I am a firm believer that if the city removed it's residency requirements and allowed student housing to be built, these buildings would be built immediately without any need for brownfield funds or other tax incentives. There is continued construction down Abbot Road north of Lake Lansing, the demand is still not met.
I think you can try putting spaces on the blank lines between the quotes to separate them.
Yeah I don't know why this would only have $18.5 million taxable value. If what they are describing is State Equalized Value then that is normally half of the fair market value. If they do build what they are planning, then I believe it would get a higher resale value than $37 million. How much higher I don't know, but the Chandler Crossings development was flipped for $100 million in 2013 [1], though that has 2,772 beds, a worse location (lower taxes though), and is about 15 years old now.
I don't know how many beds this development will have, the article mentioned at the top of the page says a mix of studio, one-, two-, and three-bedroom units. If I count each of those units at 2.5 beds (to average out the studio, one-, two-, and three-bedroom units), and then add in the apartments in the other building and hotel rooms, this development has 744 beds +- 100 due to my assumptions. With that being said, at the high end this development should be worth $30.44 million [2] and at the low end $23.22 million [3].
If Chandler Crossings used MACRS depreciation method with a 15-year recovery period [4], then reversing that value would have put their breaking-ground value at $263 million. Applying the above bed-values to this number (which now has much higher error) would value this development between $80 - $61 million (a SEV of $40 - $31 million).
According to the article at the top of the page, the city is buying the parking garage from the developer for $15 million, so the developer is also taking home $15 million just for doing the construction work here.
Staring at the numbers, it just doesn't look like this project will succeed. At this point I wish the city would just take their losses and sell the city-owned property on the open market. I would rather have multiple developers working on smaller projects than this languishing on for another 10 years.
I'm surprised that details of a seemingly important piece of the financing are up in the air at this stage of the development. I'm also surprised that the city owes over $5.5 million on the Evergreen properties and planned to "sell" them to the developer with no plans to recoup any money or otherwise pay off the debt. I'm just going to assume that given the mayor's strong support and the general headache this project has been for the city, that the council is going to push this through and be done with it.
One of the reasons they can't make it work is their residency requirements that certain percentages be owner-occupied. It will take the city to stop thinking that there are enough students downtown for these projects to succeed.
The residency requirement wasn't brought up because the developers have dealt with it already in their plan. If the residency requirement wasn't there though, the project would be much more profitable and the brownfield plan and tax issues may not be such an issue.
At the root of the problem is the city government's insistence that students must not live downtown and that it would be better for the long term life of the city if students lived on the outskirts. This line of thinking is neither sustainable nor rationale. Having large amounts of students living downtown does not have to exclude permanent residents. Right now there is such little housing downtown that either only rich empty nesters or children of rich families can afford it.
I'm really just puzzled at this whole project. I remember when Michigan Museum Place was first announced. Since then Scott Chapelle has gone on to successfully start and get in to progress a different project down the road while this corner just keeps sitting.
It's kind of like the opposite corner of Grand River and Abbot. Restaurants have come and gone in that space for many years, none being able to stay the long haul. Conrad's stayed the longest but they were pushed out by their landlord.
It's really confusing to me how prime real estate can sit unused and underused in a city. It's got to be scary for any developer who is approached with the idea of a project there because they can see the negative history surrounding it and will expect to encounter many of the same issues.
What if these properties were just turned in to a large park for the city?
This fiasco has gone on for far too long, I can't even bring myself to care anymore. At the very least I hope the buildings at Abbot and Grand River are demolished within a reasonable amount of time.
Comments
I think you can try putting spaces on the blank lines between the quotes to separate them.
Yeah I don't know why this would only have $18.5 million taxable value. If what they are describing is State Equalized Value then that is normally half of the fair market value. If they do build what they are planning, then I believe it would get a higher resale value than $37 million. How much higher I don't know, but the Chandler Crossings development was flipped for $100 million in 2013 [1], though that has 2,772 beds, a worse location (lower taxes though), and is about 15 years old now.
I don't know how many beds this development will have, the article mentioned at the top of the page says a mix of studio, one-, two-, and three-bedroom units. If I count each of those units at 2.5 beds (to average out the studio, one-, two-, and three-bedroom units), and then add in the apartments in the other building and hotel rooms, this development has 744 beds +- 100 due to my assumptions. With that being said, at the high end this development should be worth $30.44 million [2] and at the low end $23.22 million [3].
If Chandler Crossings used MACRS depreciation method with a 15-year recovery period [4], then reversing that value would have put their breaking-ground value at $263 million. Applying the above bed-values to this number (which now has much higher error) would value this development between $80 - $61 million (a SEV of $40 - $31 million).
According to the article at the top of the page, the city is buying the parking garage from the developer for $15 million, so the developer is also taking home $15 million just for doing the construction work here.
[1] http://www.mlive.com/lansing-news/index.ssf/2013/02/chandler_crossings_community_p.html
[2] 844 / 2772 * 100,000,000
[3] 644 / 2772 * 100,000,000
[4] http://www.smbiz.com/sbrl012.html
Great write-up on ELi about the project, of which will go before the city council tonight: http://www.eastlansinginfo.org/content/council-may-make-big-decisions-blighted-area-tonight
Staring at the numbers, it just doesn't look like this project will succeed. At this point I wish the city would just take their losses and sell the city-owned property on the open market. I would rather have multiple developers working on smaller projects than this languishing on for another 10 years.
At the very least it would be nice if they'd tear down the buildings on Grand River. What a depressing entrance to the city.
I'm surprised that details of a seemingly important piece of the financing are up in the air at this stage of the development. I'm also surprised that the city owes over $5.5 million on the Evergreen properties and planned to "sell" them to the developer with no plans to recoup any money or otherwise pay off the debt. I'm just going to assume that given the mayor's strong support and the general headache this project has been for the city, that the council is going to push this through and be done with it.
The project is a no-go per http://www.lansingstatejournal.com/story/news/local/2017/01/11/developer-148m-east-lansing-project-not-feasible-after-tax-rebate-change/96436436/
Not surprised. It seems the city needs to think of smaller projects instead of one mega project.
One of the reasons they can't make it work is their residency requirements that certain percentages be owner-occupied. It will take the city to stop thinking that there are enough students downtown for these projects to succeed.
The residency requirement wasn't brought up because the developers have dealt with it already in their plan. If the residency requirement wasn't there though, the project would be much more profitable and the brownfield plan and tax issues may not be such an issue.
At the root of the problem is the city government's insistence that students must not live downtown and that it would be better for the long term life of the city if students lived on the outskirts. This line of thinking is neither sustainable nor rationale. Having large amounts of students living downtown does not have to exclude permanent residents. Right now there is such little housing downtown that either only rich empty nesters or children of rich families can afford it.
I'm really just puzzled at this whole project. I remember when Michigan Museum Place was first announced. Since then Scott Chapelle has gone on to successfully start and get in to progress a different project down the road while this corner just keeps sitting.
It's kind of like the opposite corner of Grand River and Abbot. Restaurants have come and gone in that space for many years, none being able to stay the long haul. Conrad's stayed the longest but they were pushed out by their landlord.
It's really confusing to me how prime real estate can sit unused and underused in a city. It's got to be scary for any developer who is approached with the idea of a project there because they can see the negative history surrounding it and will expect to encounter many of the same issues.
What if these properties were just turned in to a large park for the city?
This fiasco has gone on for far too long, I can't even bring myself to care anymore. At the very least I hope the buildings at Abbot and Grand River are demolished within a reasonable amount of time.