Parts of City Center II in foreclosure
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If a local developer cannot find financial footing for City Center II — a major downtown development — before it falls victim to foreclosure, the project is dead, City Manager Ted Staton said.
Seven properties in the project area have gone into foreclosure. They are held by Strathmore Development Company for City Center II, a $116.4 million mixed-used development planned for the corner of Abbot Road and Evergreen and Grand River avenues. The foreclosure property sale is scheduled for Sept. 17, almost two weeks before the developer is to appear before the East Lansing City Council to submit a financial plan.
If the property is sold, the developer no longer will own the properties and the city will not be able to go forward with the project, Staton said. The properties are listed under City Center II LLC, which is a part of Strathmore.
In the Aug. 27 issue of the Ingham County Legal News, a foreclosure notice was posted saying the properties were up for auction. On July 9, the publication also printed a foreclosure notice. However, both the mortgagor, Huntington National Bank, and Strathmore President Scott Chappelle said the print was an error.
But the most recent foreclosure notice is correct and the bank is proceeding with the foreclosure on the property, wrote Eric Sanko, vice president of Special Assets at Huntington in an e-mail.
“The foreclosure is the result of continued and significant defaults under the terms of the loan agreement,” he said. “(Huntington) hopes that a more amicable resolution to this matter can be found, but at this point finds no other remedy than foreclosure on its collateral.”
Chappelle wrote in an e-mail that Huntington and Strathmore had reached an agreement, contradicting Sanko’s statements.
“The City Center investor group has reached an agreement with the lender that resolves the foreclosure issue,” he said.
Sanko said he could not go into details about the terms of the loan agreement that was defaulted on. However, Huntington will go forward with sale on the seven properties listed in the notice.
With the developer on its fourth extension to secure funds for the project, this notice comes shortly before the City Council plans to take action on the project later this month. Depending on what the developer brings forth, the council could stick with Strathmore or go in a different direction.
“It’s entirely dependent on the development company to bring their piece of the project to the table,” Councilmember Nathan Triplett said. “Obviously we wished the project could’ve moved forward a little more quickly, but I’m sure you’ve seen that securing the financing for a project of this magnitude in the credit markets like these is difficult.”
Staton said even if the properties are foreclosed upon, the city still will own its pieces of property and still plans to build a parking structure there.
“We’ve planned to build that parking ramp there for 10 years,” he said. “We’re owning them and we’re keeping them.”
Commentary
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tedman
(09/02/09 11:30am)Report
I think Cedar Village is safe for now from the fingers of Ted Stanton and the city of EL. Party on comrads.
steve
(09/02/09 1:38pm)Report
HAHA – great news to hear. it was a disaster project from the beginning…the city was far too close to strathmore the entire time. It reeked of corruption on both sides to me. Karma whipped right back around on these guys. Hopefully a competent developer will pick up the properties and make something good outta this feces storm that strathmore created.
Sooo is the city moving forward with the parking garage?? haha. Prolly not. Great use of DDA money guys – picking up all those properties on evergreen…seemed to work out well for you!
More Parking
(09/02/09 3:09pm)Report
The city is going to build another parking ramp? Ted Staton might want to look at the current EL Parking System and realize it is already under utilized and there is no need for another parking structure. How about something people want already?
student
(09/02/09 4:43pm)Report
this is horrible..
spartanrob
(09/02/09 8:42pm)Report
i hope ted realizes that there need to actually be operating businesses in downtown el before parking even makes the least bit of sense
if ted has his way it seems that the entire city will be razed and made in to one giant maze of parking garages
as well as condos :) but at least we’ll be more like ann arbor
Townsend
(09/02/09 9:12pm)Report
Thanks, tedmon, good to know you’re only here to get drunk and destroy property; and of course, worship that all mighty slum/dump Cedar Village.
Lyle
(09/02/09 10:06pm)Report
Good to hear. Maybe EL can start focusing on their bread and butter now – the students.
Sol Bilderberg
(09/03/09 11:20am)Report
City Hall—City Manager Staton, Mayor Vic Loomis, and the rest of City Council—are to blame for this disaster!
These individuals collectively blame “the economy” for this project’s failure. However, those in City Hall were fully informed of their chosen developer’s FINANCIAL and LEGAL PROBLEMS back in 2007—BEFORE they approved this project.
