Park District project faces $8.4 million financing gap
DTN Management Co. was awarded the opportunity to redevelop the 2.8 acre property near the intersection of Grand River and Michigan avenues, made up of six buildings and two parking lots owned by the Downtown Development Authority. The area was formerly designated as part of the failed City Center II project.
A project update memo released March 7 to City Manager George Lahanas from Community and Economic Development Administrator Lori Mullins highlighted several concerns the city has for the project, including questioned financial feasibility. The company apparently is $8.4 million short of the estimated $206 million needed to complete the project at this point.
Among other concerns the memo cited were issues such as zoning, legal descriptions and ownership agreements.
DTN Management Co. Vice President Colin Cronin said the initial financial discrepancy is in part because the company is “trying to absorb a lot of work that the city would do in a project like this,” including site preparation, streets, roads, sidewalks and some of the public infrastructure.
“A lot of those costs make it challenging, and the land itself is very expensive,” Cronin said. “That’s wh y the financ ial feasibility has always been the biggest question in our minds.”
Throughout the selection process conducted in 2013, DTN Management Co. Vice President Colin Cronin assured the committee appointed to choose a developer that they were financially stable enough to take on a project of the Park District’s magnitude. At the time, several committee mem bers cited the company’s apparent financial competency as one of the reasons DTN Management Co. was selected over the other candidates.
Given the magnitude and complexity of the project, East Lansing Planning, Building and Development Director Tim Dempsey said financing the estimated $206 million project is something that is equally as complicated for developer DTN Management Co.
The memo was a formal notation of how the project is going and not necessarily an indicator of future issues, Cronin said.
“(This is) part of the usual give and take on a project of this size,” Cronin said. “We have not yet reached a roadblock in the project that cannot be overcome. ... We’re still optimistic, the city is optimistic - there is just more work to be done.”
Construction costs are one of the biggest issues pertaining to the financial gap that needs to be evaluated in more detail, Dempsey said.
With the amount of work DTN already has put into the project and the commitment they have demonstrated, city officials remain confident that the challenges can be worked through.
“There needs to be an understanding that (the project is) complicated and this one is very significant in its potential to impact the community in a positive way,” Dempsey said. “These things take time, and it’s going to be a work in progress.”
Journalism senior Coty Kenneth is hopeful that DTN will find a way to fund the project. After four years of looking at the unpleasant vacant area where the Park District project is planning to renovate, she is ready to see a change.
“It will add so much to downtown East Lansing, not only more business but so mething prettier to look at rather than just empty old buildings,” Kenneth said. “Since I came to State, I have been hoping they would renovate it into something useful.”