Development digest

Of seven major development projects waiting to rise in Lansing in 2009, four — Capitol Club Tower, City Center Studios, Lansing Gateway and SOBI Square — never got off the ground.

The other three — Pat Gillespie’s Market Place and Ball Park North projects and the Lawton Group’s The Lenawee (now called Reutter Park Place) — are still waiting to be built.

Where do those three, and five more that have come along since then — with a total investment potential of $200 million — stand in what remains a rock economy? 

How many, if any, will meet the fate of the City Center II project at the prominent Abbot Road/Grand River Avenue intersection in East Lansing projected at $105 million, languished in late June after the investment became too risky for East Lansing taxpayers? Earlier this month, city officials solicited public input on how to move forward on the renamed Park District Planning Area, cutting all ties (at least in name) with City Center II.

These eight projects are at various stages in the road to completion. You’ll see some familiar names (Gillespie, Ferguson, Eyde) and some lesser-known ones (Weaver, Elliot). The list of major projects is not complete in light of major uncertainties: There’s still the prospect of developing up to 120 acres of the former Waverly Golf Course in Lansing Township, for which no plan has surfaced. Then there’s the vacant entryway into REO Town where the Deluxe Inn once stood: Two years ago, local developers unveiled a $30 million vision for the property that’s owned by the Ingham County Land Bank. Most recently, it’s been the site of various art events. “Those conversations are not completely inactive, but nothing very active” is happening, Land Bank Chairman Eric Schertzing said of the initial plans. In Lansing Township, the government is partway through a public/private development at Eastwood Towne Center; in REO Town, the Lansing Board of Water & Light is well along on its $182 million cogeneration power plant, with an expected completion in July. And, of course, the legal battle of whether the city of Lansing can partner with the Sault Ste. Marie Tribe of Chippewa Indians to build a downtown casino is just getting started — and will likely take several years.

Meanwhile, here are the major projects that are either just getting underway or have been promised for years.

Reutter Park Place
(formerly known as The Lenawee)
Location: 301 W. Lenawee St., downtown Lansing
Price tag: $28.7 million
Developer: The Lawton Group
Status: Brownfield plan subject to City Council approval

After this project was unable to secure financing a few years ago with unanimous Lansing City Council support, a revised plan that involves the city’s buying an adjacent parking lot is now being pitched to more skeptical Council members.

Developer Dan Essa of the East Lansing-based Lawton Group says the project couldn’t happen without the city’s Brownfield Authority purchasing a public parking ramp that would be attached to mixed-use apartments and retail spaces.

The project calls for replacing the old YMCA building here — which was built in 1951 — with a new four-story, 144,000-square-foot, mixed-use apartment and commercial building. That was the case last year when the Council approved a Brownfield Redevelopment Plan for a project featuring 228 apartments and 228 parking spaces. A revised brownfield plan before the Council calls for six more apartments and 22 more parking spaces. But the big difference this time around is that the Bernero administration supports buying the adjacent parking ramp, through the city’s brownfield authority, for $4.2 million from the developer once the project is constructed. The plan is to do so by issuing bonds that would have to be repaid within 18 years.

For the developer, the parking structure is “really the portion that drags it down from a financing standpoint,” Karl Dorshimer of the Lansing Economic Area Partnership said at a Council committee meeting last week. “It’s very expensive to build and doesn’t generate enough revenue.”

The city’s brownfield authority would own and operate the structure that would be open to the public.

However, the property is not located within the city’s Tax Increment Finance Authority district, meaning new revenue from the project would not go directly into the city’s precarious TIFA fund, which may need a $1.6 million influx from the General Fund by fiscal year 2014. Whether the project would indirectly benefit the TIFA district by increased economic activity with new people living downtown was the subject of recent debate between Dorshimer and Council President Brian Jeffries.

The Council’s Development and Planning Committee plans to meet again on Sept. 26 to discuss the project.

Ottawa/Butler
Location: Downtown Lansing
Price tag: $7 million
Developer: Scott Gillespie
Status: Waiting for a Council committee hearing

While Reutter Park Place is at least having its day in a Council committee, the same can’t be said for Scott Gillespie’s plans for an apartment complex on the mostly green space near the Capitol Building and Hall of Justice. Gillespie may give up on it.

Developers — including Scott Gillespie’s brother, Pat — have for years tried to develop the area commonly known as Ottawa/Butler, which consists of 5.3 acres bounded by Butler Boulevard and Ottawa, Sycamore and Ionia streets. 

Reacting to neighbors, Gillespie scaled back his original $7 million plan for mixed use retail and housing to include just rental apartments. He has an option to buy the property — which he said is going to expire soon — but that depends on the City Council’s approving an amended brownfield redevelopment plan for the site.

