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Wednesday, March 13,2013

Kids in the Hall

East Lansing developer needs the city’s help in seeing his Reutter Park Place proposal through. Will Council agree to it?

by Andy Balaskovitz

Correction: The developer originally planned to provide underground and surface parking as part of the development, not a parking structure.

Monday, June 18 — A city economic official and the developer of a plan to repurpose the old YMCA building downtown told the City Council tonight that if the city doesn’t finance a public parking ramp as part of it, the deal’s off.

The Council is considering an amended brownfield redevelopment plan for Reutter Park Place. The development calls for demolishing the former YMCA building downtown, 301 W. Lenawee St., to build a four-story residential and commercial mixed-use facility. The original brownfield was approved just over a year ago.

The two men — Lansing Economic Development Corp. CEO Karl Dorshimer and developer Dan Essa of The Lawton Group — suggested that if Council votes down the amendment, the development wouldn’t happen. The amended brownfield includes the city’s financing a $4.3 million public parking garage by issuing municipal bonds through its Brownfield Redevelopment Authority. Originally, the developer was going to provide underground and surface parking as part of the building. Essa subsequently had difficulty finding bank support, even after the Council approved the initial brownfield plan.

Essa said the city’s involvement “is the only vehicle to get this project done. If we could do this project alone without the bond, we could make a lot more money. This is the only way to get this done.”

The development includes 234 residential units, 17,400 square feet of retail space and 250 parking spaces for a total $28.7 million project.

The Council held a public hearing tonight that largely centered on whether the city could and should issue bonds to see the project through; whether the parking structure would indeed be public; and a broader debate on whether governments should play the role of developer.

“The initial plan was to be all private,” Dorshimer said, referring to the city’s initial involvement. “They came back to the Brownfield Redevelopment Authority and asked if there’s anything we could do to help. … It’s a difficult thing to build parking facilities to accommodate development.”

Dorshimer said the city stands to gain by “providing public parking to promote private development.”

“First of all, it won’t happen without that,” he said, adding it could lead to 300 people living downtown and “frequenting downtown businesses.”

As for paying off the $4.3 million to bond holders, Dorshimer said the Brownfield Redevelopment Authority is in a “unique” position because it’ll have two streams of revenue coming in to pay them: increased tax revenue from the development and parking revenue.

Moreover, after 10 years, the development agreement will likely stipulate that the parking deck can be sold back to the developer. Essa said he plans to buy the ramp then: “In 10 years and one day, we will buy the ramp back if ya’ll sell it to us.”

Dorshimer said if the city decides not to sell after 10 years, the plan is to pay off the bonds in 17 years.

Council members questioned whether the city’s bonding could negatively affect its credit rating — fearing a downgrade — but answers to those questions were not available tonight.

Council President Brian Jeffries wondered if the publicly owned and operated parking ramp, though, would actually be public. As such, it can’t exclude anyone from leasing space in it. “If you’re providing these spaces to tenants, how are we going to be able to lease them out? Is there a preference to your tenants?”

“No — it’s a first-come, first-serve type of situation,” Essa replied.

The underlying question surrounding the Reutter Park Place project is whether the government should play the role of developer. On a much larger scale, Lansing Township is using funds from the sale of $22 million in municipal bonds to pay for a parking structure and 122,000 square feet of commercial retail space just north of Eastwood Towne Center, the Lansing State Journal reported in December.

To be sure, it’s risky business: taxpayers could ultimately be on the hook should the development fail. But are more of these public-private projects the future of revitalization?

“These are the type of projects that bring about change and create greater demand,” said Ryan Henry of Kincaid Henry Building Group, speaking in support of Reutter Park Place. “They are complicated and do take time to think about, they take time to work. There’s definitely a learning curve on it. There has to be risk mitigation and shared risk.”

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