Response

Staton, Loomis, and the rest are certainly acting like they have no intention of putting City Center II to rest.

They pushed the extension through the Planning Commission—it was done hurriedly (they knew months in advance they would need an extension), during MSU spring break when there was less likelihood of opposition, with a dramatically restated bottom line for which the commissioners should have demanded a plan modification to compensate, and while Strathmore was still delinquent on its taxes, perhaps none of this a violation of the letter of the city charter, but a violation of the underlying idea behind the commissions as an independent voice of the community not an extension of government power.

They are trying to get the Historical Districts Commission to approve demolishing the Evergreen buildings, which is in violation of the law, since multiple parts of the planning are no longer valid, there is no development agreement, and most importantly, there is no financing.

And they told Fitch they plan to refinance the $5.6 million in BANs with $16 million in bonds for the parking structure to be paid for by tax increment financing. With the BANs coming due next fiscal year, the option of just kicking the can down the road, with the occasional hype followed by months of silence, is no longer possible.

City Center II will never happen—that has been true since they first fantasized about it. But there is every reason to fear they will spend the $30 million in LTGO bonds already approved, and maybe the other $10 million in the financing plan of record, and the whole thing will end up another Broadway Village or one of the other Strathmore black holes.

Loomis has consistently said he is waiting for Strathmore to produce a financing plan. A financing plan is not the same as financing. The $116 million plan they approved was smoke and mirrors. The Brownfield tax capture plan approved by both city and state was significantly at odds with the $116 million financing plan.

To repeat: a financing plan is not the same as financing. No one but East Lansing government, and maybe still the State of Michigan, will give Strathmore money anymore. Not with the eight development projects lost to foreclosure (and counting), plus Broadway Village. Not with losses so huge even I’m finding them hard to believe as I try my best to estimate. Not with the debt, the lack of any collateral for loans, and a death-grip mortgage on the City Center II properties.

If you really want to be frightened, the precedent for these bond-funded public-private projects is for the developer to be in charge of all the construction, even the parts paid for by the bonds. Does anyone seriously think East Lansing government will put its bond proceeds in a lockbox until all the rest of the money needed to complete City Center II has been obtained and spent on construction?

------------------------------
Related Essays:
Chris Wolf's Response to Bellfy
Phil Bellfy: "...The Project Is Dead"