Loomis
An East Lansing resident and ardent opponent of the City Center II project said during Tuesday’s City Council meeting that he plans to ask Michigan Gov. Jennifer Granholm to remove East Lansing City Council members from their positions for violating the state constitution in regard to property acquisition and funding for the development.
East Lansing Mayor Vic Loomis said the resident will be hard-pressed to find anyone willing to listen.
Phil Bellfy, an MSU associate professor of writing, rhetoric and American cultures who also unsuccessfully ran for city council in November 2009, said the city borrowed money from taxpayers to allow the Downtown Development Authority, or DDA, to purchase $5.5 million in bond anticipation notes to acquire land — including Evergreen Arms Apartments, 341 Evergreen Ave. — for part of the 5.25 acre, $116 million project.
That land would house a parking garage and performance arts theater.
Bellfy also accused the city of planning to use $30 million in bonds to perform construction on that site, which he said would cost taxpayers money.
He also said the city is using a process called tax increment financing, which uses future revenue from increases in property taxes gained through new development, to pay for the City Center II development.
“It’s not against the law,” Bellfy said.
“But it is against the law to lie to the public. The city of East Lansing is faced with this huge budget problem, and it is a crisis.”
Loomis, however, said Bellfy is misinformed about the bond usage.
Loomis said the $30 million bond notice was informing citizens that the city was exploring the market, but no money has been spent.
Even if bond money were necessary, Loomis said it would be paid long term by new property taxes generated from the development, the theater lease from MSU and parking revenue.
The $5.5 million used to acquire property for City Center II will not impact taxpayers because the bond anticipation note also will be paid for by parking and property revenue.
If no parking garage is built, the city could regain money by reselling the properties, Loomis said.
“There is plenty of protection to the taxpayer, all of which Mr. Bellfy chooses to ignore,” Loomis said.
But Eliot Singer, a 26-year East Lansing resident, said citizens haven’t been given enough information about the project’s cost structure.
Singer said East Lansing has used “propaganda” to promote the positives of the city, but rarely has provided concrete facts about its spending.
Singer said Bellfy’s information regarding city conduct and spending related to City Center II “looks solid.” He said the onus is on the city to prove doubters wrong.
“I’m much more willing to rely on someone who does not have a vested interest in the project,” he said.
The financing plan still could change, and nothing will progress until Scott Chappelle, president of Strathmore Development Co., which is leading the project, provides the City Council with an assessment of his financial plan.
Chappelle said his financing package will look different than the one approved by the City Council in 2008, but he still doesn’t have the pieces in place.
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Another issue Bellfy raised is that the city sold the Evergreen Arms properties to CADA Investment Group for development — which Loomis says is misguided.
CADA Investment Group is affiliated with Chappelle in that they’re working together on the project, but it has not purchased the properties, Loomis said.
In 2007, the city bought the Evergreen Arms properties from DTN Management for $2.4 million under the parameters of Michigan’s Uniform Condemnation Procedures Act, but it has not sold the properties.
The law allows the city to begin the condemnation process 30 days following the initial offer if no response is made or no agreement can be reached, only if the intent is for public use.
Loomis said the city never used eminent domain, which is substantiated. He said the city went through the proper legal steps included in the Uniform Condemnation Procedures Act, but did not use eminent domain.
Bellfy said, however, the fact eminent domain was a possible outcome if DTN Management refused an offer scared the company into selling the property.
Tom Yeadon, East Lansing assistant city attorney, said the city had to outline all procedures in the act to avoid legal conflicts. He added that property owners, such as DTN Management, achieve tax benefits through involuntary sales, as the company can transfer capital gains taxes to another property.
“The fact is, Mr. Bellfy’s assertions are taken out of context,” Yeadon said.
“The property owners aren’t saying their property was condemned; it was Mr. Bellfy who said it was condemned.”
