After almost three years of setbacks, the East Lansing City Council will consider approval of a development agreement for the Virginia Avenue project today.
The agreement will hammer out the details of the project, and what city officials and the developer are responsible for. The development agreement, which the council discussed at its May 8 work session, also provides specifics about financing and the number and types of homes included in the project.
The developers are trying to secure an additional $750,000 from the government and are generating about $50,000 in revenue from additional rental income on the acquired properties, said Tim Dempsey, East Lansing's community and economic development administrator.
According to the developmental agreement, construction on the project cannot begin until the project's developer, Mayberry Homes, provides the City Council with proof of "adequate financing."
Ideally, a final site plan will be submitted to the planning commission by the end of the month, said Stephanie Gingerich, an East Lansing community development analyst. She said the plan will not be finalized until all the properties are acquired, but Mayberry Homes plans to move ahead with what they already have.
Gingerich estimated that model homes could be completed as early as late summer and with certainty by fall. City Manager Ted Staton agreed.
"We're at the point where we're starting to see the light at the end of the tunnel, so to speak," he said.
The 600 block of Virginia Avenue will be restructured into 30 housing units — 16 single-family homes and 14 townhomes— after the demolition of about 19 existing homes, said Gingerich.
About 75 percent of the homes on the block are rental properties, but the newly constructed homes will be restricted to owner-occupants, with no possibility of becoming rentals in the future.
Since the city first applied for funding in August 2004, the project has faced budgetary and logistical difficulties.
Before a nearly $2 million budget increase in April, based on rising property values, the project was about $500,000 over budget. Now, the redevelopment — tentatively named Avondale Square — is moving forward, with a budget of $5.2 million.
Projecting the budget was a difficult task in the beginning stages because of its dynamic nature, Dempsey said.
"We're pretty comfortable that the numbers that we've established right now are pretty accurate," he said.
Mayberry Homes also has been hard at work acquiring the final properties they need for the completion of the project. On May 1, the council approved the acquisition of 1330 Burcham Road and 683 Virginia Ave., bringing the total number of properties needed to six, Gingerich said.
The company entered into a unique agreement with one resident, Todd Berlinski, who lives at 637 Virginia Ave.
Instead of purchasing the entire property, Mayberry Homes will acquire a portion at the rear of the lot to build an alley. They also will aid the owner with the construction of a new garage and other improvements to the front of his home.
Berlinski's home, which was moved from another section of East Lansing several years ago, has some of the historic features the designers are looking to incorporate into the development as a whole, Gingerich said.
"We think they'll fit in well with what we're looking at doing," she said.
Among the remaining property owners, Gingerich said the main difficulty is coming to an agreement that is financially beneficial to both parties.
"The landlords have a good income coming from these properties," she said. "They would like to find something they can replace them with that will let them enjoy that same income stream."
Finding comparable properties is a challenge within the project, Gingerich said, not landlord opposition.
At least one property owner does not see negotiations with the city ending any time soon.
"At this point, we're not really coming to terms," said Matt Hagan, of Hagan Reality, Inc. The company currently manages 612 and 618 Virginia Ave.
Hagan Reality is trying to recoup a return on their investment, which taxes and other factors could make difficult. The two sides are no closer to an agreement, Hagan said.
Of the proposed 30 housing units, 12 will be set aside for low-income families. Those who qualify for this housing will be provided with down payment assistance, thus securing a smaller mortgage for the families, Dempsey said.
"There's been a declining opportunity for single-family homes with children to purchase homes in the East Lansing school district," Staton said.
Demolition on five of the properties could begin as soon as late June, but no later than July, Gingerich said.
Sarah Norris can be reached at norriss3@msu.edu.
VIRGINIA TIMELINE
Aug. 31, 2004: City officials apply for a $2.3 million loan from the U.S. Department of Housing and Urban Development (HUD) for redevelopment of Virginia Avenue's 600 block.
The initial plan called for the demolition of 23 homes and the construction of 39 new housing units.
2005: After delays in receiving federal funding, the Virginia Avenue project is almost abandoned by city officials. The project moved forward after $350,000 in funding came through for the city.
April 27, 2006: HUD awards East Lansing a $1.5 million loan for continued funding of the redevelopment.
May 23, 2006: City acquires property at 601 Virginia Ave.
July 27, 2006: Monetary incentives are offered for owners to vacate their Virginia Avenue properties.
Owners may be eligible for $1,000 for owner-occupied properties or $250 for rentals to assist with moving costs.
Sept. 19, 2006: City officials announce the need for an additional $300,000 to redevelop Virginia Avenue.
Oct. 24, 2006: The city purchases properties at 625, 613 and 624 Virginia Ave.
Nov. 30, 2006: Completion of home demolition at 601 and 673 Virginia Ave. is expected by the end of the calendar year.
Jan. 8, 2007: Demolition is pushed back until the end of January after difficulties in lining up a contractor.
Jan. 16, 2007: City officials purchase 1340 Burcham Road.
Jan. 24, 2007: Delays in turning off utilities at 601 and 673 Virginia Ave. stall demolition further.
February 2007: The Virginia Avenue redevelopment is almost $500,000 over budget. The overall plan has also been altered because of unforeseen changes in acquiring homes. The new plan calls for the demolition of 19 homes, with about 30 owner-occupied homes taking their place.
March 2007: After discovering the home at 673 Virginia Ave. has been constructed with steel-reinforced concrete, S. Sulski Construction Inc., requests an additional almost $8,000 to cover demolition costs. City Council approves the request, putting the project even further over budget and behind schedule.
April 2007: A reassessment of property values increases the budget of the Virginia Avenue project by $2 million.
May 1, 2007: The city acquires properties at 1330 Burcham Road and 683 Virginia Ave.
May 15: The final development agreement goes before the City Council for approval. The agreement between Mayberry Homes and the city includes plans for 30 units of housing — 16 single-family homes and 14 townhomes—as well as funding details and construction parameters.
