Is Lansing going to subsidize a developer’s gamble?

LANSING, Mich. (WLNS) – In 2021, Boji Group paid $1.75 million to buy the empty Masonic Temple.

Monday night the City Council Committee of the Whole will begin the process to consider a purchase agreement for that same property with a $5 million payout to the developer. Under the proposed purchase agreement for the former Masonic Temple, 217 S. Capital Ave., has two cash provisions.

The first is $3.65 million for the actual building and land on which it sits.

SUPP – 4869-2524-4037.8 – Site Purchase Agreement – Boji City HallDownload

The remaining $1.35 million will create a permanent “visibility easement” and pay the developers for “carrying costs.”

The easement will cost taxpayers about $350,000 and would prevent Boji from developing a 20-spot parking lot on the north side of the building.

Boji Group owns the building that the lot is attached to and can’t detach the lot from that property to sell it by itself. The building is the former Farnum Building, located at the corner of Allegan St. and Capital Ave. in downtown Lansing. It used to host the Michigan Senate offices and hearing rooms.

John Hindo, president of the Boji Group tells 6 News the lot is part property for which the company has a mortgage. The lot cannot be separated from the building and sold separately he says. In addition, the company has lease agreements with current tenants that requires them to provide parking spots in the small parking lot in question.

The remaining $1 million would be used to cover the developer’s costs in holding onto the property before the city had the financial wherewithal to create a new city hall.

“We’ve held it for this opportunity, and we have expenses that we’d like to be reimbursed for,” Hindo says of the deal. “Again, we could have sold the building over a year ago for $1 million over our asking price and not incurred any of these expenses, but we knew, at some point, there was going to be a city hall opportunity.”

What is it that Hindo says the city should foot the bill for, exactly?

“We’ve been paying for taxes, insurance, utilities,” Hindo says, “You know, electric, Board of Water and Light, all the utilities and maintenance repairs and carrying the building.”

Records on the city’s website show the company has paid $481,146.78 in property taxes for the building since obtaining it in 2021. Records show the company paid Cooley Law School $1.75 million for the building at the time. Cooley’s ownership kept the property off the tax rolls due to its nonprofit status. Boji Group is a for profit entity.

The revelation of reimbursing Boji for the expenses the company incurred with the speculation isn’t sitting will with at least one member of city council.

“It is concerning that a substantial amount of money – -specifically $1 million – is being considered for a speculative venture involving the acquisition of a new city hall and the project generating additional profits for wealthy developers are the expense of the taxpayers of Lansing in the proposed deal,” says Ryan Kost, First Ward City Council member.

Discussions of a new city hall have been ongoing for nearly a decade. Former Mayor Virg Bernero had struck a deal with Chicago developer J. Paul Beitler to purchase the current city hall and redevelop it into a hotel and restaurant complex.

But when Lansing Mayor Andy Schor was elected, he nixed the deal because of concerns about where the city would relocate the 54-A District Court and the jail facility. In November 2022, taxpayers approved a $175 million bond proposal to build a new public safety facility.

That new facility will be located on South Washington Ave. and replace the old National Guard Building that used to house the city’s election operations.

Last year, the state legislature approved a $40 million budget appropriation for the city to have a new city hall.

Following that announcement, the Schor administration negotiated a deal to not only purchase the building but to hire Boji Group to develop the building for city use. Under that deal, four the building’s seven floors will be redeveloped to meet city needs for an estimated $42 million. The other three floors could be rented to the Lansing School District or the state, Schor says.

The $2 million over the state appropriation for city hall would come from the sale of the current city hall building. Schor is expected to sell the building Beitler for his planned hotels and restaurant hub.

Schor says he’s not focused on the $1.3 million because the entire deal for the purchase and development of the building is a win for taxpayers.

“It’s a win for the preservation community because we’re preserving a building. It’s a win for downtown because we’ll have a revitalized hotel at probably one of the best spots in the city and we’re doing it without spending Lansing taxpayer dollars to do it,” says Schor. “it’s a win for the taxpayers because they get a more effective and efficient city government where they can come and pay taxes, pay their bill, get a permit, see City Council, see the mayor – all in one place.”

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