Three Years In, Developer Says the Only Thing That’ll Work on the Evergreen Properties Is…Student Housing

Over three years into a repeatedly-extended exclusive agreement with East Lansing’s Downtown Development Authority to redevelop the DDA’s Evergreen Avenue properties, John McGraw of River Caddis Development told the group this week the only viable option is to build a large student-attracting apartment building on the land.

When the exclusive deal with River Caddis was first signed four mayors ago, then-mayor Ruth Beier told McGraw she wasn’t interested in being told the developers wanted to build downtown office space only to be told well down the road they’d really be building a high-rise rental apartment tower for students. She’d seen it before.

How did River Caddis get the exclusive deal? In early 2020, McGraw had responded to an open Request for Proposals (RFP). He pitched “The CITADEL,” an 8-story glass-wrapped office building that would contain 250,000 square feet of space. McGraw promised to incorporate 250 interior parking spaces at the developer’s cost. The DDA and City Council were excited.

By a few months later, McGraw had realized that building interior parking is very expensive. He came back with a plan to remove the parking from his building and make it the city’s financial problem.

Shortly thereafter, it became clear the pandemic was changing the approach to office work. Subsequently, River Caddis suffered loss of interest of companies McGraw hoped would occupy the building. Still, McGraw asked for one extension after another of the exclusive deal. Over and over again, the DDA agreed to the extensions.

This Thursday (May 25), facing an expiration of his exclusive deal on July 17, McGraw came with a new presentation. This one was headlined “Evergreen Discovery.”

Slide from the presentation by John McGraw of River Caddis to the DDA on Thursday, May 23, 2023.

What was the discovery? That the site has “issues,” in McGraw’s words.

It’s oddly shaped, he noted. It’s hemmed in by other properties that can’t be easily incorporated into the project. It doesn’t have much road frontage. It has an active alley out back. All of these “issues” have always been known and part of development discussions.

“It’s an island,” he told the DDA.

Plus, it might have some soil contamination problems, he said. Again, everyone has always understood it might have soil contamination from things like lead paint from old buildings that stood on the land.

And parking in the area is an issue, as there aren’t many spaces. Various players – Peoples Church, the new MSUFCU building, The Graduate Hotel and others – are all needing more parking. This is new only in terms of the hotel and MSUFCU building coming online. The lack of parking west of Abbot Road has been a well-known issue.

The areas outlined in red show land River Caddis Development is now looking to redevelop: the DDA’s Evergreen Avenue properties; Peoples Church parking lot; and the land that now holds Showroom Shine Car Wash. River Caddis does not own any of the parcels.

The Solution,” McGraw finally announced after a big wind-up, is to undertake a “collaborative approach” that would involve building two big new buildings.

One would be a student-housing apartment building on the DDA’s Evergreen Avenue properties, up to eight stories. The other would be some other structure, possibly as tall as eight stories, built on what is now the Showroom Shine car wash property and the parking lot of People’s Church. (River Caddis does not own any of these properties.) That second structure, along Grand River Avenue, would include at least several stories of parking.

DDA member Reuben Levinsohn asked who would own that second building? McGraw said that hasn’t yet been worked out with the other property owners and the city.

“That would have to be fully vetted out,” McGraw said, saying he had “never talked about ownership with that piece of property.”

He said he had been playing “middle-man or facilitator, trying to achieve a collective solution” that would also protect the interested parties.

What he suggested at the Thursday meeting is that the second building (on Grand River Avenue) might have a “food hall,” and the whole thing might somehow solve the DDA’s problem of its $5 million debt, accrued in 2009 when the DDA bought the Evergreen Avenue properties to support downtown redevelopment. That debt was recently refinanced to avoid “catastrophe” in terms of the DDA’s finances.

John McGraw of River Caddis Development answering questions at the DDA meeting on Thursday, May 25, 2023. (Gary Caldwell for ELi)

Nowhere in the plan was an explanation of how the project would satisfy the diversified-housing requirement the city puts on all big new market-rate housing downtown. The requirement says that, if big market-rate housing is built, a developer must include in the site plan a way for 25% of the units to be for low-to-moderate income residents or be owner-occupied condo apartments or be restricted to people ages 55 and up.

