Monday, Nov. 21 — The ambitious, $36 million redevelopment of a downtown landmark is poised to begin this winter and, if all goes to plan, will be complete in about two years.
Three city officials and a representative from the Eyde Co. announced today a completed development agreement for the historic Knapp’s building, 300 S. Washington Square. The announcement marks the end of a more than one-year process of securing financing and tax incentives for the estimated $36 million project.
“We’re so close, we can see the finish line,” Karl Dorshimer, interim president and CEO of the Lansing Economic Development Corp., said during today’s announcement. “This finish line is the starting line to the actual project.”
The development agreement must be approved by the Lansing City Council before construction can begin. The agreement is scheduled to be referred to a committee at tonight’s Council meeting.
City Council president A’Lynne Robinson joined Dorshimer, Mayor Virg Bernero and Mark Clouse — a representative for the Eyde Co., which owns the building, at today’s announcement downtown.
“This is actually a building I can’t imagine downtown Lansing’s landscape to be without,” Robinson said. “It’s also exciting that one of the most prominent buildings will have activity again, not just being here. … I look forward to seeing it come to fruition.”
The 190,000-square-foot former department store has been vacant for nearly a decade. The Eyde Co. plans to install retail and restaurant space on the ground floor, commercial space on the second, third and fourth floors and apartments on the fifth floor. The building will also hold the LEDC’s planned business incubator. Financing for the project includes a mix of federal and state tax incentives, including those for restoring historic-designated buildings, New Market tax credits, along with brownfield and renaissance zone designations. The Eyde Co. also secured a $5.9 million Section 108 loan from the federal government, which it will pay back.
Financing for the project hit a stumbling block earlier this year when the U.S. Department of Housing and Urban Development denied an application for a $2 million Brownfields Economic Development Initiative, or BEDI, grant. Clouse said the developers and the LEDC “came up with a solution” that includes a “slight modification (to construction plans) to reduce some costs” and also a loan guarantee program.
Clouse said “hard costs” for demolition and renovations is between $20 million and $25 million. “When you add in soft costs — interest, some of the things not physically part of the building — it’s in the mid-30s.”
Clouse also hopes the Council will approve the development agreement “in the next 30 days.” If that happens, interior preparations before the full construction effort would begin this winter, he said. The bulk of construction would start next summer and Clouse said it’d take about “16 to 18 months to complete.”
Bernero said the project will result in 200 to 300 new jobs downtown.
The J.W. Knapp’s Department Store was located in the building from 1937 to 1980. The Eyde Co. bought the building in the early 1980s and converted it to office space. The state moved its last offices from the building in 2002. The Eyde Co. plans to maintain the structure’s Art Deco architecture.
"These kinds of buildings are special but have lots of additional costs," Dorshimer said. "This building has its own pizzazz, it's own character. Not only are we going to save it, but make it better than it was before."