Repeated delays in the Virginia Avenue project are costing city officials almost half a million dollars more than they anticipated.
Numerous roadblocks — from receiving funds to scheduling demolition — have upped the overall cost of the project, East Lansing officials said. The city is financially backing the project, which began August 2004 and originally was projected to cost $3.3 million.
City officials want to redevelop the avenue's 600 block by demolishing 19 homes and replacing them with about 30 owner-occupied properties. About 75 percent of the homes on that block are rental properties, but the new homes will be targeted toward permanent residents, especially those with children. The city is looking to develop fewer homes in the area because of property owners who refuse to sell.
Increases in overall property value since 2004 meant the city had to pay more to purchase the properties, said Tim Dempsey, East Lansing's community and economic development administrator.
Because the city had to wait almost two years for approval of its loan from the U.S. Department of Housing and Urban Development, property values were given enough time to change, Dempsey said.
"This project is different in terms of when you look at a budget," he said. "Because we're dealing with 18 to 19 different owners, there's a greater level of uncertainty. That's part of the expectation."
Property owners also are accounting for changes in the property tax when they move out of their Virginia Avenue homes, Dempsey added.
But city officials said they aren't too worried about being nearly $500,000 over budget, since that money will come back once the redevelopment has come to fruition.
"As property values increase, we estimate that we can generate more profit," Dempsey said. "We can get a better return from the developer that will build the homes."
Also, the higher costs won't come down on future residents of Virginia Avenue's 600 block because the price of homes is affected by the real estate market — not the redevelopment itself, Dempsey said.
"We're excited about our objective of creating marketable yet affordable housing," he said.
Mayberry Homes, which will lead the construction, is working on an updated site plan since officials have lowered the number of homes they expect to acquire. The updated plan should be released in about a month, Dempsey said.
"Since we didn't have a final site plan, we just estimated our goal," said Stephanie Gingerich, community development analyst for the city. "Now there's 19 properties that we estimate we'll be able to eventually demolish, and there's only two that we think will stay."
The 2004 proposal called for demolishing 23 homes and building 39 in their place, but the overall change in plans toward less homes shouldn't come as a surprise, Dempsey said.
"This is not atypical," he said. "Those property owners have indicated a willingness to sell. But there's no condemnation if you don't sell; there's never been any threat of condemnation — that's never been an option. So when you look at it that way, it's a challenge."
Kristen Daum can be reached at daumkris@msu.edu.
A WORK IN PROGRESS
Since it began in 2004, the Virginia Avenue redevelopment has faced numerous obstacles, leading up to almost a half million dollars more in costs for East Lansing, which is backing the project.
• Aug. 31, 2004: City officials apply for a $2.3 million loan from the U.S. Department of Housing and Urban Development for redevelopment of Virginia Avenue's 600 block. The initial plans call for demolishing 23 homes and replacing them with 39 permanent housing units. About 75 percent of the homes to be demolished are rental properties.
• 2005: The Virginia Avenue project is almost abandoned by city officials after delays in getting federal funding. Near the end of the year, $350,000 in funding came through for the city, so the project moved ahead.
• April 27, 2006: U.S. Department of Housing and Urban Development awards a $1.5 million loan to East Lansing to continue funding the redevelopment.
• May 23, 2006: City acquires property at 601 Virginia Ave.
• July 27, 2006: City officials announce monetary incentives for owners to vacate their Virginia Avenue properties. To assist in moving costs, owners might be eligible for $1,000 for owner-occupied properties and $250 for rental properties.
• Sept. 19, 2006: After facing higher costs than expected, city officials announced they'll need about $300,000 more than originally anticipated to redevelop Virginia Avenue.
• Oct. 24, 2006: Properties at 625, 613 and 624 Virginia Ave. are purchased by the city.
• Nov. 30, 2006: Demolition of homes at 601 and 673 Virginia Ave. is anticipated to be finished by Dec. 31.
• Jan. 8, 2007: Delays in lining up a contractor result in the demolition being pushed back until the end of January.
• Jan. 16, 2007: City officials purchase 1340 Burcham Drive.
• Jan. 24, 2007: Demolition is stalled even further because of delays in turning off the utilities at 601 and 673 Virginia Ave.
• Now: The Virginia Avenue redevelopment is almost $500,000 over budget. Unforeseen changes in acquiring homes also resulted in altering the overall plan — now 19 homes are hoped to be demolished, with about 30 owner-occupied homes taking their place. The project's developer, Mayberry Homes, is drafting an updated site plan, which should be released within about four weeks.
Source: City of East Lansing
