A tale of two developments

Initial plans to redevelop the former YMCA building at the corner of Townsend and Lenawee streets downtown enjoyed unanimous City Council support a year ago.

Today, with a revised plan that requires the full faith and credit of the city’s finances for buying an adjacent parking ramp, the project’s certainty hinges on a more skeptical Council.

The East Lansing-based Lawton Group has plans for a new four-story, mixed-use apartment and commercial building called Reutter Park Place to replace the old YMCA building, built in 1951, at 301 W. Lenawee St. That was the case last year when the Council approved a Brownfield Redevelopment Plan for a $20 million project with 228 apartments and 228 parking spaces. Now, a revised brownfield plan before Council is a $28.7 million project with 234 apartments and 250 parking spaces.

But the biggest difference is that, because the developer was unable to secure bank financing for the earlier project, the Bernero administration is now proposing to buy — through its Brownfield Redevelopment Authority — the adjacent parking ramp for $4.2 million from the developer once the project is constructed. It would do so by issuing bonds that would have to be repaid within 18 years.

That raises some red flags for Council President Brian Jeffries, who supported the original plan. Jeffries is primarily uncomfortable with the use of public funds to help the project along. “I have a difficult time supporting public funding on this and utilizing the full faith and credit of the city,” he said Monday.

Jeffries is also concerned about the broader issue of the city’s Tax Increment Financing Authority and its precarious reserve fund, which the city may have to start feeding after fiscal year 2013 to the tune of nearly $2 million annually.

But the developer and the administration say the project won’t happen without the city’s support. Karl Dorshimer, president and CEO of the Lansing Economic Development Corp., says the revised Reutter Park Place proposal is good for the city. For one, the city would have two revenue streams coming in to pay off the bonds from parking fees and capturing new property taxes. The EDC estimates that to be $625,000 annually. Moreover, Dorshimer said, the developer is interested in buying the ramp from the city after 10 years and is willing to contribute more than $1 million into a reserve account to cover any shortfalls.

As for replenishing the TIFA, Dorshimer said that could happen indirectly by new residents’ “participating in the downtown economy” and directly should the city decide to amend its TIFA district to include the property once taxes are no longer captured for eligible brownfield activities.

Dorshimer also emphasizes that the city would not buy the ramp until after the entire development is completed. By that time, he said, it’s expected there will be significant leasing interest. “We eliminate the issue of it not being complete,” he said.

A public hearing was held last week and it’s now back in committee for discussion.

Ottawa/Butler

It’s been over three months since Scott Gillespie first introduced his plans to redevelop the 5.3 acres of green space downtown near the Capitol Building and the Hall of Justice, commonly known as the Ottawa/Butler block. Gillespie wants to invest nearly $7 million for apartments. (Plans for retail were dropped because neighbors expressed concern about traffic, Gillespie said.)

You’d have thought by now the City Council would have at least discussed the project in committee or maybe even held a public hearing on it: It was introduced on the same night in April as the Reutter Park Place project (above). A third brownfield plan introduced that April night for Emergent Biosolutions received final Council approval over a month ago. 

Gillespie is waiting to buy the property until it receives the necessary approval from the Council, which involves an amended brownfield plan.

The rumor mill is running as to why it’s not being touched.

You may recall Gillespie’s developer brother, Pat, and his issues with the Council when it comes to organized labor working on his projects. In fall 2010, the Council nearly halted a plan by Pat Gillespie to move forward on his mixed-use Market Place project downtown (which still looks the same, though now it’s tied to whether a casino will be added to the Lansing Center). The Council rejected a new redevelopment plan at the time in part because a project labor agreement wasn’t in place. The Council’s vote was overturned by a Circuit Court judge shortly thereafter.

Some have suggested it’s Scott Gillespie’s turn now, and the same issue is unresolved behind closed doors. Scott Gillespie is aware of the rumor but can’t say whether it’s true because Council members won’t respond to his calls. Feeding the rumor is that Councilman Derrick Quinney, who is employed full-time as health and safety director of the state AFL-CIO, chairs the Council’s Development and Planning Committee. 

Quinney denied Monday night that he’s holding it up because of labor agreements. “We’re pretty backlogged as far as agenda items. It will be coming up,” he said. “I have not had that discussion with anyone,” referring to whether agreements with organized labor would be in place before breaking ground, but “we always like to have those conversations. Hopefully they will come to the table with that as part of their proposal.”

“I’m happy to talk about it,” Gillespie said last week when asked about whether he thinks labor negotiations are holding up his project. “The project will be wide open for anyone that’s able and willing to do the work. Everyone will have an opportunity to bid.”

“I’m just trying to invest in the city,” he said Tuesday.