Developers pitch plan to renovate shuttered West Junior High School

FRIDAY, Aug. 27 — Out-of-state developers want to renovate the shuttered West Junior High School in Lansing into a three-story apartment building. But first: They want tax incentives to get the project going.

Lansing Housing Commission Director Doug Fleming on Monday pitched a plan to the City Council in which developers aim to collect about $2.9 million in tax breaks over the next 40 years to kickstart a $15 million renovation of the school into 75 apartments for seniors and people with disabilities, as well as creating new community spaces in the auditorium and gym.

If all goes as planned, contractors hope to finish construction by 2024, according to early plans.

“Other potential uses? Truthfully, they’re very minimal,” Fleming told the Council. “It takes a significant investment to use that. I think the building has been empty for 15 years. If there were a lot of things that could’ve been done to this building other than what we’re proposing, I think it would’ve already been proposed by someone — probably people smarter than us. We think this is a really good use of the potential site and for the maintenance of a historic asset in the city.”

The request before the Council is for a PILOT (or payment in lieu of taxes) ordinance that would allow developers to forgo an estimated $96,000 in annual property taxes, instead only paying an estimated $25,000 annually, or 4% of the total rental income collected for the next 40 years.

City officials cautioned that those early projections are still only “estimates with a capital E.” They also emphasized that the property, in its current form, is generating no tax revenue at all.

Built in 1919, the iconic 150,000 square-foot building is bordered by Kalamazoo Street to the north, Chestnut Street to the east, Lenawee Street to the south and Pine Street to the west. And some of Lansing’s most noteworthy residents went to school there before it was closed in 2008. Among them: Malcolm X, Earvin “Magic” Johnson Jr. and City Assessor Sharon Frischman.

“It can be much more expensive to rehabilitate an old building like this rather than to build on green space somewhere else in the city,” Frischman added. “Generally, if the market recognized that this was worthwhile to do without tax incentives, then it would’ve been done by now.”

The project — a partnership between the Lansing Housing Commission and Wisconsin-based General Capital Development LLC — heavily relies on the tax break, Fleming emphasized. The Council held a public hearing on the PILOT on Monday and is expected to vote on it next month.

In the meantime, the concept is garnering plenty of early support from officials at the Lansing School District and at Lansing City Hall, many of whom are eager to repurpose the building, get it back on the city’s tax rolls and create more affordable housing opportunities within the city.

Only those over age 55 or with disabilities would be eligible to live there, Fleming said. He also noted that 57 of the 75 units would be limited to those with annual incomes at or below $50,000. Exact rental prices weren’t immediately available upon request from the Council or City Pulse.

“Older buildings are really challenging to develop,” said Brian McGrain, the city’s director of planning and economic development. “A lot of times, these older buildings take some sort of incentive. These old schools are also wonderful assets. They were built to last. They have these big auditoriums and big gyms, but they can be expensive to rehabilitate. Nothing lasts forever.”

School Board President Gabrielle Lawrence also said the district is supportive of the concept.

“We’re working out the terms of the purchase agreement, so we’re not prepared to make extensive comments,” she added. “If the purchase is complete, we’ll be happy to talk about it.”

Fleming said a signed contract with developers for site control and the eventual sale of the school building depends on the Council’s approval of tax credits. Without them, construction costs would rise to the point of putting the project’s “feasibility in question,” he explained.

“There’s a very high environmental risk,” Fleming said. “When you’re dealing with an old building, you don’t know what you’re getting into until you get into it. It’s like the old story: You don’t know what you know until you know it, and we just don’t know what we don’t know.”

And with an estimated 13,000 of the 24,000 tenants living in Lansing spending more than 30% of their annual income on monthly rent payments, the project fills a housing void, he said. He also said opening up the auditorium and gymnasium could also be a boon for Lansing.

“The intent is to work with community groups in terms of long-term use of these facilities. We’ve talked to the school for the use of the school for musicals and plays. We’ve had conversations with the Lansing Symphony Orchestra and athletic groups who could use it,” Fleming said.

Developers also plan to pay about $10,000 annually to the Housing Commission for wraparound services for residents:  assistance with health and wellness, food security, financial education, educational development and employment skills. A food pantry would be on site, as well as monthly distributions to residents from local food banks, Fleming told the Council.

Council members Patricia Spitzley, Peter Spadafore, Brandon Betz and Adam Hussain voiced varying degrees of support for the potential project as the proposal for tax incentives heads to the Council’s Committee on Development and Planning for further review this month.

“You have a building that has been empty for years. They pay no taxes because it’s owned by the Lansing School District. And it’s offering clean, safe, affordable housing,” Spitzley added. “I had some initial questions when this was first explained to me, but I plan to support this project.”

Betz and Councilwoman Kathie Dunbar both expressed concerns about only one elevator included in the site plan to service potentially hundreds of disabled people and adults with mobility concerns. Fleming said he plans to take those concerns back to the project developers.

The payments for resident services give the Lansing Housing Commission a clear financial stake in the project’s success. In addition to serving as LHC director, Fleming also told the Council that he would be paid $75,000 by the developers to serve as a project consultant. But after the appearance of conflicting interests quickly raised eyebrows among members of the Council, Fleming told City Pulse he will give up the paid consultancy.

“You’re making more money on a side gig than anyone who can afford to live in that place, and I’m concerned about that,” Dunbar said. “It’s really concerning to me that this is a partnership with the LHC, but the director is making money off the partnership independently of the LHC.”

Fleming told Dunbar that he speaks to developers daily to hash out deals in Greater Lansing, and this project is “really no different than the way I’ve acted for the last three or four years.”

“I believe strongly in the revitalization of this historical asset for all the reasons outlined in the proposal to the Council. There are no current agreements between the developer and LHC and no money has changed hands,” leming told City Pulse.  “LHC board and staff do believe that a partnership with the development would enhance the lives of the residents and continue our mission to bring clean, safe and affordable housing to the city and support it with robust resident services. I hope going forward that the conversation will return to the City Council’s support of an important development to the school district, the community, and most importantly low income seniors.”

The Council’s Committee on Development & Planning next meets at 3:30 p.m. Sept. 7. Check back at lansingcitypulse.com for continued coverage as the proposal advances.