Problem is, Gillespie can’t understand why — after making his plans pubilc about six months ago — the Council’s Development and Planning Committee won’t discuss the project. That committee’s chairman, Councilman Derrick Quinney, said repeatedly Monday night that the committee is “working on it.” Some had speculated back in June that the project was being held up over concerns that Gillespie would not hire local, organized labor on the job. Quinney (who chairs the committee overseeing development projects coming through the city) is employed full time as health and safety director of the state AFL-CIO, but has denied the rumor, saying the committee was “backlogged.”

Gillespie said the time is approaching when he needs to make a “decision on whether or not I can proceed with the development.” Also, he said, a Michigan Business Tax incentive approved for the property stipulates that the project must be done by 2013 in order to qualify for it. “It’s getting to a point where I’m not sure if the project is going to be complete in that time frame.”

Gillespie said he stands to “lose a substantial amount of money in investments I already put in if I let the option expire,” as well as time spent planning with neighbors. He declined to say how much money he has spent on the project so far.

And the latest Ottawa/Butler saga doesn’t end there. Gillespie and Council President Brian Jeffries, who also sits on the Development and Planning Committee, have acknowledged rumors that a nearby resident, Chris McCarus, is leading an effort to buy the three houses owned by Lansing Community College at the corner of Saginaw Street and Capitol Avenue and move them to the Ottawa/Butler block in an effort to preserve the houses’ historical integrity.

“I’ve had some conversations. I’ve heard about it,” Gillespie said. “I have told certain people I would be interested and open in talking about it.”

McCarus, who submitted the only proposal to LCC to relocate the houses, declined to comment on the rumor.

Bob Johnson, director of planning and neighborhood development with the city, said he had told McCarus, “My No. 1 priority is working with” Gillespie’s proposal. “That’s the project my boss and me support. If that were to change, there would be opportunities for others.”

Jeffries, however, has other concerns about the project, which include issues raised by neighbors relating to density and increased traffic and whether the city needs another residential development. “I want to see a market study. I’m not sold on the idea that the capacity (need) is there.”

Knapp’s Center
Location: 300 S. Washington Square, downtown Lansing
Price tag: $36 million
Developer: The Eyde Co.
Status: Opening expected fall 2013

One of the final ingredients in the Knapp’s building’s complicated financial incentive soup — a $5.9 million federal loan from the U.S. Department of Housing and Urban Development — is yet to be closed on, but “it’s getting closer,” said LEAP’s Dorshimer. The loan to the city, which will be paid back by the developer with revenue from the building, is “very significant” to the project’s completion, Dorshimer said — it’s “going through the administrative approval” at this point.

But inside the building’s architecturally historic exterior, the 190,000-square-foot former department store is coming back to life. Dorshimer said the tear-out of the inside is complete, which gives visitors a “really good feel for the space. It’s pretty exciting.” That’s a sign of progress for the building that has faced setbacks when it came to obtaining financial incentives.

Dorshimer said construction is expected to end in fall 2013, but LEAP’s business incubator focused on fashion design — called “The Runway” — could open within the building as soon as this winter or spring. The Eyde Co. is planning for retail and restaurant space on the ground floor, commercial space on the second, third and fourth floors and apartments on the fifth floor.

The building is still subject to certificate of occupancy approval by the city, and other smaller financial incentives are still being worked out, Dorshimer said, but once the HUD loan is wrapped up, “I think at that point everything will be set and locked in place.”

Market Place
Location: North of the City Market
Price tag: $23 million
Developer: Pat Gillespie
Status: Hopefully “moving dirt” in three to four months

Five years have passed since the city and developer Pat Gillespie announced a $23 million development for the 3.64 acres immediately north of the City Market downtown. Early estimates had Gillespie starting construction on the mostly residential complex of three to four structures in fall 2009. The old City Market was torn down to make room for it and a new one built nearby from the sale proceeds of the city property. Then a start date, which the original development agreement said was supposed to be 15 months after the City Market opened, was pushed to earlier this year. On Monday, Gillespie said crews will start “moving dirt” in the next three to four months for constructing the first 72 housing units to go up closest to the City Market. He is still waiting on final approvals from the state Department of Environmental Quality. Gillespie said the “unknown is always a challenge” when trying to see these projects through, adding that there is “no guarantee” that the latest timelines will be met.

“You never know what’s going to come up,” he said.

Across Cedar Street, though, when or what will go up is far less certain. Originally, Gillespie’s plan for Ball Park North (so-named for overlooking Cooley Law School Stadium) included mixed-use housing and retail. Now, the project waits on whether the city can partner with the Sault Ste. Marie Tribe of Chippewa Indians to build a casino downtown. If the casino happens, which could take several years, Ball Park North would become a 2,000-plus space parking deck with mixed use spaces on the first floor, developed by investors in the casino. If the casino doesn’t happen, Gillespie said he doesn’t plan to move forward with a parking ramp, but will re-examine his original plans.

