Vlahakis Proposes 12 Stories of Student Housing at Dublin Square (Plus More)

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Real Estate developer Paul Vlahakis at the Sept. 19, 2019, meeting of East Lansing's Downtown Development Authority, when he was working on the Royal Vlahakis ParkPlace proposal.

Four years after he tried a similar gambit, local real estate developer Paul Vlahakis pitched a large redevelopment concept to East Lansing’s Downtown Development Authority at its regular meeting today.

The concept map put forth by Vlahakis proposes turning the Dublin Square property into a 12-story building with restaurant and retail space on the first floor and student housing above.

It also proposes redeveloping the DDA’s Evergreen Avenue properties into another student housing building seven-stories tall, adding a new parking ramp with 600 spots near Valley Court Park, and putting an Artspace project on a triangle of privately-owned land near the park.

The Vlahakis Michaels’ concept plan pitched to the DDA on Oct. 27, 2022, showing the ground floor features.

But in his pitch to the City Council-appointed DDA today during the board’s public comment period, Vlahakis didn’t mention a major stumbling block to the idea: he doesn’t own most of the properties, and he doesn’t have deals with the property owners to use their land for this proposal.

Vlahakis does own the Dublin Square property along Abbot Road.

But local landlord/developer Matt Hagan owns 404 Evergreen Ave., where Vlahakis has penciled in a parking garage. Hagan told ELi by email Wednesday, “I haven’t partnered with them on it.”

Chicago-based developers DRW Convexity own the triangular property at 341 Evergreen Ave., where Vlahakis has drawn in “essential housing,” meaning affordable housing. But DRW Convexity’s representative told ELi just after the DDA meeting Vlahakis did not contact them about the proposal.

A memo from Vlahakis’ team explains in more detail that the “essential housing” at 341 Evergreen Ave. would be an Artspace project. Artspace is a Minneapolis-based nonprofit that develops and owns live-work space for creative people and has been considering doing a project in East Lansing.

But Artspace Senior Vice President Wendy Holmes told ELi by email Wednesday, “We have not been in touch with the developers, but it’s good to know that these downtown parcels are being discussed.”

Meanwhile, the properties along Evergreen Avenue owned by the DDA are under an exclusive contract with another developer, River Caddis Development, which has promised to build a large new office building there called The CITADEL.

Concept plan for upper floors annotated by ELi to show ownership of properties not owned by Vlahakis.

John McGraw of River Caddis told ELi by email Wednesday his company has no comment on Vlahakis’ proposal. He confirmed his team still holds the exclusive redevelopment contract on the DDA’s properties in Vlahakis’ plan.

Vlahakis has used this unusual launch approach before.

Normally, developers bringing forward big projects get the permission of landowners’ involved, create a proposal based on those partnerships and submit it for formal review. City staff then present the proposal according to the review process written into the city’s code.

But Vlahakis has a record of taking a different approach. As several members of the DDA know from previous experience, Vlahakis made the same sort of move in August 2018 when he stood up at public comment and presented his concept for a huge redevelopment called “ParkPlace.”

The original version of the “ParkPlace” concept showing what would have been built where the MSUFCU project is now being constructed.

ParkPlace was also originally designed to use the Dublin Square property and DDA’s properties. It included the dream of a 12-screen movie theater with a robotic parking garage in addition to student housing.

The plan was known colloquially as the “Royal Vlahakis” project because the development partners then were Royal Properties and Vlahakis Development. It fell apart 14 months after its introduction when, in October 2019, City Council voted unanimously against the site plan, a rare occurrence.

The failed Royal Vlahakis project ultimately delayed redevelopment of the Evergreen Avenue properties, as other failed projects have as well.

The DDA bought the properties along Evergreen Avenue in 2009 to support a proposal from real estate developer Scott Chappelle (recently sentenced to federal prison for tax evasion). The DDA paid well over market value and, since then, the $5 million debt has been a weight on the properties.

The principal on the bonds used to buy the properties still stands at about $5 million, with the DDA having spent about $2 million in taxes on interest payments and bond-related fees. Since Chappelle’s project fell apart, one proposal after another for these properties has also gone nowhere.

The DDA wants to pay off the debt with a project, but the debt makes getting a project done very hard.

In fact, at Thursday’s meeting, city staff warned the DDA that the required payments on the bonds are about to rocket up. This Fiscal Year, the DDA’s required payment is going up about $100,000 to $322,000. Next year, it will go up to $628,200. Staff is working on another bond refinance to try to manage the financial problem.

The DDA ordered an income-producing rental building at 314 Evergreen Ave. demolished to give the MSUFCU project a place to park construction vehicles.

In the past, the DDA used rental income off the structures on the properties to make interest payments on the bonds. But the DDA has decided to demolish the structures on the properties one by one, including demolishing the most lucrative building to give MSUFCU a place to park their construction equipment for that private office building.

That means the DDA is having to turn to taxes to pay the debt.

DDA members did not have much to say about today’s pitch.

DDA Chair Mike Krueger reminded Vlahakis the public comment period is not meant to be used as a back-and-forth for hashing out this kind of thing. (Krueger was on the DDA throughout the Royal Vlahakis proposal process.)

Consequently, Vlahakis spoke only briefly and then introduced two representatives from the nationwide developer he would like to work with on this project, the New Jersey-based Michaels Organization.

Michaels Construction Vice President Joe Shivell gave background on his company’s history, saying it has a long history of developing urban housing and has constructed market-rate housing, essential housing, military housing and affordable housing. Shivell said the company “controls” about 64,000 housing units nationwide and is looking to do more in the Midwest.

Michaels Development representative Tom Pany told the DDA the company is a “one-stop shop” for residential development and they’d like to do a project here.

Later in the meeting, under the agenda topic of “Board Member Comments,” the DDA did briefly discuss the area under question.

City Manager George Lahanas reminded his fellow DDA members that the exclusive agreement with River Caddis for redevelopment of the DDA’s properties could be ended by a vote of the DDA and said he expects a potential discussion of that at the November or December DDA meeting.

Raymond Holt for ELi

City Manager George Lahanas at the Aug. 13, 2019, meeting of City Council. Council has appointed Lahanas to also serve on the DDA.

Lahanas said if the DDA wants to end that contract with River Caddis, there will need to be a discussion about what the DDA wants to try next with these properties.

After the meeting, Vlahakis told ELi only that there would not be a way to move forward on his idea unless the DDA votes to end the exclusive agreement with River Caddis Development.

While true, Vlahakis would also have to get cooperation from other landowners, including Hagan and DRW Convexity.

He would also have to talk the DDA and City Council into okaying another large downtown student housing project. And that’s not been a direction the DDA and Council have indicated they want to go.

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