Monday, Oct. 15 — The redevelopment of the former YMCA building in downtown Lansing is stalled indefinitely after a media report that uncovered the project’s developer owes back taxes to the city.
MLive.com’s Angela Wittrock reported today that Y Site, LLC — the holding company that owns the property at 301 W. Lenawee St. — owed nearly $73,000 in back taxes and fees to the city and county as of this morning. The taxes owed go back to 2010. By around lunch time this afternoon, developer Dan Essa — who is behind the project — had paid off nearly $28,000 in 2010 taxes.
That the Reutter Park Place project made it this far — the Council was scheduled to vote on a Brownfield plan tonight but tabled it in light of the tax issues — violates an executive order Mayor Virg Bernero issued in 2008. That order “requires all developers to be current on their city taxes,” Chief of Staff Randy Hannan told the Council tonight.
The oversight has left the Bernero administration digging for answers; an economic development official apologizing; and the City Council president questioning whether he wants the developer’s business at all.
“We’re investigating” how the project made it through approvals by economic development officials, Hannan said. “We will take corrective action to make sure it does not happen again.”
Hannan noted that the administration still supports the project and hopes the tax issue is resolved.
Meanwhile, Lansing Economic Area Partnership President and CEO Bob Trezise reportedly apologized for the oversight. LEAP worked with the developer on making the development happen this year, after the project stalled last summer because Essa had trouble financing the original plan. The plan to be voted on tonight involved the city’s — through its Brownfield Redevelopment Authority — to bond out to pay for an adjacent $6 million parking ramp. Essa has said the project couldn’t have happened without the city’s involvement.
“On behalf of the Lansing Economic Area Partnership (LEAP), which manages the Lansing Economic Development Corporation (LEDC) under contract with the City, I want to express my regret for the confusion surrounding the Reutter Park Place project,” Trezise wrote in a letter to MLive. “LEAP will investigate how and why this oversight took place and take all appropriate steps to ensure that future projects comply fully with the Mayor's Executive Order.”
Council President Brian Jeffries didn’t hold back shortly after two items relating to the development were pulled from tonight’s agenda.
“It is very troubling,” he said. He read a quote from Essa in MLive’s story in which the developer said he “did not want to put any more money into thus (sic) project unless it was going to move forward.”
“That is ridiculous,” Jeffries said. “This is a very serious issue. I’m not sure this is the kind of developer we want to do business with.”
Councilman Derrick Quinney, who chairs the Development and Planning Committee, which saw the project through, said the plan will go back to committee for discussion, starting Thursday.
In other business, the Council voted unanimously to hold a public hearing at next week’s meeting on a “transparency in bidding” ordinance. The ordinance would require developers to disclose information about the bidding of contracts when seeking certain tax incentives in the city.
The Council also unanimously approved a seven-page resolution outlining its budget policies and priorities for the next fiscal year. The document is compiled annually by the Council to inform the mayor of its priorities as he drafts his own budget recommendation, which is then subject to Council approval. The administration is projecting a $11 million budget deficit heading into the next fiscal year, which starts July 1.
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