Market Place, however, will get going regardless of the casino, but it could influence what goes into the other two or three buildings, Gillespie said.

Capital Gateway
Location: Former Red Cedar Golf Course, nearby car dealerships
Price tag: Up to $100 million
Developers: Joel Ferguson and Chris Jerome
Status: Pending voter approval

After a major redevelopment of a prominent East Lansing intersection fell through in June, the Capita l Gateway project could take its place as the most transformative and expensive project in greater Lansing. Standing in its way is approval from city of Lansing voters to authorize selling off up to the remaining 48 acres of the former Red Cedar Golf Course (12.5 acres of which they approved in November). Voters will decide on Nov. 6 whether to permit selling more acreage.

The development team of Chris Jerome and Joel Ferguson has big plans for the golf course: student and professional housing, hotels, an amphitheater, restaurants and green space. The proposed project also includes building on two vacant car dealerships owned by the Jerome family.

Park District Planning Area and St. Anne Lofts
Location: Downtown East Lansing
Price tag: Uncertain and “south of $8 million”
Developers: Uncertain and Kris Elliot
Status: Soliciting ideas for an RFP and partly finished

In downtown East Lansing, it’s back to the drawing board in one case and closely following a developer’s moves in another. 

In late June, the East Lansing City Council put an end to Strathmore Development Co.’s $105 million plan for more than five acres of privately and city-controlled property immediately west of the Grand River Avenue and Abbot Road intersection because the project posed “unacceptable financial risks,” according to the city’s website. The plan called for a performing arts center, a 10-story mixed-use building with residential, office, retail and restaurant space, and a hotel. The Council’s vote to end the project came 11 years after the city’s Downtown Development Authority purchased property in the area, setting off the first stages of the project.

Earlier this month, the city solicited ideas for what else could potentially be located on the property near Valley Court Park. The city expects to issue a Request for Proposals for the publicly controlled land in October.

Meanwhile, less than a quarter-mile away, a controversial five-story luxury loft project is on its way to completion, despite multiple setbacks and a reportedly suspect relationship between the city and developer Kris Elliot. The St. Anne Lofts project, which East Lansing planning director Tim Dempsey said is “south of” a reportedly $8 million investment, has so far included a fifth story built without a permit, a floor collapse mid-construction and a four-story cross built into the façade that city officials have acknowledged caused discomfort among residents but is nonetheless legal. City Attorney Tom Yeadon issued an opinion that said the Establishment Clause of the First Amendment was not violated because public funds were not used on the structure itself and that the city would be violating the First Amendment by “precluding such an architectural feature on this private property and/or requiring its removal.”

The State Journal reported last week that a temporary occupancy certificate has been extended, as people are living in some of the 31 apartments already completed while construction is finished on the top and bottom floors. A permanent occupancy permit is still subject to city approval.

Douglas J expansion
Location: Downtown Okemos
Price tag: Uncertain
Developer: Doug and Scott Weaver
Status: Waiting for township approval

Will White, owner of the Traveler’s Club International Restaurant & Tuba Museum, is putting up a fight to block a development in downtown Okemos that would force him out of his long-time establishment. But he acknowledges that his efforts may not pan out in his favor.

Doug and Scott Weaver, president of Douglas J Aveda Institute headquartered in East Lansing, want to buy the bank-owned property where White’s restaurant and music store sit near the Hamilton and Okemos roads intersection to construct two buildings for a salon and mixed-use apartments and retail. Douglas J’s salon across the street from the planned expansion would serve as corporate offices.

The Meridian Township Board of Trustees was scheduled to vote on a pair of permits for the project at its meeting Tuesday night. White said he is due in court today to settle whether Comerica Bank can evict him from the properties, which he lost to foreclosure two years ago.

Both sides of the deal — White and Douglas J — have sought public support for their positions via petitions. White says the project would ruin the historical integrity of downtown Okemos, eliminating his longtime business presence there, a 142-year-old house and two 150-year-old trees. Scott Weaver said he and the company are as equally invested in the community and that it’s impossible to expand the business at the current site.

White said the Traveler’s Club “will probably have to close” if Douglas J’s project becomes a reality, but that it might be easier to move his White Bros. Music store. “It’s kind of a shock. Landmarks will be gone.”

Weaver, who said he’s “very sympathetic” to White’s concerns and his foreclosure process, counters: “After 40 years, moving out of the village of Okemos did not sit easy with us as a family. As an organization, we really wanted to develop there.”