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Lansing voters will decide whether to sell the Lansing Shuffle to the group that operates it.
City Council members voted 6-1 Monday to place the sale of the publicly-owned riverfront property on the August ballot.
Under Detroit Rising Development’s lease with the city, the company is allowed to request that the city begin the process of placing the sale on the ballot after two years of operation.
Some residents opposing the sale said City Council members could still meet their agreement without moving forward, expressing concern about reducing the amount of parkland in the city.
City Council regular Ivan Droste said the city gave Detroit Rising “a really sweet deal, and now the chicken is coming home to roost.”
“We are only contractually obligated to consider the sale,” Droste said. “So, okay, we considered it. Obligation met. No obligation to actually put it on the ballot.”
But Downtown Lansing Inc. board member Joshua Pugh said the sale would secure the Shuffle’s future without affecting the adjacent parkland or river trail.
“The highest and best use of our city government's time and resources is certainly not being a landlord to a shuffleboard court, a couple bars and a half dozen restaurants,” Pugh said.
The Lansing Park Board voted against recommending placing the sale on the ballot while the Lansing Planning Commission voted in favor of recommending it.
If voters approve selling the land, the city would then negotiate a specific buy-sell agreement, which would need to be approved by City Council members.
But the sale price is already set. Detroit Rising would be able to purchase the land for slightly more than $953,000, based on a 2018 appraisal of the property.
Detroit Rising Development co-owner Jon Hartzell previously explained that the group has invested more than $4 million to make the building, which formerly housed the City Market, suitable for its current use.
Selling the property at its current market value would amount to penalizing the developers for their previous investments, which likely increased its value, Hartzell said.
City Councilmember Ryan Kost, the sole City Council member to vote against placing the sale on the ballot, called it a “rotten deal for the citizens of Lansing.”
Hartzell said the building will soon be in need of additional repairs, including replacing an aging HVAC system and its roof.
Owning the land would lower interest payments and give the developers more liquidity to make those repairs.
Detroit Rising Development currently pays the city $2,000 a month to lease the property but can terminate the lease at any time.
City Attorney Greg Venker said if the Lansing Shuffle were to go out of business, improvements made to the structure itself would remain in place, but any equipment that may be rented or used as collateral would be taken out.
“Most of everything that can be unplugged and wheeled out is going away, and everything else is staying put, and then it’s just a vacant space again,” Venker said.
Mayor Andy Schor said the building has struggled in the past and would likely be vacant again if the Lansing Shuffle were to leave.
“It was empty. It was unused. You can go back and look and see we all talked about, ‘We’re going to active this space, we’re going to activate this space,’” Schor said. “Before it was empty, it was the Waterfront Bar and Grill, which we were subsidizing. We were subsidizing a fairly bad restaurant, which had a lot of violations.”
Some residents and City Council members expressed interest in possibly selling just the structure while continuing to lease the land on which it resides.
But Venker said the land lease would be so long that it wouldn’t be materially different than selling the land, and, as such, would still need to be approved by voters.
Continuing to lease the land would also likely defeat any ability for the lessee to secure financing due to a lack of viable collateral, Venker said.
“At the end of the day, they can't pick up the building and take it away and sell it to somebody else,” Venker said. “So the bank—the lender, whoever it is—is going to need to have the ability to sell the thing to recoup their losses if there's some default scenario or anything like that.”
Responding to additional questions about potential guardrails, Venker said the city can’t restrict potential new owners from reselling the land, but could include a provision giving the city the first chance to buy it back if the new owners move to sell it.
