Neva-Lee’sgate: Both sides of a complicated story

Former downtown Lansing business owners Faun Donald and Luke Trusnovec closed their houseplant shop, Neva Lee’s, last March after about 19 months in business on Washington Square.

On Dec. 22, the pair launched a website titled “Downtown Lansing Incompetence,” in which they outlined claims that Downtown Lansing Inc. helped spur the failure of their business by not delivering grant dollars that DLI officials had allegedly promised Neva Lee’s to help them bring their business to Washington Square.

This week, Downtown Lansing Inc. responded through their attorney, who threatened a libel lawsuit. Meanwhile, DLI executive director Cathleen Edgerly denied their claims in a phone interview with City Pulse.

DLI is overseen by a board nominated by the mayor and approved by the City Council. It’s funded by a mix of public and private money to advance businesses in an area bordered by Interstate 496 in downtown to Clinton Street in Old Town.

Donald and Trusnovec have successfully shared their story locally through social media. But what exactly do they claim happened? And how does their recollection differ from that of DLI’s staff?

In essence, the pair’s assertions hinge on two primary claims.

The first is that DLI approached them about moving from their existing space, at 123 E. Kalamazoo St., and promised $25,000 in relocation assistance money, but then only provided $10,000.

The second claim is that DLI staff helped place them in a building that was “hazardous” and not in compliance with city code.

Donald and Trusnovec said they opened their shop in a 600-square-foot space on Kalamazoo in July 2021. They had plans to buy a food truck to start an adjacent mobile coffee shop, they said.

They said they were financially solvent in early 2022 when DLI’s community development director, Julie Reinhardt, “recruited” them to relocate to a larger downtown space on Washington Square.

Julie Reinhardt

The pair sent City Pulse a screenshot of an April 11, 2022, email from Reinhardt’s DLI email address in which Reinhardt appeared to have written the following: “I am looking into getting you $20k-$25k in grant money from DLI to make the move possible. We believe in your business and we want it on Washington Square! I will know more in the next couple of weeks on the exact amount but you can count on that range.”

Donald and Trusnovec said they accepted the offer and signed a three-year lease on 2,400 square feet at 109 S. Washington in June 2022. They did so with the hope that they could also eventually expand it to include a coffee bar. The space was initially expected to be ready after some summer renovations.

During that period, DLI suggested that Neva Lee’s should apply for a $10,000 Comerica-sponsored small business grant, which they received in late July. According to Donald and Trusnovec, the Comerica grant was the first portion of the $25,000 they said DLI promised them for relocation.

The pair finally opened their new space in September 2022. Before opening, however, they said they encountered delays because it was allegedly not up to code. They cited plumbing issues, broken and boarded-up windows and carryover trash that was not promptly removed as some of the problems. They said the issues persisted after they opened.

“They put you in these buildings that have poor conditions, under landlords that don’t follow their leases and don’t maintain the buildings,” Donald said. “So, you’ve got it coming from both sides. They say they’re going to give you this funding to move down there. They actively recruited us and approached us, unsolicited, multiple times to move our business there.”

Edgerly contested both points. She told City Pulse that Donald and Trusnovec approached DLI about relocating to Washington Square, not vice versa.

Secondly, Edgerly said, the plumbing issues and other code violations had nothing to do with DLI.

Cathleen Edgerly

“That is between the business and the landlord. We’re not involved in those matters, nor would I have the specifics of them,” Edgerly said.

But Donald and Trusnovec claim that DLI should have known what kind of properties they were promoting.

“It all comes back to the people who are in charge of building up downtown, who are putting you into buildings with known issues. There’s no monitoring, there’s no regulation of these landlords to say that they need to have safe, compliant buildings,” Donald said.

Through the start of 2023, Donald and Trusnovec said they struggled to get their new location up and running. In addition to the alleged code violations — which they said their landlord was slow to address — they still believed they were due the $15,000 they said they were promised to help them relocate.

“We would have been fine where we were. It all started going to crap when we went to the space that they directed us to, based on the fact that they secured this funding and incentivized us with the money to make the move and expand. Our rent, overhead and expenses all went up. We were behind from the get go,” Donald said.

Donald and Trusnovec maintain that they continued to reach out to Reinhardt asking when they would see the additional $15,000 they believed they were owed. They again shared correspondence that appears to corroborate their inquiries.

In December 2022, DLI held a downtown merchants meeting to encourage them to apply for a Small Business Support Funding Grant, a reimbursement-based grant from the Michigan Economic Development Corp., for which the application process opened in January 2023.

After that meeting, they said, Reinhardt had them stay behind to discuss the additional $15,000, which she allegedly told them they’d have by the end of that holiday season.

Neva Lee’s did not receive the $15,000 by then, but it was awarded at least $49,000 through the MEDC reimbursement grant in early 2023. Still, the pair say that money did not count toward that outstanding balance because it wasn’t on the table when Reinhardt allegedly promised them the original funds.

In May 2023, Donald and Trusnovec met with Edgerly to discuss their concerns over the funding. They said they informed her that they were still awaiting the $15,000. In a letter dated Oct. 19, 2023, Edgerly settled the matter by clarifying that, when taken together, the $49,000 MEDC reimbursement grant and $10,000 Comerica grant represented a larger allocation than the $25,000 “relocation assistance” the pair believed they were still owed.

When asked about it by City Pulse on Monday, Edgerly reiterated that take.

“The two grants that they applied for and that we offered were awarded at the maximum amount,” Edgerly said, adding that “in the history of DLI, as far as I know, there has never been a relocation assistance fund.”

However, Donald and Trusnovec continued to contest that determination. They say other businesses have experienced similar “mismanagement” but are afraid to speak out because they feel that they “need” DLI.

“They’re recruiting us into these buildings so they can get their numbers up. It’s a numbers game, so they can pat themselves on the back and say they got one more business in this building,” Donald said. “But what happens afterwards? Where are the regulations of how those landlords are treating these people and the conditions of their buildings?”

Donald and Trusnovec tried to negotiate out of their lease, citing an unsustainable business model prompted by the funding disagreements. However, they found themselves in the midst of a lawsuit that they said cost them around $20,000 “on an attorney to negotiate our way out of the building.” They couldn’t keep up with the legal expenses and later settled out of court ahead of closing.

Now removed from the downtown scene, they decided now was the time to speak up.

“We’re not down there anymore, so we’re not afraid of DLI. We don’t need them. We just want the other people down there to know that they don’t really need them either,” Donald said.

Edgerly noted that “93 percent” of the businesses DLI “has supported” are operating.

Edgerly expressed regret that Neva Lee’s failed downtown.

However, she said its owners’ claims “do not accurately reflect our values, our work or the lengths that we go to help support all of our downtown Lansing businesses.”