The heavily-debated and oftentimes controversial project would attempt to kick-start the area economy and draw in MSU students by bringing office and retail space, a luxury boutique hotel and a performing arts theater to a blighted corner of Grand River Avenue and Abbot Road.

The predevelopment agreement allowed demolition to start at a dilapidated city-owned building related to the project that sits across from Rick’s American Café, 224 Abbot Road.

Within 12 hours of approval, a construction crew moved to secure the building site, putting up metal fencing around its exterior in preparation for work.

The activity extended the project’s site plan and special use permit and also signaled the start of what officials said will be an exhaustive review of the project’s proposed financing.

The review will include an examination of project developer Strathmore Development Co.’s draft of a comprehensive financial plan, which indicates that the developer recently secured $50 million in private construction financing to assist with the effort.

Now, city staff has started to follow the money in a due-diligence process expected to last about 89 days. Following its examination of the results, the council can decide to proceed or cut ties with the project.

In the intervening days, officials, residents and students will continue to ponder what a decrepit city corner looks like now — and what it might look like in the future.

Transformative impact
Proposed plans for the project call for the construction of a 400-seat performing arts theater and the 114-room Hotel Indigo, a luxury boutique hotel brand belonging to InterContinental Hotels Group.

The group also operates chains such as Holiday Inn and Holiday Inn Express.

Terms of the hotel agreement — which were finalized in July 2008 — remain in place, Strathmore President Scott Chappelle said in an email.

Mary Dogan, Hotel Indigo’s director of brand management in the Americas, said in an email the planned hotel aims to bring East Lansing to life through a series of oversized photographic murals of the city throughout the facility.

“Each Hotel Indigo property is uniquely designed to reflect the culture, character and history of the surrounding neighborhood,” she said in an email.

Any competition that another hotel might bring to the area is healthy for business, said Joel Heberlein, general manager of Kellogg Center.

“It adds inventory to this marketplace,” he said.

Taking the stage
Other components of the project continue to receive feedback from officials.

University and city representatives, along with Strathmore officials, continue to work on the terms of a lease related to the proposed 400-seat performing arts theater, Planning and Community Development Director Tim Dempsey said in an email.

“We are close to a point where we could present it to council as part of the due-diligence process,” he said in the email.

The theater would be used for performances through MSU’s Department of Theatre and Wharton Center, and potentially could incorporate other campus instructional activities, said Barb Kranz, director of MSU’s Office of Facilities Planning and Space Management.

“The Department of Theatre would continue to do the same type of programming,” she said, noting that the university does not anticipate it would draw patrons away from Wharton.

Environmental biology-zoology junior Ruth Adamus said the proposed location is better for students than Wharton, but programming would have to cater to suit student interests.

“Right now, (the buildings) are vacant and they look nasty,” she said. “It’s a really good location.”

Past and future
Recent movement at the project site cannot hide its past financial difficulties, which still raise the eyebrows of some community members.

Proposed in the early 2000s, the project has been stalled more than once. Since 2009, the development has faced foreclosure, back city and county taxes as well as vocal opposition to the project.

Strathmore has paid its back taxes since then, but citizens continue to question the project.

“The East Lansing city government … (has) too often been developer-driven rather than community-driven,” East Lansing resident Jim Anderson said. “The money being waved is ‘Monopoly’ money. … In some ways, we have a real city versus an unreal estate project.”

As officials examine the project’s amenities, city staff are plowing forward with an evaluation of City Center II’s proposed financing.

The city is concerned with turning over every stone as it validates potential project financing, not simply focusing on one area, officials said.

“We want to do a comprehensive review of all aspects of due diligence,” City Manager George Lahanas said.

Lahanas said officials do not anticipate taxes increasing for residents, as the project’s future tax revenues would be able to cover the city’s financial obligation to the project.

A draft of the comprehensive financial plan calls for the city to issue $20 million in bonds to cover its obligation to the project’s parking garage and public space.

But officials also are stepping back to acknowledge the project’s ultimate vision.

“One of the things that’s important is making sure the project contains uses that really add to the vitality of East Lansing,” Mayor Pro Tem Nathan Triplett said. “You don’t want just anything thrown in there ”