Alexander Alusheff

Lansing State Journal

EAST LANSING – The developers proposing to build two 12-story buildings in downtown East Lansing want a $52-million property tax reimbursement from the city.

More than half of that money would be used to pay off a non-recourse bond issued by the city to cover the cost of building a city-owned, five-level parking deck and widening Albert Avenue, among other changes, according to the proposed brownfield plan submitted by the developers. A non-recourse bond prevents the city or brownfield authority from assuming any financial liability.

Chicago-based Harbor Bay Real Estate Advisors is asking for $32 million to cover eligible activities, of which $28 million would pay off the non-recourse bond. It’s also asking for nearly $20 million to cover interest from the bond. The project will cost $125 million.

The brownfield plan was approved during the East Lansing Brownfield Redevelopment Authority on Thursday. It will go before city council in April. It’s the largest brownfield reimbursement proposal even brought before city officials.

RELATED:

Developer may seek $27M bond for E.Lansing project

New Park District plans include grocer, taller hotel

$132M project would bring 12-story buildings to downtown East Lansing

"We're making a significant infrastructure investment," said Mark Bell, CEO of Harbor Bay, during a city Planning Commission meeting Wednesday night.

East Lansing Mayor Mark Meadows said, when the city considers these plans, it aims to “maximize the amount of money that would flow into the city.”

He added that what the city approves could change.

“This is just what they are asking for,” Meadows said. “We could just be looking at the bond.”

The city did something similar when it approved the $26 million brownfield plan without interest payments for the Park District project in January. Without interest payments, developers said the project wasn't feasible and they have since revised their plans.

Greg Ballein, of Ballein Management, is a partner on the Center City project. He said he believes the city will find that the value of the public improvements justifies the amount of money requested.

This type of proposal is new to the city, because the developer is asking for property tax reimbursement to pay off the bond. Harbor Bay is proposing to capture 90% of the new property taxes generated from the project for 30 years to cover that cost as well as to reimburse the costs of demolition and environmental cleanup.

The local and state taxing authorities would collect the remaining 10% of the new taxes during that time frame. The projected is estimated to generate roughly $600,000 a year for East Lansing. It currently generates $36,000.

Bell said the project would bring in additional revenue to the city through parking fees in the garage and ground lease payments.

The project is proposed on City Lot 1 on Albert Avenue and a stretch of Grand River Avenue. The buildings would include more than 350 apartments, a grocery store and other retail space.

The site plan for the project still needs approval from the planning commission.

"This project will complement existing businesses and support additional development," Bell said.

Alexander Alusheff is a reporter with the Lansing State Journal. Contact him at (517) 388-5973 or aalusheff@lsj.com. Follow him on Twitter @alexalusheff.