactions with Artspace (the ‘Artspace Projects’), including any Artspace Projects involving or relating to the ‘Evergreen Properties,’ whether or not RCD is involved or included in any way in such Artspace Projects.”
The DDA recently voted to knock down usable buildings on some of the Evergreen Properties, to help out MSUFCU with its nearby office-space project. That demolition will reduce the market value and taxable values of those DDA-owned properties. That reduction of taxable value will, in turn, increase how much money can be drawn off them in a new redevelopment via a tax increment financing (TIF) deal.
That fact – that the potential TIF just got bigger – is bound to make more developers, including Artspace, interested in the Evergreen Properties, as they seek big tax incentives to bring projects to fruition.
River Caddis has had a long period of true exclusivity, until now.
River Caddis originally obtained an exclusive redevelopment agreement with the DDA after the company’s proposal for the Evergreen Properties — a proposal called The CITADEL — was the sole option left following the only competitor pulling their proposition, because a change in tax assessment methods had made competitor Convexity’s proposal financially untenable. River Caddis, by default, had the last proposal standing.
The original agreement between the DDA and River Caddis, for a 90-day “Due Diligence Period” during which River Caddis would “explore, develop and submit concepts for the Project,” was signed on Apr. 24, 2020. That gave River Caddis the exclusive privilege to pursue a development deal during the period of the agreement.
The original agreement was first extended for 90 days in July of 2020, then again in October of 2020 for 95 more days. Then, for a third time, in January of 2021, the DDA extended the MOU for another six months.
That last extension expires this month and brings us to the current request from River Caddis — and their ask for the MOU to automatically renew indefinitely for additional periods of 180 days until either party asks for the agreement to be terminated.
In a letter to the DDA outlining the extension request and proposed amendment to the MOU, River Caddis Director of Development John McGraw wrote that, “While our City and the economy are still faced with Covid-19 issues and extreme uncertainty, RCD remains diligent in its efforts to pursue the Project.”
When some DDA members have asked City staff during meetings if any other developers have expressed interest in the Evergreen Properties, the answer has – until Artspace – been “no.” But typically developers follow what is called “the developer’s creed”: that they will not express interest in a property if they know another developer has a deal in the works for that property. The extensions may have held off other potential developers.
In any case, now it looks like Artspace might find the Evergreen Properties to their liking, particularly given the TIF possibilities. One downside remains: the DDA owes over $5 million on the properties, and someone has to figure out how to manage that debt.
Thursday’s meeting will be held virtually. Find the agenda and information on how to watch or comment here.