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TUESDAY, April 2 — A downtown grocery store in Lansing is a step closer.
Demolition has begun to clear the site of the Gillepsie Group’s mixed-use project that will include a hotel and apartments along with a mini-Meijer.
Five large excavators rolled onto the corner of Michigan Avenue and Larch Street last month. Fencing was put up around the site last week. Signs went up this morning and the backside of Brogan’s tire and auto service came down today. Groundbreaking is expected this month, sources said, wih completion late next year.
“If we don’t hit that date, we’re in trouble,” Pat Gillespie said previously. “We’ll need to start the project by April.”
Plans call for the hotel and apartments to be stacked on top of a mini-Meijer grocery store — using millions of dollars in Brownfield redevelopment funding and state-sanctioned loans.
Corporate suits at Meijer “asked us to do some things that are pretty tough to do,” Gillespie explained last year as he introduced a request to the City Council for more than $10 million in Brownfield, tax-increment financing and two, $1 million loans from the state Department of Environmental Quality — necessary steps to completion.
That plan was approved by City Council last year. And officials at the Lansing Economic Area Partnership said additional steps — like approval from the state Department of Environmental Quality — have been completed.
Gillespie announced plans in August to construct the first hotel to be built in Lansing in more than 20 years. The four-story site will cover more than four acres and includes both an “urban” Meijer — the second in the state — and dozens of apartments. He said the “gamechanger” of a development absorbed 21 separate downtown parcels in order to become possible.
Brownfields plans are doled out to properties that are either contaminated, blighted or functionally obsolete and face economic impediments before they can be reused or redeveloped. Tax-increment financing allows local taxing authorities, like Lansing, to reimburse developers to help offset the costs of the inevitable clean-up work.
The incremental tax capture takes place over time, as the incremental taxes are realized. In Gillespie’s case, the 600-block project is slated to include $4.3 million in eligible environmental clean up activities along with $6.1 million in estimated interest for a total of $10.4 million, including contingencies and MDEQ loan activities.
The hotel will be developed by nationally known Concord Hospitality, the management team behind familiar names like Hyatt, Couryard and Renaissance and will include between 120 to 125 rooms. The name of the hotel has remained a secret but could likely be revealed at Gillespie’s upcoming plans for an announcement.
Another 36 to 40 apartments will also be merged into the structure for those seeking the “downtown living experience.” Gillespie said nearly all of them will likely become one-bedroom apartments to help meet the market demand. A stairwell will also allow residents direct access to Meijer without ever stepping outside.
The grocery store, billed under the working moniker Capital City Market, would mark Meijer’s second departure from its traditional storefronts to an “urban market” concept. The concept is modeled almost identically to that of the Bridge Street Market, which opened months ago in downtown Grand Rapids.
Gillespie said a 20-year lease agreement was penned with Meijer and he also solidified a purchase agreement with the yet-to-be named hotel chain. He expects the development to become fully operational by October 2020.
Gillespie also pointed to extensive environmental contamination to justify the incentives. Several petroleum tanks need to be removed due to the history of automotive service in the area. The homes swallowed by the development were also in “very bad shape” and asbestos needs to be cleaned out before demolition.
“We are formalizing some demolition and groundbreaking dates,” Gillespie said. “All coming together nicely.”
About 25 to 30 jobs are expected to be created at the grocery store. A “fair amount” of staff will be required to operate the hotel and another couple employees will help staff the apartment complex. Gillespie also suggested he would utilize as much locally sourced labor as possible to complete the construction in the next two years.
The Gillespie Group could capture as much as $10.4 million in incremental tax reimbursements with about $800,000 reserved for the Lansing Brownfield Redevelopment Authority and another $443,000 funneled back into the state’s Brownfield fund, proposals noted. Another $1.2 million would head back to local taxing units.