Developers plan to pitch scaled-back Red Cedar Renaissance project to Lansing City Council

LANSING — The developers of a $242 million project proposed at the site of the former Red Cedar Golf Course are asking the city to kick in more than $10 million to the scaled-down project.

The development group that hopes to build on the city-owned property near the East Lansing border has submitted a proposal for a purchase agreement with the city, asking for $10.7 million in general obligation bonds to pay for the public infrastructure portion for the project. A brownfield plan would collect property taxes to pay off the bond.

“This will be another shot in the arm in the Michigan Avenue corridor growth," Lansing Mayor Andy Schor said. "That’s a good thing for the city.”

The group will give a presentation to the City Council Monday night. The council would need to approve the purchase agreement.

The city approved a pre-development agreement with developers Joel Ferguson and Frank Kass in late 2014. Kass is the the chairman of Continental Real Estate Companies and Ferguson is the head of the Ferguson Development Group and a Michigan State University Trustee.

The cost of the project — called the Red Cedar Renaissance — was initially pegged at $380 million.

"Given the substantial costs of the site's infrastructure, we worked very hard to value-engineer those costs by almost half," Christopher Stralkowski, Ferguson Development's executive project manager, said in a Friday email.

The developer is now planning to put $67.2 million toward the cost of the public infrastructure portions of the site.

But Stralkowski said the overall investment needed for the project "has a real chance of increasing."

Even scaled back, it would be costly. The golf course sits in the flood plain of the Red Cedar River. The planned structure would need a thick foundation. And roads, utilities and sewer lines also need to be put in place.

“It’s unusual that it’s taken this long to get to this point but this is an unusual project," Kass said. "Red Cedar is an unusable site as it sits today.”

The developers previous asked the county in 2016 to issue at least $35 million in bonds to help finance the project , but was rejected. An employee of the developers said at the time that the county's better credit rating made it a better choice than Lansing.

Lansing has a credit rating of A2, according Moody's Investor Service. Anything below a Baa3 is considered too risky to be a guaranteed investment, according to Moody’s scale.

Lansing Economic Area Partnership President and CEO Bob Trezise said the project strikes a balance between the best interest of the city, taxpayers and the developers.

Trezise said the space is currently a gap along the Michigan Avenue corridor. Filling the area in with development could better connect MSU and the city of Lansing and potentially draw in more shoppers to the Frandor area.

“We’ve never dealt with a site as bad as this, and we’ve never dealt with a site as strategically important as this,” he said.

The city closed the golf course in 2007 for budgetary reasons. City officials have worked toward developing the closed Red Cedar Golf Course since 2011, when they asked voters to allow the future sale of the site.

The city still owns the property and is planning to sell it for $2.2 million. The money from the sale will go toward Lansing city parks, Trezise said.

The mixed-use development would include two hotels, 40,000 square feet of retail and restaurants, multi-family and student housing as well as an assisted living facility. The project also calls for a 22-acre park. The $242 million project is expected to create 388 new jobs, according to the developer.

Construction on the site could potentially start in the fall, Kass said.

In order to move forward, the project will also need approval from the Lansing Brownfield Redevelopment Authority, Michigan Department of Environmental Quality and the Michigan Economic Development Corporation.

Another potential issue for the developers is the reconstruction of the Montgomery Drain. The drainage district includes the former golf course, Frandor shopping center and a residential area north of Frandor. Contaminated storm runoff from the drain area flows through the golf course and into the Red Cedar River.

Ingham County Drain Commissioner Patrick Lindemann plans to do an overhaul of the drainage system that services the area around Frandor in order to reduce pollution. The project could cost up to $30 million and will add fountains, ponds, streams and waterfalls in Ranney Park and adjacent to the proposed Red Cedar project.

Kass said the drain project is key to the development moving forward.

"Without the drain commissioner's project, we would not be doing our project," he said.

Lindemann said he plans to coordinate with the developers when rolling out the drain project, which could start as early as June.

“I don’t want to move the same bucket of dirt twice,” he said.

A civil lawsuit filed by developers previously involved with the project is still pending, according to court documents.

Leo Jerome, Christopher Jerome and their Story Companies, claim Ferguson conspired with former Lansing Mayor Virg Bernero, LEAP, Trezise and other local economic development officials to steal the Red Cedar project.

In 2012, the Jeromes had proposed Capital Gateway, a mixed use project. Plans called for it to include the former Story Olds and Sawyers Pontiac dealerships along Michigan Avenue and the former golf course site.

In the lawsuit, the Jeromes claim they were forced to consider Ferguson and Charles Clark, of Clark Construction Services, as development partners who later demanded Bernero give Ferguson's team control of the project and cut the Jeromes out completely.

The end of the Jeromes' involvement was announced in December 2013, when the Capital Gateway name was dropped and Ferguson partnered with Kass to pursue the Red Cedar Renaissance project at the same site.

Contact reporter Haley Hansen at (517) 267-1344 or hhansen@lsj.com. Follow her on Twitter @halehansen.