Beitler wants another bite of the City Hall apple

Chicago-based developer J. Paul Beitler is still ready to buy Lansing City Hall and renovate it into a hotel.

“Right now,” as he put it — six years after his first attempt.

But Beitler said this may be Lansing’s last chance to partner with him on the project.

“How many times do you go to the altar and get rejected?” he said. “We’ve submitted multiple proposals. Each time we have been told we need a new city hall. That has been the factor that has precluded the sale of the building. We absolutely have an interest in going forward with the plans as depicted on the YouTube video” (at https://www.youtube.com/watch?v=J_7lxbjCKz4).

A $40 million appropriation in the state budget for a new city hall will dramatically shift the conversation about the old topic of relocation. It’s been on hold while the city sought to determine where to relocate the city’s lock-up facility, police operations and the courts from the current City Hall. That problem was solved in November when voters approved a $175 million bond proposal to build a new public safety facility.

And Beitler is ready to move ahead with his plan to renovate the mid-century modern building into a shining upscale hotel and restaurant.

Lansing Mayor Andy Schor is ready to get to work on the sale and revamp as well, city spokesperson Scott Bean said. 

“Mayor Schor really, really likes the old Beitler proposal and is looking forward to the city reaching out and working with him again once we have a plan in place for a future City Hall,” said Bean.

Where a new City Hall may go is still up in the air, Bean added. No plans for a Request for Proposals have been announced yet.

But where the courts, lockup and police administrative offices will go has been determined, removing a major hurdle to relocating City Hall sans those occupants.

The city is developing plans for the new public safety complex on Washington Avenue just north of Mt. Hope Avenue. It will occupy a parking lot that the city purchased from McLaren Health Care plus the grounds of the city’s South Washington Office Complex, which will be torn down.

 City Hall, completed in 1958, has significant infrastructure issues that is costing taxpayers an estimated $575,000 to $600,000 a year in general upkeep, Bean said — an $75,000 increase over what the previous administration said in 2017 was the maintenance tab.

In September 2021, a burst water storage tank caused water damage to the top three floors. The flood caused the offices of the mayor and city clerk and the City Council to either cancel meetings or move operations to other areas in the building or the city. The cleanup added $83,000 in maintenance expenses, Bean said.

Beitler has been wooing the city since 2017 to purchase and renovate the current City Hall into an upscale hotel and restaurant. Former Mayor Virg Bernero selected his proposal after a public presentation and review of four proposals.

All four proposals — three by local developers plus Beitler — included hotels.  But two of them would have would have constructed towers on the plaza that would have obscured the view of City Hall, which is considered a mid-century modern gem, and the third would have razed it. Beitler’s was the only one that maintained the architectural integrity.

What the shape of new deal will take is unknown. Beitler’s 2017 proposal called for his purchasing and renovating the former Lansing State Journal building at Lenawee Street at Grand Avenue for a new City Hall. Once refurbished, Beitler would have sold the LSJ property to the city at a cost not to exceed $50 million, under a development agreement worked out by Beitler and officials of the Bernero administration.

Once that transaction was done, Beitler would have entered into a 99-year land-lease deal to take possession of and own the City Hall building, but not the land on which it stands. He would have paid the city $225,000 a year, plus property taxes. The $225,000 would have covered the bonds needed to purchase the former LSJ property, Lansing Mayor Virg Bernero said at the time.

But missing in the equation was a home for the courts, police headquarters and the lockup. The old LSJ building wasn’t big enough. Ideas floated around, including expanding the Ingham County’s Veterans Memorial Courthouse on Kalamazoo Street for the courts, moving the police to the South Lansing precinct and housing prisoners in a new county jail to be built.

Schor, who was running for mayor at the time, supported the Beitler plan. But he began expressing doubts after he was elected and killed the deal altogether when he took office. He said it didn’t make sense to move out of City Hall until all its tenants had a new home. Thanks to public approval of a new public safety complex plus the state’s $40 million contribution toward a new City Hall, that is a lot closer to being a reality.

Re-enter Beitler.

Beitler, a Michigan State University graduate, said his proposal is important for the city’s growth, economically and socially.

He praised the Lansing Center as “modern and perfectly sized.” More hotels will drive more people to use the Lansing Center for conventions, creating “a very strong revenue generator for the city and the business community.”

The center, he said, “has been passed over by a number of companies because there isn’t enough hotel space available within walking distance.”

Moreover, turning City Hall into a hotel would generate more pedestrian traffic for downtown businesses. That, he said, could break those businesses out of the 9 to 5 trap they have been stuck in for years.

The post-COVID real estate market has also dramatically shifted, Beitler said. With businesses realizing they can operate with smaller in-person footprints, less office space is needed, only creating more reason to turn City Hall into a hotel, not more offices.

The building, he noted, is also not built to support apartments either.

Post-COVID downtown businesses have struggled to attract even the 9 to 5 crowd. That crowd consists mostly of state workers, but many of them still working remotely.

For Beitler, the development could create an increase in tourism. Post-COVID tourism trends, he said, are seeing people traveling shorter distances and engaging in tourism locally.

Developing City Hall into a hotel and restaurant will have one more bonus for Greater Lansing, Beitler argued.

“The hotel provides a tremendous employment opportunity for local residents at all levels of the employment spectrum — including suppliers that provide services to the hotel such as taxis, limos, laundry services and food supplies and beverages,” said Beitler.

The increased demand for hotel rooms at this proposed development is based on one very key and unique perspective, Beitler said.

“The most important feature in real estate is location, location, location,” he said.

City Hall is perfectly placed to provide an expansive view of the state Capitol for hotel guests as well as event spaces and a proposed restaurant.

Finally, the developer said, the hotel will increase income tax and property tax revenues.

“We’re ready to move ahead,” he said in a phone interview. ‘We have been, and we continue to be, ready to move ahead as soon as the city can move out. We’re prepared to enter into an agreement with the city today allowing the city to remain in the building as long as they need to make the determination where to go and when. That allows us the time to do all the preparation to convert the building and complete the financing arrangements, including government incentives.”