On Thursday, McGraw told the DDA again that he had really tried to make the office concept work. He said his company had turned to professional commercial brokers to try to find tenants, but they had only “six phone calls in three years” in terms of interested parties.

“We called hundreds if not thousands of people” to pitch the project, he said.

Now, he told the DDA, “We’ve started to understand a little bit more than what we already knew.”

McGraw said he had looked into trying to expand the size of the DDA’s Evergreen Avenue parcel to get enough land to build something more substantial in terms of a structure.

But the Hagans of Hagan Realty, Inc., who own a student-rental property to the north, said they aren’t interested. And Convexity, who owns the property to the west, has committed to selling their land to PK Companies for an affordable housing project that Convexity was supposed to build.

Consequently, “That property is not under collaborative potential,” McGraw told the DDA.

To the east is the AT&T building with effectively unmovable infrastructure and Dublin Square, which owner/developer Paul Vlahakis is apparently not interested in selling to McGraw. To the south is Albert Avenue. McGraw used a visual with big X’s around the DDA’s property to show its limits.

He bemoaned the size of the parcel, saying it is “a small piece of land with no opportunity to go in any direction. The cost of going vertical is a heck of a lot more expensive than it was three years ago – [even] eight months ago.”

“So, the point is,” he told the DDA, “there is limited ground and only so much opportunity for revenue.”

In proposing a two-parcel concept, McGraw said he has sketched out a site plan. But, he didn’t want to show it. He said that’s because “you only get one shot” with the first impression, and he wasn’t ready to make that shot.

He wanted instead to know from DDA members, “Are you willing to consider what I am about to show you?”

If so, he said, he’d come back soon with something to actually present.

“We have had some issues with politics and planning,” McGraw told the DDA, “and it’s just going to take some time.”

But, he speculated, his plan could be built in 24 months, far fewer, he said, than if the DDA went back out with a general call for proposals, opening up the land to other developers.

Heather Pope of the City of East Lansing’s planning department at the Thursday, May 25, 2023, DDA meeting. (Gary Caldwell for ELi)

‌The DDA response appeared non-committal. Breaking an awkward silence, Heather Pope of the city’s planning department and City Attorney Tony Chubb reminded the DDA members they did not have to take action and that the exclusive deal with River Caddis would expire if they took no action by July 17. An extension of the exclusive agreement could also be drafted, they said, if the DDA wishes.

DDA member Luke Hackney then noted that when Vlahakis proposed student housing for the parcel, City Council unanimously rejected the plan. It was shortly after that rejection that the DDA issued the RFP that led to River Caddis providing its proposal, in the end the only one the DDA got.

Hackney wondered if this proposal would meet the same end at Council, and wondered if the DDA should look to other options.

Next to speak was DDA Chair Mike Krueger, who owns Crunchy’s (next to Showroom Shine) and who has said before he could use more parking for his business.

Krueger said if the DDA ends the exclusive agreement and goes out for bids or proposals, the “collaboration with Peoples Church and Showroom Shine” could be lost, risking the opportunity for a new parking structure west of Abbot Road. It’s also the case that if the DDA ends the exclusive deal with River Caddis, Peoples Church and Showroom Shine could be able to negotiate with multiple developers to get a better deal.

Mayor Ron Bacon, who is a member of the DDA, said it seems important to “support” MSUFCU with more parking. When the MSUFCU building was proposed, the claim was it would utilize parking in the city’s structures east of Abbot Road. But since then, city leaders have said they want more parking closer to that project.

DDA Treasurer Jeff Smith asked if there was a parking analysis available? Interim Director of Planning Tim Dempsey responded that his department has “anecdotal” information, “nothing formal. The hotel is obviously scrambling” for parking, Dempsey said. He expects “pressure” from MSUFCU and Peoples Church for more parking.

Interim Director of Planning Tim Dempsey (center) at the DDA meeting on Thursday, May 25, 2023. (Gary Caldwell for ELi)

“The goal,” McGraw replied in response, “is to use the student housing revenue to pay for the parking structure.” He didn’t explain the revenue scheme.

Smith then asked his colleagues to consider the matter “from the lens of completion,” suggesting they think about what they want the streetscape along Grand River to look like 10 years hence.