“Twisted Explanations from the 800-Pound Gorilla”? MSUFCU Begs to Differ.

“How did MSUFCU go from a reputable member-owned credit union to an 800-pound gorilla?”

That’s the question asked by local businessman and real estate developer Paul Vlahakis in a written statement made to ELi about the treatment of him by Michigan State University Federal Credit Union.

The credit union is proceeding with plans to construct a seven-story office building on East Lansing’s parking lot #4, right next to Vlahakis’ Dublin Square restaurant. Vlahakis has been suggesting MSUFCU has been treating him quite poorly, including not communicating enough. He has been threatening to sue the credit union if it interferes with his business.

But when asked to respond to Vlahakis’ statement to ELi from last week, credit union CEO and President April Clobes suggested in her reply that perhaps Vlahakis has got the roles reversed.

In fact, Clobes dropped something of a bombshell: earlier this year, Vlahakis told the credit union he wanted a big redevelopment deal including his Dublin Square property – a deal in which MSUFCU would effectively partner with him.

“If agreement could not be reached for joint development,” Clobes said, “Mr. Vlahakis said he would not provide any construction easement.” 

Asked to respond, Vlahakis didn’t deny that he asked for a redevelopment deal. But he continues to paint the credit union as a bad actor.

What exactly did Vlahakis want?

According to Clobes, during a meeting earlier this year, amidst conversations about construction issues, Vlahakis suddenly “proposed a joint development under which he and his partner, CRG from Chicago, would purchase Parking Lot 4 and construct a single building covering both Dublin Square and Parking Lot 4 and including the Credit Union.”

Alternatively, Vlahakis proposed that “the Credit Union withhold any development of its property until [Vlahakis] was prepared to redevelop Dublin Square simultaneously.”

Clobes outlined Vlahakis’ idea for a joint development: Across both the Lot 4 and Dublin Square properties would stand a building 138-feet tall with 265 apartments designed to house 630 people. The credit union would have space in this mixed-use building, and there would be parking for 220 cars.

Clobes points out that this is not what the voters approved when they agreed to give City Council permission to sell Lot 4 to the credit union.

Presented with Clobes’ statement, Vlahakis described it as “the twisted explanations from the 800 lb gorilla.” 

Says Vlahakis, “we told them in an effort to amicably resolve this, that we would propose several options.” 

He says those options were: Build a large building across both sites where MSUFCU could own “their portion of the project, and as much of the project as they wanted to own,” or that MSUFCU and Vlahakis build their own buildings sharing a common wall. 

Vlahakis thought the second proposal was “the best” because the projects would be built simultaneously, preventing construction from interfering with regular operations at either site.

But this approach would have required MSUFCU to wait a very long time while Vlahakis tried to get approval from City Council for his concept. And there was no guarantee of approval. In 2018-2019, Vlahakis had failed to bring to fruition a previous project for these and nearby properties, with Council rejecting his ultimate concept.

In his answer to MSUFCU’s statement, Vlahakis said, “They [MSUFCU] are correct CRG is my development partner (I think that is the only accurate statement they have made) and they prepared the proposal and elevations which we presented to the Credit Union. CRG architect provided a great plan to MSUFCU, they had a drive through, prominent signage and the commanding presence they always feel they need to overspend to achieve.”

“However,” Vlahakis says, “MSUFCU just chose to not even entertain or discuss the proposal.”

To be clear, this proposal came from Vlahakis early this year. The credit union had obtained all necessary approvals for their project – consistent with the ballot proposal approved by voters – last fall. The reason the credit union hadn’t already started construction was the hold-ups caused by Vlahakis’ legal threats.

But Vlahakis sees the credit union as being unreasonable.

“They never even entertained a joint development,” Vlahakis wrote to ELi. “Their attorney within 5 minutes of receiving our plan and proposal, informed my attorney that MSUFCU was not interested in a joint venture and that they planned to proceed with their project. The funny thing is, we were not proposing a joint venture, we were proposing to build our project alongside of their project.”  

Vlahakis continues to complain about what he sees as a lack of appropriate communication from MSUFCU. The credit union continues to disagree.

Vlahakis, both in a public meeting and in statements to ELi, has repeatedly said that the credit union has not shared construction plans and has not appropriately reached out to him as the neighboring property owner, despite planning to build a seven-story brick wall right next to the Dublin Square patio. That, he says, is why he engaged lawyers.

“Knowing the credit union was just disregarding me and my business with no regard for our operation, it was evident to me I needed to involve my lawyers in the matter.”

But MSUFCU says it has, in fact, made efforts to communicate with Vlahakis. In her own statement to ELi, Clobes said that reps for MSUFCU met with Vlahakis in August and September of 2020.

“The credit union understood those discussions to be amicable but incomplete,” due the then-unapproved site plan, Clobes said. The site plan was approved on Sept. 23, 2020.

The credit union then received a letter from Vlahakis’ attorney, the day prior to closing the land sale. 

“The issues were ones we were working on,” Clobes wrote. “Although the letter warned of court action against the credit union, we asked Mr. Vlahakis and his attorney to discuss with us ways to reduce the effects in terms of noise and time of construction. We recognize that there are real and difficult problems with any construction in a congested downtown.”

Clobes’ statement continued, saying that through November and December of 2020 and early January of 2021, MSUFCU followed up on several occasions to provide details of construction plans and to request a response. This all occurred while Vlahakis was securing new legal counsel because of conflict of interest problems for his lawyers.

In light of Vlahakis’ non-starter redevelopment proposals and legal threats, MSUFCU has now altered the planned size of its own building.

“We asked our architects to reduce the size of the building by three feet along the north side to avoid any encroachment during construction,” Clobes explains. The credit union is also getting an assist in construction from the DDA, which voted to demolish two of its own buildings to help.

“With revised and more complete plans in hand, the Credit Union and its contractors had an initial meeting with City staff to discuss logistics and staging,” Clobes wrote on Monday. “That discussion included planning for outreach to neighbors on access, control of construction, and communications with both the neighbors and public. We have time before construction starts to do that and we are starting that work now, including communications to Mr. Vlahakis through his attorneys.” 

Late yesterday, MSUFCU had this final word on the matter: “We apologize that we did not handle the discussion in the manner that Mr. Vlahakis preferred. We have been in contact with his attorneys again this week to review our recently-finalized plan and get his input. We are hopeful for positive outcomes and an amicable solution as we are going to be neighbors.”

See the series of statements to ELi here, here, here, and here.