‘Major concerns’ about Park District financial review
EAST LANSING – A financial consultant who produced a positive review of the $92 million Park District project Tuesday said he might have reached a different conclusion if he had known the developer recently sued a lender.
“I asked for a list of all litigation pending,” Corey Leon of the National Development Council told the Downtown Development Authority Board. “I did not receive any information regarding the most recent litigation.”
The developer’s omission “raises a major concern,” he said during a conference call.
“I was not at all happy to receive, an hour and 45 minutes before your meeting, an email saying that there’s major litigation happening,” said Leon. “This isn’t the time to say, ‘Oh, by the way, something of this importance is happening.’”
He described the information as “far more important and far more relevant” than information he received about other lawsuits in Florida and Ohio.
“I definitely would want the opportunity to review this (litigation) and see how it changes the analysis,” Leon said.
Board members asked Leon to evaluate the new information. He said he would report back this week.
Just last week, Leon had forwarded his original findings to the city’s planning staff.
On Monday, the Lansing State Journal reported the lawsuit was filed by Park District Investment Group and a Michigan affiliate in Ohio on June 18. The suit came after Ohio-based lenders issued notices of default on a $12.5 million loan issued in in 2008.
The original loan was issued to East Lansing-based developer Scott Chappelle and affiliated investor groups he formed when he was trying to develop much of the current Park District property as City Center II from 2001-12.
Chappelle later sold the project and his Park District-area land holdings to Charles Crouch, a Glen Arbor resident who controls PDIG.
Leon’s review determined Crouch and Chappelle had “the expertise and financial capacity to complete” the project as proposed and that PDIG was worthy of tax increment financing to pay for public infrastructure in the central business district.
DDA board members expressed high interest in news of the Ohio litigation, although it became clear most of them had not seen the lawsuit. Some questioned when and how information was being shared.
Lori Mullins, economic development administrator for the city, explained city staff received email notice Monday about the Ohio lawsuit from project attorney Tom Eckhardt, who also serves as general counsel for Chappelle’s Strathmore Development firm.
Eckhardt’s email was almost identical to one sent by Chappelle in response to questions from the LSJ. But Eckhardt’s note mentioned an additional development.
“It is likely the lender will move forward with a foreclosure action ...” Eckhardt informed the city.
“Yesterday the foreclosure proceedings became public and there’s a sheriff’s sale scheduled for July 30,” Mullins informed the DDA board members.
Stunned by the developments, board members discussed how they could be sure they had all the information they needed to make prudent decisions on behalf of taxpayers. Eventually they agreed the city attorney should be the one to make the effort.
The board agenda included consideration of a draft of a Park District development agreement. But action was postponed pending results of the findings of the city attorney and additional review by Leon.
Mullins said continuing financial research likely means the City Council will remove the Park District project from the agenda of its July 7 work session.
PDIG’s project would revitalize a blighted area in and near the 100 block of West Grand River Avenue, including the former Citizens Bank at the corner of Grand River and Abbot Road. Plans include an eight-story building with a boutique hotel, housing, commercial space and underground parking and a four-story building with ground-floor retail and three floors of apartments.
Contact Steven R. Reed at (517) 377-1015 or srreed@lsj.com. Follow him on Twitter@StevenReed_LSJ