After years of stalled development, rehab of Holmes Street School 'eyesore' set to begin this spring

Clarification: This story has been updated to use the word "judgement" instead of "restitution" in reference to the money Ryan Vartoogian owes the city of Lansing. 

LANSING — A developer anticipates converting the former Holmes Street School, which has sat vacant for nearly two decades, into apartments by spring 2021.

Developer Jeff Deehan anticipates construction will begin this spring and take less than a year to complete.

Deehan's company, Dymaxion Development, plans to rehabilitate the three-story brick building, create 41 studio and one-bedroom apartments and add landscaping to surrounding green space.

Lansing City Council approved tax incentives for Dymaxion's $2.28 million project late last month. The plan, pending approval from the State Tax Commission, will freeze the property's taxable value for 12 years, allowing developers to pay taxes based on the property's worth prior to rehabilitation. 

Blighted properties are eligible for the tax exemption under Michigan's Obsolete Property Rehabilitation Act.

The latest proposal follows years of deterioration at the former elementary school in Lansing's Potter-Walsh Neighborhood. Another developer, Ryan Vartoogian, still owes Lansing nearly $1 million after he billed the city for work he never completed.

"It really is the center of the neighborhood," said Deehan, who bought the property from Vartoogian this spring. "To have it sitting vacant for so many years really was a point of destabilization for the neighborhood."

Vartoogian, then the head of a marketing firm called Spartan Internet, purchased the east side property in 2007 and promised to convert the building into a hub for tech companies.

The project broke ground in 2009 and, in 2011, the city of Lansing signed a lease that would allow the city to use part of the building as a technology training center for local children. 

Years passed and the project remained unfinished. Lansing sued in 2018, saying Vartoogian had faked some of the invoices he sent the city. Last year, Judge Joyce Draganchuk ordered Vartoogian to repay Lansing more than $940,000.

Vartoogian has yet to pay any of that judgment, but the city is pursuing another debtor's examination in an attempt to recoup the money, Chief Deputy City Attorney F. Joseph Abood said.

Vartoogian referred a request for comment to his lawyer, who did not respond to a voicemail.

The Holmes Street School, built in 1923, has been shuttered since 2000.

Nancy Mahlow, president of the Eastside Neighborhood Organization, is optimistic about the future of the site, which includes a 31,000-square-foot building on more than two acres of land.

"The Holmes Street Neighborhood worked very, very hard," to rehabilitate the property, she said. "It really was an eyesore."

Earlier this year, Lansing made revisions to its Universal Development Agreement with the intent of tightening up rules for developers who receive financial incentives from the city. An executive order signed by Lansing Mayor Andy Schor outlines expectations for completing projects on time and providing yearly progress reports to the city. 

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Contact reporter Sarah Lehr at (517) 377-1056 or slehr@lsj.com. Follow her on Twitter @SarahGLehr.

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