The lead developer behind the multimillion dollar City Center II project is amid a sticky tax controversy with the federal government, further raising questions regarding the future of the project’s site and finances as it is slated to break ground this fall.
On June 24, the Internal Revenue Service, or IRS, filed a personal lien notice on Scott Chappelle, the president of Strathmore Development Co. — the company developing the City Center II site — with Ingham County totaling $496,659.20.
City Center II is a mixed-use development project planned to revamp the site of several vacant buildings located on the corner of Abbot Road and Grand River and Evergreen avenues in downtown East Lansing.
The lien shows a string of debt owed to the federal government between 2007-09. If it is not paid, the lien might eventually result in funds being forcibly collected from companies in charge of the project, or even portions of the City Center II property being seized by the government and auctioned off — though it is unclear how this specific case will be resolved.
Although the lien is placed on Chappelle, Frank Caudle, an IRS revenue officer, said this type of lien could have consequences for projects such as City Center II.
Caudle said if an individual does not have personal assets to collect, the IRS can turn to assets that person has placed in companies — such as the group of limited liability corporations that own the City Center II property.
The government could seize property such as the City Center II or money from the companies funding the project.
Chappelle said he has some ownership staked in City Center II, but maintains a necessary amount of legal distance, to where the project would not be affected.
“Anything that would be relevant to me has nothing to do with the City Center project,” Chappelle said.
He also said the lien was a mistake and will be released within the next three weeks. If this does happen, he said the amount still is in dispute, and it will take some time to negotiate details with the IRS. As of Wednesday, the lien still was in effect.
“A careful review of the matter demonstrates that the amount of the tax lien is in dispute,” City Manager Ted Staton said in an email.
“Strathmore is working diligently to reconcile this matter and any amount due with the IRS.”
East Lansing Mayor Vic Loomis said he considers the project stagnant until the city council receives a copy of the finance plan for the project and a legal description of the properties.
The lien is the latest addition to an already long history of tax delinquencies and foreclosures on Strathmore-related projects.
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