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City dodges $10 million tab for Red Cedar project

Council sets public hearing, questions sale price


Some Lansing officials are “tickled pink” as developers inch closer to a multi-hundred-million-dollar project at the site of the former Red Cedar Golf Course. But questions still surround its discounted purchase price.

The City Council on Monday unanimously greenlighted the Red Cedar redevelopment project — often labeled the Red Cedar Renaissance or the “Gateway to Lansing” — for a public hearing early next month. The vote ticks the massive undertaking a step closer to reality, but developers aren’t ready to break ground just yet.

“This is a $250 million investment in what’s probably the most important corridor in the region,” said Christopher Stralkowski, project manager for Continental-Ferguson, the development team behind the initiative. “It’s a guarantee of jobs and it’ll create new tax revenues that simply don’t exist today.”

City officials previously agreed to pitch in $10.7 million in bonds for infrastructure as the project gained steam. But developers this week agreed to float that bill themselves as years of negotiations reached a climax. Some Council members lauded the move but raised their eyebrows at the planned $2.2 million purchase price. That’s nearly $5 million below the appraised price for the 61-acre site, which sits in a floodplain.

“The potential purchasers certainly didn’t arbitrarily settle on $2.2 million,” said Councilman Adam Hussain.

Developers plan to construct an amphitheater, two hotels, five restaurants, an ice rink and hundreds of housing options for families, seniors and students. More than a third of the site will also remain as parkland.

Councilwoman Patricia Spitzley — who pronounced herself “tickled pink” about the plan — spoke up first about the proposed sale price.

“Don’t get me paragraphs that don’t include whatever,” Spitzley said at the Committee of the Whole meeting that prceded the biweekly Council meeting. “What I need to see are some numbers so I can have some comfort as to why it went from $7.3 million to $2.2 million ... . There has to be some general scratch paper on how this went down almost $5 million.”

Stralkowski — and officials at the Lansing Economic Area Partnership — are quick to justify the hefty discount. Developers initially received a $38 million bond commitment from city coffers before reducing and eventually nullifying the mechanism in its entirety.

Something had to give, said LEAP CEO Bob Trezise Jr.

“Obviously, when someone makes a profound concession like that, the other side is expected to make a concession as well,” he added. “We’re really proud of this. We’re trying to make the project a good deal for the community buy also reach a point where the developer can realize benefits as well.”

Continental-Ferguson — led by Columbusbased developer Frank Kass and MSU Trustee Joel Ferguson — plans to secure financing for the project independently from the city, ultimately relieving some Council members who had previously worried about piling another long-term debt into the city’s budget.

LEAP’s chief operating officer, Steve Willobee, said the project will now be funded entirely by the developers — save for expected tax reimbursements for eligible activities through a yet-to-be approved Brownfield Redevelopment plan. At least some of that savings translated to a reduced price point, he said.

“I didn’t think I had the stomach to bear any financial risk for a private development at this time,” said Councilwoman Jody Washington, who reprsents the 1st Ward, where the development is planned. “I couldn’t be happier with what we have before us but I, too, will be looking for a (more detailed) cost analysis” regarding the sale price.

Projects built on designated Brownfield sites, as Stralkowski explained, allow developers to receive specific reimbursements from taxes collected on their future projects in exchange for reinvigorating otherwise blighted landscapes and environmentally hazardous areas like the former Red Cedar Golf Course.

Developers won’t be fully reimbursed for $78 million in pre-construction sitework, Stralkowski said. But the financing plan gives his company a cash incentive to utilize otherwise unattractive properties within the state.

“We have compromised. We’ve made concessions. For those concessions, we’ve got a different price that we’re paying for the property,” Stralkowski said. “You might not like it and you might not agree with it but we can go step-by-step and show how much money will be coming into Lansing as a result of this project.”

Developers — as part of their recently amended proposal — agreed to compensate their construction workers at the prevailing wage for remediation and related jobs and to use “as much available and qualified local labor as possible.” Stralkowski anticipates at least 388 jobs will be created by the project’s completion.

“I didn’t think I had the stomach to bear any financial risk for a private development at this time. I couldn’t be happier with what we have before us but I, too, will be looking for a (more detailed) cost analysis” regarding the sale price.

- Lansing City Councilwoman Jody Washington

The $2.2 million set to be collected as part of the purchase will also be funneled into city parks. Spitzley suggested the funding should be spread around to different parks around the city — not just those near Michigan Avenue. City officials said that final allocation can be decided by resolution at a future meeting.

More than 1,000 more jobs with indirect ties to the development — like security guards, electricians, plumbers and laundry service employees — could also be created within the next few years, Stralkowski estimated.

He said he doesn’t understand why anyone would oppose the project from a financial standpoint.

“What doesn’t this do for Lansing?” he asked.

A public hearing on the project is slated for 7 p.m. July 9 at Lansing City Hall.

Developers are planning to release a financial impact study by Sept. 1 and fulfill the conditions of the agreement by Nov. 30. The project will then head back to the City Council for approval before it’s handed to the Lansing Brownfield Authority.

Early drafts suggested construction could begin as soon as this year with a targeted completion date of 2021. Officials said the Michigan Department of Environmental Quality and the Michigan Economic Development Corp. — in addition to the Brownfield Authority — need to sign off on the plan before it can begin.


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