City Center II should move forward after tax payment
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It’s no secret that the State News editorial board hasn’t been pleased with how the City Center II project has been handled in the past, but recent project developments are giving the city of East Lansing an opportunity to buckle down and finally push forward.
Strathmore Development Co., the developer for City Center II, a $116.4 million mixed-use project slated for the corner of Abbot Road and Grand River and Evergreen avenues, paid $96,000 Tuesday in taxes owed to the city. The payment ends a stalemate between the city and Strathmore that has lasted more than a month, putting a possible site plan amendment into motion.
Although it is a good thing Strathmore paid off its taxes, we believe the company has received preferential treatment from the city. East Lansing gave Strathmore four extensions on its payment plans, a remarkable amount considering the developer has millions of dollars in outstanding loans in Petoskey and Florida.
But now that Strathmore has balanced its debt to East Lansing, it’s important that the city takes a more stern approach to City Center II. The city needs to stay on Strathmore and hold it and president, Scott Chappelle, accountable. East Lansing no longer can allow the company multiple extensions on deadlines and expect development progress to be made.
Strathmore has showed in its other developments that it can be unreliable in financial dealings and it was risky for the city to continue with the company at the helm of the project. At this point in the game, the city has to stick with Strathmore. And because the city wants the area developed into City Center II, they need Strathmore.
Although Strathmore is crucial in the development, it doesn’t mean the city needs to be lenient with the company. City officials need to set stricter guidelines, and Strathmore must follow them to finally get the project rolling.
If the city can shy away from its previous leniency with Strathmore, this long-awaited and important project can show residents the city means business. In East Lansing, residents know projects will happen, but they also know it will likely take a while. Although City Center II has taken more than 10 years to make any significant progress, the fact that Strathmore is caught up with tax payments gives the developer and East Lansing the opportunity to show residents they are serious and give them faith in the city’s actions.
The City Center II project is no longer an issue of Strathmore owing money to the city. Now, the issue is more about the city owing East Lansing residents respect and progress in the project.
If Chappelle didn’t have money in several other developments across the country and was a regular resident of East Lansing, he would have been released from this project a long time ago. It’d be nice to see the city conduct business with the developers with the same sort of hard-nosed approach they do with the residents.
The city also owes the residents of East Lansing the long-awaited City Center II. After years of waiting and seeing nothing happen, it’s about time the project gets under way.
Both parties now are in the position to start making visible progress on City Center II, but it is the city’s job to make sure it gets finished — and soon.
Commentary
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ryan
(01/29/10 6:28am)Report
“Now, the issue is more about the city owing East Lansing residents respect and progress in the project.”
The City has shown no respect at all regarding this project. Strathmore has been treated with kid gloves by our City, and the residents have been pushed to the side so one man can enrich himself at the expense of our schools and infrastructure. Thirty years! That is how long Strathmore will be collecting property taxes for a building that would be othersise unaffordable. $59 million in taxes going to a private bank account to build a building that is too big for the location, and that chomps into a historic district.
Pays Property Taxes with a Credit Card? So where's developer's funding for his project?
(01/29/10 10:29am)Report
Strathmore, until proven otherwise, has no money to build their housing project.
Strathmore appears to be drowning in lawsuits, liens, foreclosures, and delinquent property taxes, involving failed projects in Bonita Springs, Florida, Petoskey, and Ann Arbor.
Scott Chappelle stated in sworn testimony that his company has been pushed, and I quote: TO THE POINT OF INSOLVENCY.
The taxpayers of E.L. overwhelmingly rejected the use of $80 Million Dollars of Public Money, including $30 Million Dollars of property tax backed bonds for this project.
The housing market, in this economy cannot support worsening the oversupply of housing units, particularly overpriced, expensive student housing.
The property taxes generated from the project will be used to pay off the PUBLIC DEBT used to build the project in the first place, and the money will NOT go to the general revenue fund.
Therefore, there is only a huge public financial risk and minimal benefit for this project.
Marie
(01/29/10 1:26pm)Report
Sometimes I get angry when I consider the way the city of East Lansing has treated its residents during this “development.”
Then I remember that Strathmore is somehow more incompetent than East Lansing itself, and I can smile. Cheers to never seeing this break ground!
