East Lansing Director of Planning and Community Development Tim Demspey said he received confirmation from both Huntington Bank and Strathmore that the sale had been canceled Wednesday morning.

This comes in light of a Sept. 15 announcement that the City Council would receive a formal request from Strathmore asking for a fifth extension for the project. Mayor Vic Loomis said the council would vote on the extension Oct. 6. The extension would run through mid-December.

The project’s history
City Center II has been no stranger to financial struggles. This past summer, and again in the last few weeks, seven of the properties slated for the project went into foreclosure. Strathmore also owed about $140,000 in delinquent property taxes to Ingham County for the properties.

Huntington Bank officials said the foreclosures were because of delinquent taxes and defaults on the loan agreement. City officials and Strathmore President Scott Chappelle blamed the inability to finance the project on the poor credit markets. Experts said the recession has been the worst it has been in years.

“At this point in history, a very good development could have severe financial problems,” said Roger Hamlin, a professor in the MSU School of Planning, Design and Construction.

Despite these problems, Strathmore was able to pull out of foreclosure at the last minute. Although contacted by The State News on several occasions Wednesday, Chappelle did not give the paper a comment as of press time.

City Manager Ted Staton said Strathmore had to obtain temporary financing to acquire the City Center II properties and as the finances became due, they fell behind.

“Now they are negotiating a restructure of that agreement,” he said. “We understand that as of today the Sheriff’s sale has been postponed.”

City involvement
The project is a partnership between the city and Strathmore, with the developer building the main portions of the project and the city providing a public theater and parking garage.

The city originally became involved in the project after Strathmore acquired some of the properties located at the site. Staton said the developer came to the city with the project with the city in mind as a potential partner. The city said it still is looking into plans to construct a parking garage that could cost about $11 million, including property acquisition, despite a decrease in overall parking use.

The city also has come under fire for reportedly saying it would use eminent domain to acquire some of the properties for the parking garage.

Some of the property owners in the area, such as Matt Hagan, have said former Director of Planning and Community Development Jim van Ravensway implied threats of eminent domain. City officials vehemently deny this, saying Hagan met with the city to discuss negotiations for the property on numerous occasions.

In a written statement from van Ravensway, he said both he and current Director of Planning and Community Development Tim Dempsey never brought up the topic of eminent domain.

“In all of our conversations with property owners, not once did Tim (Dempsey) or I bring up the topic of eminent domain,” he said.

Hagan, in a signed affidavit, accused both van Ravensway and Dempsey of threatening eminent domain.

The City Council voted in June to grant Strathmore a fourth extension to secure financing for its portion of the project. If a fifth extension is granted, city officials said they would recommend council have the extension date end in December.

“What we’re looking at is making that extension coterminous with the special use permit for the site and the site plan,” Dempsey said.

The future
With the project moving forward, residents still have questions about where the project is headed. East Lansing resident Ann Nichols, who strongly advocated against the project in the past, said even if the project continues, the economic climate will not be right for the development.

“A lot more people have questions about: A. Strathmore and B. Given what we see with condos going into foreclosure in the city, whether or not this is the right time for this development in the city,” she said.

Once the site plan approval expires in December, Strathmore will have to redo the approval process with the city to gain permission to build the current project or a changed project presented by Strathmore.

“We will treat Strathmore as we treat any developer seeking to do a project with city financial incentives,” Staton said. “We will collaborate where it is necessary, and certainly scrutinize their proposal.”