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Lansing Township backed The Heights at Eastwood. Now it's being sued over a $13.8 million debt.

Lansing Township Won't Talk
Posted at 5:47 PM, Apr 25, 2022

LANSING, Mich. — The estate of developer Michael Eyde is suing Lansing Township for $13.8 million for unpaid debts related to The Heights at Eastwood.

That's a significant amount of money for a township with a population of about 8,000 and an annual budget of $4.3 million, and officials are still working out what the township might ultimately owe and how it might pay.

The Heights at Eastwood is an 88,000-square-foot luxury apartment and retail space adjacent to Eastwood Towne Center. Lansing Township backed the development in 2010, an odd investment for such a small township.

The township also agreed to a 99-year land lease from Eyde with annual payments starting around $1 million and growing to more than $5 million.

The plan was that tenants would bring in tax dollars, replacing the revenue the township used to get from auto plants.

"Their optimism was real," said Ingham County Treasurer Alan Fox, who is working with the township on financial issues, it's debt from the Heights among them. "They had some basis for it, but didn't pan out the way they'd hoped."

But The Heights ultimately never found enough tenants for the township to meet its obligations, according to the lawsuit.

By 2016, The Heights had never even achieved 30 percent occupancy. Businesses that did lease the space went under, and at least one sued the township afterwards.

The township and Downtown Development Authority sold $30,000,000 in bonds to keep The Heights afloat.

By 2020, according to the lawsuit, Lansing Township owed $9.9 million. The building that was supposed to make money for the township, started to drain its budget instead.

"It's one thing to go into debt to build the road or fix part of your infrastructure, which is the most common way governments use debt," said Michigan State University economist Eric Scorsone. "In that case, you're doing something good and important... In this case, it's quite different."

FOX47 has been reaching out to township officials and attending their meetings for months.

We've asked officials how this debt keeps building, why, when they're going to be open about it, and what's going to be done.

No one will talk.

"It's not like it's a secret that that they've had financial trouble," Fox said. "It's a secret only from people who haven't been paying attention."

In 2021 Lansing Township residents received a clear taste of the repercussions with a special assessment that raised property taxes.

The township said the assessment was to fund the police and fire departments.

"It’s a shell game," Lansing Township resident Luke Sciberras said a township meeting in December. "You pick up the cup, you move the money that would go to police and fire to other things... Paying off bonds. Then you special assess and say well this is police and fire. The reason for more money being needed isn’t because our police and fire is bankrupt, it’s because there is a large bond coming due."

And future increases seem all but certain.

"No matter what happens, the taxpayers of the township are on the hook for the debt, said Fox. "This has been pointed out at township board meetings, some people have come to township board meetings, and they've said, 'Default on the debt.' And they've been told by the township attorney, 'Nope. Then you just get ordered to pay it and the court orders a millage to pay it.' So that doesn't get the the taxpayers out from under the burden."

The township hasn't paid rent for The Heights at Eastwood since April 2020. In March, Township Supervisor Diontrae Hayes resigned suddenly and moved to Oklahoma. And recently the township has asked Alan Fox to take a look at their debt and help them come up with a plan.

In addition to the Eyde Estate lawsuit, the township also owes $1,750,000 to Walmart in back taxes.

"One way or another, the debts have to be paid," Fox said. "The question is, can the township find additional sources of revenue?"

Sciberras said he wishes the township has paid better attention to the deal it struck a dozen years ago.

As for the debt, "It’s frustrating as a resident," he said. "You don’t want to pay that."

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