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Developer backs out of East Lansing affordable housing project

Affordable housing project in East Lansing
Posted at 9:54 PM, May 15, 2022
and last updated 2022-05-16 09:36:35-04

EAST LANSING, Mich. — The second phase of the Park District Project in East Lansing is falling flat after the developer backed out.

In 2019, East Lansing began building on a site that had long been an eyesore.

“The project itself, redeveloped an area that was blighted for many, many years," said Planning, Building and Development Director Tom Fehrenbach. "Many people remember, the former bank building that was sitting there vacant, I think, for 17 or 18 years.”

Fehrenbach said phase one of the project was completed successfully.

“The phase one was what brought us the Abbott mixed use building with commercial and residential, as well as the Graduate Hotel," Fehrenbach said.

But phase two, also known as Building C, has hit a bump in the road.

“They have now indicated that they're not moving forward with with building Building C due to kind of rising costs, inflation, etc,” Fehrenbach said.

Building C was taken on by Convexity Properties, LLC and designed to be affordable housing with 99 units with a 74/25 low to moderate income market split. It was supposed to be built by 2025.

“We do have some serious gaps in our housing market, especially for folks of low to moderate income and effect, especially have kind of like attainability, in terms of our marketplace,” Fehrenbach said.

But in April, Convexity Properties emailed a non-binding letter of intent to Fehrenback saying they had to back out of the project.

“I think they had a lot of concerns related to rising costs and the economic feasibility of the project and I think ultimately, that's probably what made them decide to indicate that they're no longer moving forward,” Fehrenbach said.

The developer also sent over site plan documents and architectural plans for the property, while in exchange asking for the city to amend a brownfield plan to allow $1.56 million of eligible project expenses to be reimbursed to the developer.

What makes this situation so complex for the city is a previous agreement with Convexity.

"Per the development agreement that we have with Convexity, if they do not move forward and pull a certificate of occupancy by by spring of 2025, the property does transfer to the city," Fehrenbach said. "However, it comes with a deed restriction for public open space.”

As of now, the deed restriction would prohibit the city from using the land for any purpose including affordable housing as previously planned. Fehrenbach said that's something they're trying to figure out.

“Certainly, as part of part of our kind of daily activities, we're looking at what other options might be available," Fehrenbach said. "So certainly another developer maybe may have an opportunity to look at, for instance, a low-income housing tax credit project through MSHDA, or various other options.”

Convexity Properties did not respond to a request for comment.

Fehrenbach said any next step with the property is going to take time due to the complexities of the situation.

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Mikayla Temple

Mikayla Temple

1:39 PM, Jan 05, 2021

Your Neighborhood Reporter

Mikayla Temple

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