Responses to Park District Proposal Supplementary Questions

The responses to the added questions for the Park District RFQ/P have now been posted on the city's website (click under "responses to questions" for each of the six remaining developers -- Core Campus has withdrawn):

Park District Planning Area

Who's Who

The first question was intended to identify who actually is involved in the proposed projects. This is a little complicated at this stage of the game, because in some cases place-holder LLCs are necessary for legal reasons, although later the ownership structure, with investors, will look different. The keys now are to make sure there are no secret players (like might be lurking with the new DTN managed ELBB, LLC, that has been assigned the sheriff's deed on the big bank building) and to make sure that the developer who will be building and obtaining financing for the project is qualified, among other things passing the $10 million completed project threshold.

MTB is a bit complicated, but the key question is whether Michael Bailey, who was involved in City Center I, or Visser Brothers can be considered as the prime developer of some of the big projects in the portfolio submitted with the proposal. I'll leave that to the committee to figure out. The one that had everyone concerned was Studio Intrigue, where an architect who has been involved in big projects by other developers, was submitting a proposal on behalf of unknowns. The people are now revealed, but it is an insufficient qualification for a consortium of inexperienced or small time developers to hire an experienced architect. The committee will need to explore the development credentials of those listed.

Capstone has apparently decided to distance itself from its controversial local partner. DTN and Lurvey-White are both clear as to who is involved, with Lurvey-White having completed some big projects, although nothing quite like what they are proposing, and DTN probably not.

Everybody (except his grass widow and children) knows Chris Jerome, who is acting as the agent for Carpenter, but what matters is that Carpenter, a world-class developer, is the one who would design, build, and obtain financing for the project.

Public Debt Financing

DTN: "nothing." Jerome-Carpenter: "nothing." Studio-Intrigue: "Our investment model does not include financing any portion of
the proposed project with public debt (i.e.—municipal bonds)."

The others all expect major debt financing by the city, notably parking structure (with Capstone hedging).

MBT expects parking structure to be funded by public debt. Lurvey-White expects bond financing for parking structure and underlying land value (presumably the existing city debt for the land).

Capstone seems to expect the city to pay for infrastructure (water, sewer, etc.) and "would also work with the city to determine the feasibility of financing with public debt a public parking garage…. The farmers market could be developed using public funds. Capstone however is willing to work with the city to determine the best means of financing the project including the use of TIF funds."

Financed Privately but Reimbursed by Public Funds

DTN appears to be proposing to pay for all the infrastructure, parking, etc., to be reimbursed with TIF: "Site work including demolition, excavation, sheet piling, fill, underground and above ground utility improvements benefiting the project and the municipal infrastructure generally. Parking structure and underground parking level under hotel. Skywalks, miscellaneous architectural structures, farmers market, landscaping, sidewalks, brick pavers, irrigation. Road improvements including the straightening of Abbot Road, vacating and repositioning of Evergreen. Land cost associated with land acquisition at above market rates. Environmental remediation, engineering and architectural relating to the above. Interest carry to finance the above."

Studio-Intrigue also expects TIF reimbursement over 20 years for parking structure, infrastructure, farmer's market, etc. Also, explicitly mentioned is TIF reimbursement for "site procurement."

Capstone: "Although Capstone must maintain a financeable return, Capstone will work closely with the City to determine if it would be more advantageous for the City for Capstone to finance the infrastructure, parking garage and be reimbursed by the City or if the City would prefer to build…using public debt…. Depending on the final agreed upon scope of the project Capstone could finance certain improvements including the parking garage and be reimbursed using TIF funds or other sources of public funds.

Capstone mentions places where it has built parking garages, and it would be important to investigate the type and size relative to number of beds, because it is a lot easier for a developer to afford to build parking when there is too little.

Jerome-Carpenter: "The developer intends to apply for existing state and local business development programs, subject to qualification. While applying for existing programs such as brownfield tax credits may be desired to ensure a quality development providing competitive returns on investor capital, the developer respects the needs of the City of East Lansing to weigh these potential credits against the needs of the City to finance existing debt and provide essential services."

City Ownership

Roads, sewers, right of ways, etc. always belong to the city, even if developers pay for construction (as traditionally is the case) and then "donate" improvements. The proposals differ about ownership of parking structure (if any), depending on who is expected to pay for it. Jerome-Carpenter wants to improve the park, which would stay under city ownership but would be enhanced with a private endowment. Some other proposals include a year-round farmer's market that may or may not end up owned by the city.

For the most part, this question is redundant with who is paying for the big ticket items.
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