State OKs tax incentives for Red Cedar project in Lansing

Michigan Strategic Fund approves financing after initial rejection


TUESDAY, May 19 — The Red Cedar project cleared a major financial hurdle this morning after the Michigan Strategic Fund board approved a tax incentive package for its construction after rejecting it earlier.

The approval, which was recommended by the Michigan Economic Development Corp., represents a major philosophical shift among the board, which voted to reject the proposal in March, in part for its allegedly underwhelming economic impact on Greater Lansing.

Officials familiar with the vote said the decision was unanimous and made without discussion.

And that means developers have the greenlight to move forward with bonding and full construction of its $256 million mixed-use development along Michigan Avenue at the site of the former Red Cedar Golf Course, including two hotels, restaurants and a variety of apartments.

As part of a Brownfield tax plan already approved by the Lansing City Council, the project’s development team — led by Joel Ferguson of Lansing and Frank Kass of Columbus, Ohio — will recoup some of their construction costs on property taxes eventually collected from the site.

Initial plans called for $177 million in private investment alongside a 30-year Brownfield plan that would’ve covered about $97 million in infrastructure and soil cleanup from years of chemical treatment at the golf course. The project, however, was downsized after its state rejection.

With almost no discussion, the Lansing City Council approved plans last month enabling the project to continue without a parking structure and a building that was originally intended for student housing — a move that sliced $13 million off the construction costs in the process.

“The development will activate a long-vacant property into a vibrant, attractive mixed-use development that will bring density and vibrancy to a high-impact commercial corridor in Lansing,” said MEDC Senior Vice President Michele Wildman.

Today’s feedback was in sharp contrast to the state rejection the project had faced in March.

Previously rejected plans to prop up the development with tax incentives didn’t include enough information or comport with state guidelines and would not result in “overall increased economic opportunity for the region,” according to officials at the Michigan Economic Development Corp.

Funding for the plan was shot down by the Michigan Strategic Fund Board 8-2, with one abstention in March. A spokeswoman for the city of Lansing said today’s vote was unanimous.

The new plan reduces the number of student housing beds from at least 1,100 to 792. That space, instead, will become a parking lot as developers also nix a $15 million parking structure.

Because the site sits nearly seven feet below the floodplain, developers initially thought parking would be needed to serve as the foundation of each of the buildings. Kass said contractors have since realized they could simply build their hotels and apartments on elevated piles of dirt.

The development’s market-rate apartments and a senior living center are slated to be finished this summer. Student housing will be ready by the fall of 2020, developers said. Construction on the two hotels — Hyatt House and AC Hotel by Mariott — is set to begin sometime next year.

Lansing Mayor Andy Schor said he was “thrilled” about the tax incentives that made the project possible. Project Manager Christopher Stralkowski, in a statement, labeled the ongoing project as an “enormous investment” toward Lansing’s future. Ferguson has called it a “gamechanger.”


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