As Voting Starts, MSUFCU Wants to Build Eight Stories. What about a TIF?

Above: The initial rendering provided by MSUFCU, showing only five stories, looking northeast along Albert Avenue. The new plan calls for eight stories, but renderings of that are not available yet.

Responding to questions from ELi, Michigan State Federal Credit Union President April Clobes says that if voters authorize City Council to sell a piece of downtown land to her organization by approving a question on the March 10 ballot, the credit union will seek to build an 8-story, 112-foot-tall office building.

That’s the tallest allowed by the ballot question.

“This is most cost-effective and allows for the Credit Union to have additional space for long-term growth,” she explains. “It is not our intent to sell the building to another party. It is possible that we could lease some of the floors to other business for office operations until we fully grow into occupying the space.”

Clobes also said in the email interview that the credit union will not be seeking tax incentives for the project.

But East Lansing’s Planning Director Tom Fehrenbach tells ELi there may yet be a tax increment financing (TIF) plan for the project, particularly if ongoing investigations show environmental contamination that requires remediation. (More on that below.)

Balloting on the issue has started

According to the East Lansing City Clerk’s office, absentee balloting has already begun for the March 10 election, and that means registered East Lansing voters can now indicate whether they support or oppose this sale of City-owned land to MSUCFU.

The land, located at the northwest corner of Abbot Road and Albert Avenue, is made up what has been City surface Parking Lot #4 (just south of the Dublin Square restaurant) and part of Albert Avenue. Albert Avenue is currently being shifted south, so part of that right-of-way is available for this sale, along with Lot #4.

Below: original rendering showing the 5-story version, looking west down Albert Avenue with The Graduate Hotel (now under construction) on the left.

The ballot question asks whether Council should be authorized to sell the approximately 13,000-square-foot plot to MSUFCU for the appraised value of $810,000 to enable the credit union “to construct a five to eight story commercial office building, not to exceed a height of 112 feet, which may include an MSUFCU branch office, intern center, office space, and a community room that may be utilized to host MSUFCU, MSU, and non-profit events.”

What MSUFCU intends at this point

Before approval by Council, the ballot language shifted from saying the building “will” include those named internal elements to “may” include those elements. So, what is MSUFCU really looking to put inside the building?

Answering that question, Clobes (below) said that the credit union is planning a branch on the first floor (to replace the branch currently located next to Peanut Barrel), a community room on the second floor, an intern center on the third floor, and office space on floors four through eight.

Says Clobes, there is “the possibility of some floors being leased [out to tenants] until we grow.”

There is no parking planned for the site to replace the surface-parking spots that would be eliminated.

According to Clobes and Fehrenbach, MSUFCU will likely bring forward a more detailed plan three weeks from now, at the February 18 work session of City Council.

Clobes said the public should expect a design “very similar to the first rendering that was released earlier.”

Fehrenbach also says that his office “anticipate[s] having a draft of a purchase and sale agreement for review” by Council at its February 18 meeting.

If a majority of voters approve the March 10 ballot measure, that doesn’t mean the project is a done deal. The proposal will go through the normal review channels and City Council will decide on the plan and the sale terms, within the parameters allowed by the ballot language.

Photo of April Clobes courtesy MSUFCU.

Clobes says her team is not planning to seek tax incentives

Asked whether MSUFCU will be looking to enact a tax increment financing (TIF) plan on this project — a tax incentive system that would capture future taxes to pay for pre-approved development-related expenses — Clobes replied, “We are not intending to seek a TIF.”

She also said MSUFCU will not be seeking exemptions from the “personal property tax” East Lansing levies on certain material business goods.

She noted that the credit union is “currently the City of East Lansing’s largest property taxpayer. And, all of our employees working in East Lansing, which includes our headquarters and campus locations, pay East Lansing personal income taxes.”

But East Lansing’s Planning Director has a somewhat different take

Tom Fehrenbach, Director of Planning for the City of East Lansing, thinks there may yet be a tax increment financing (TIF) plan for this project, because, if ongoing investigations turn up environmental contamination, “it will need to be remediated as part of any development project.”

Private developers like the credit union can be required to pay for site-specific cleanup expenses themselves, without reimbursement from tax dollars.

But the City of East Lansing has tended to allow Brownfield TIF for such environmental cleanup, reimbursing developers from tax revenue generated by their new projects.

Photo of Tom Fehrenbach by Raymond Holt.

“The City policy on the use of TIF clearly places an emphasis on environmental remediation and public infrastructure,” said Fehrenbach. “Since this is currently City-owned property, I would not characterize environmental remediation as a private development expense under these circumstances.”

Fehrenbach said that “the City would not institute a TIF plan on its own.”

However, he said, if environmental remediation is needed, “MSUFCU may request brownfield TIF” from City Council and East Lansing’s Brownfield Redevelopment Authority (BRA).

As for the end goal, writes Clobes, “we look forward to being a positive business partner in downtown East Lansing by providing market rate jobs, intern opportunities for students, space for community events, and a well-maintained and aesthetically pleasing building.”