Paying Delinquent Taxes Does Not Warrant Taxpayer Funded Bailout of Insolvent Private Developer
(01/29/10 1:32pm)Report
Why are the State News editors suddenly in a rushbuilder City Center II started? Because Chappelle finally put another $100,000 delinquent tax bill payment on his VISA card? So now everything should be rushed through? The State News ignored Plante Morans findings that neither the City nor the developer properly conducted accurate market analyses and basic due diligence, according to the the developmental checklist. Their warnings went ignored, and since then, we have been in a deep recession. This massive BAILOUT is a paragon of risky pork barrel spending, at precisely the WRONG time. Let us see some investigative journalism, rather than fallacious editorials based on lies and fantasy.
County Treasurer quoted in the STATE NEWS that Chappelle paid property taxes with Credit Card!
(01/29/10 6:35pm)Report
QUOTE FROM 7-19-09
This is not the first time the company has been late in paying property taxes. Ingham County Treasurer Eric Schertzing said the developer has been late with taxes on the City Center II properties since 2005.
Paying taxes late subjects an entity to additional fees. An exact amount of how much the company paid in additional fees since 2005 wasn’t available from the county.
“They have had a history of the last couple of years of having delinquent taxes,” Schertzing said.
Property owners have up to 25 months to pay delinquent taxes before the county files for a tax foreclosure on the property.
The property at 100 W. Grand River Ave. — where the old Citizens’ Bank was located — was delinquent for the fifth year, Schertzing said.
Strathmore owes $53,397 on that property for the 2008 taxes. Schertzing said in 2005, the taxes were paid by CADA Investment Group on a Visa card for $99,578.
CADA is a holding company Strathmore Development Company uses.
Chappelle declined to comment on CADA’s involvement in the project.
http://www.statenews.com/index.php/article/2009/07/downtown_development_company_lags_on_tax_bills?FORM=ZZNR5
Lyle
(01/30/10 10:00am)Report
To continue is ridiculous. It took how long for them to come up with the $96,000.00? They now only have to come up with financing for $116.4 million?
Give me a break, this project will never get started let alone completed.
Straight Talk Depress
(01/31/10 9:29am)Report
Even if City Center II gets built and is fully occupied, very big ifs, it will not transform East Lansing any more than City Center I did. This and all the other projects for the glorious future that keep getting hyped are just an attempt to distract from the grim present reality that is certainly going to get worse over the next few years, with cutbacks at MSU and state government. The fact is the people now running East Lansing lack the management and leadership skills for dealing openly and effectively with hard times. There may be a lot of unhappiness with fiscal decisions being made by the MSU administration to deal with current budget problems or future health care costs, but (unlike under banker MacPherson) issues are for the most part being discussed openly and the administration is not pretending everything is coming up roses. It is appropriate during hard times to look to what needs to be done for the future, but not as a substitute for dealing with the present, which is how East Lansing government operates.
Staton, Loomis and company liked the original CC II “business plan,” although it never went through proper market analysis. Loomis says the new plan is better (he and Staton also have different stories about how Strathmore is going to come up with funding). There is no new plan. There is simply a suggestion that there will be a combination of commercial, residential, and office space. A plan requires details and projections of who will occupy the space and, of course, serious market analysis. So far what we hear is that Strathmore wants to decide what the space will be used for after it is built. All of a sudden East Lansing is gung ho about office space for high tech. Where was it 20-25 years ago when other college towns were pursuing high tech ventures? Is East Lansing really failing to attract high tech because of a lack of office space? (I see an aggressive ad campaign for the Hannah Tech Center, which suggests no takers.) Why, in this mobile computing era, would anyone want to pay high overhead costs for office space downtown when they can get it for a lot cheaper a mile or two away—East Lansing is not a big city with a two hour commute.
The State News editorial board has generally been thoughtful on these issues and is trying to be this time as well. But please hold back—at most this would be a time to say, let’s see what Strathmore has in the way of a plan and let’s see whether the city is willing to engage in due diligence before suggesting the project go forward. And even then there are legal issues, tax payer subsidies for real estate speculation, and the terrible track record of Strathmore (and city government) that makes it a company no one in their right mind would do business with in their personal lives (would you buy a used car from Chappelle?).