Nevertheless, long after Strathmore stated that they were INSOLVENT in 2007, long after Strathmore’s failed project in ANN ARBOR, long after Strathmore’s lawsuits, liens, or foreclosures on their Petoskey and Cape Coral projects, it is OUR CITY OFFICIALS who continue to recklessly waste taxpayer money on a completely un-needed, $30 Million Dollar parking ramp—for City Center II.
They are out of touch with economic reality, and they should be removed from office.
This community is comprised of a lot of bright people, and City Hall ignored us in 2008 when we said there was too much risk and uncertainty with this Public-Private partnership—involving a troubled developer. City Hall was wrong. The Citizens were right—and now City Hall is blaming it all on the recession. We must hold them accountable and elect new leaders who will represent the citizens and the students, rather than KOWTOW to the DEVELOPERS—in order to benefit a few wealthy individuals.
SB
Phil Bellfy
(09/05/09 3:51pm)Report
I think it would be very informative if Ted Staton would explain who the “we” in that last sentence refers to. That “we” certainly doesn’t refer to community residents and voters who were only brought into the “planning” process less than two years ago —and we’ve been opposed to it ever since! I would also like to point out a little deception on his part —“the city” does not own the properties slated for demolition to make way for the parking garage. These properties are owned by the DDA, an “authority” completely insulated from any “city” control. The DDA is not accountable to either the Council or to the voters. In an odd, and unconstitutional twist, “the city” did coerce some buyers to sell their properties to the DDA by threatening to use eminent domain. Again, you can read about these threats —and much more about CCII— by visiting PublicResponse.com.
development
(09/06/09 11:03pm)Report
I can’t believe that people oppose to economic and urban development in the city of East Lansing.
The city officials are working towards the future of the city: to make it attractive for more people to live in EL and to create new economic venues. This is also the purpose of the development in the Cedar Village area.
Whether there is a conflict of interests between the city and the developer I don’t really care because this also benefits the city.
East Lansing depends largely on MSU. Well, lets take a look at MSU. First, the University just got the FRIB which means that the University will add significant employment by the time the Lab begins working. Second, IBM settled on campus which means that there is more people in the area looking to buy products and services. Third, the Broad Museum in the north part of campus will be a modern and unique structure that will diversify the city and attract visitors. Fourth, MSU is in a phase of renovating the residence halls, as many as the budget allows. Fifth, innovation and entrepreneurial centers are being established in the city of East Lansing to stimulate creativity and new businesses. Sixth, the former headquarters of the Michigan State Police will be redeveloped to enhance the economy of the region (the University is still working on that).
And many other transformations are taking place on-campus. So, East Lansing has to transform itself too to keep pace with the University. Also, East Lansing has to start separating itself from MSU and begin attracting more permanent residents, as I said below. This last point goes in hand with the same goals of Lansing and mid-Michigan.
You all probably argue that nobody has moved in the recent residential developments. Well, its a good point but not good enough. Nobody is buying properties right now, but eventually as, and if, East Lansing keeps developing and diversifying itself more people and more families will select East Lansing as their hometown.
Great towns don’t develop magically. It takes time.
Also, I don’t know the people who oppose these projects. So, I don’t really know if they too have some economic stake regarding their financial happiness.
Another point. Many people think that developing East Lansing will make it lose its small town atmosphere with plenty of parks and recreational places. There is not problem with that because MSU will always maintain its park-like campus.
I am in favor of a modern East Lansing that is the economic motor of mid-Michigan, at least. Unfortunately, some people is against it and want to keep East Lansing in stagnation.
Phil Bellfy
(09/07/09 11:33am)Report
“Development” —I beg to differ. In the early days of opposition to CCII, three alternative development plans were posted on the city website (mine was one of those). Those of us who oppose THIS development are NOT anti-development —quite the contrary: we want what nearly everybody wants —reasonable, reflective, responsive growth, resulting in a VIABLE project. The proposed City Center II is “none of the above.”
UseTaxDollarsWisely
(09/11/09 5:36pm)Report
Look, we need to keep our residential taxes lower with all the cuts coming in revenue sharing. If some developer is willing to invest their hard earned money in Michigan when noone else is willing to do so and help keep my taxes lower, I’m all for it!