What now?

Less than two years ago, grand plans were in place for the 5.3 acres of mostly vacant land a quarter of a mile west of the Capitol Building.

A local developer with prior success in the city owned the property, for which he had $20 million visions of 76 condominiums and mixed-use retail and loft space. The Lansing City Council rezoned it to higher density residential and partially commercial. The city and state approved tax incentives for about $2.5 million in public investment.

But walking the perimeter of the property bordered by Butler Boulevard and Ottawa, Ionia and Sycamore streets, you’ll notice the imposing red, white and blue RE/MAX “available” signs. The whole project, dubbed “Sobi Square,” has been abandoned. RE/MAX, which has the sale price listed at $350,000, sent out inquiries to developers and potential buyers two weeks ago, but there’s no interest yet. The property is owned by Wolverine Bank in Midland. Any plans for the property are back to square one.

Local developer Gene Townsend’s Sycamore Street Partners lost the property in a bank forceclosure last fall after buying it from the city’s Brownfield Redevelopment Authority (which had bought it from the state) for $460,000 in 2008. That was before spending about $300,000 in mostly architectural and engineering plans, Townsend said.

Due to the housing downturn that caused appraised home values to drop “precipitously,” Townsend said the cost of construction would simply be more than what he could make selling the properties. 

“It’s a question of: How long do you want to pour money into something to maintain it until the eventual day when you might be able to do something profitable with it?” Townsend said. He predicts it will be at least five to 10 years before the “downtown market will be able to support a substantial number of for-sale condominium homes.”

Bob Trezise, president and CEO of the Lansing Economic Development Corp., said building single-family housing in this market is “not viable.” However, because the property is surrounded by the Genesee Neighborhood on three sides, any kind of development will have to be “compatible” with that: “We care about that neighborhood,” he said.

Trezise said at least the property is generating tax revenue for the city — it wasn’t when the state owned it. He called the development a “victim” of the economic downturn, even though a respected local developer was leading it.

“Gene Townsend is considered a visionary, master developer, and he had proof of it right down the street,” Trezise said, referring to the upscale Printer’s Row housing development in the downtown Cherry Hill Neighborhood.

Trezise said he has met with bank representatives “several times” to strategize about plans to market the property. Brownfield and Neighborhood Enterprise Zone tax incentives are part of the package, he said.

But as for any development plans: “I really don’t know at this point. Development on that site is not on the horizon right now.”

The mostly vacant block is made up of eight parcels, the largest being the 5.3 acres owned by the bank. Nine structures — some built in the late-1800s — sit on the whole block, two of which are on the largest parcel. Those two vacant houses, which are the first buildings east of Butler on Ottawa, were intended to be torn down, but they still sit in rough shape, empty and owned by the bank. “Why they aren’t red-tagged I don’t know,” Townsend said. 

Seven other structures on Ottawa, Sycamore and Ionia streets are owned by a variety of individuals, the state and Booth Newspapers. Two of the houses were once owned by Townsend’s Sycamore Street Partners but were sold to individuals for $54,000 each as part of the project.

In the 1950s, the state, which owned the whole block, considered building the governor’s mansion on this property but opted for the Moores River Drive neighborhood in 1957. In 2005 when Virg Bernero was a state senator (he was elected mayor later that year), he was involved in getting the state to convey the land to the city. Shortly before that, then-state Rep. Michael Murphy sought unsuccessfuly to buy the property to build a new St. Stephen’s Church, of which he was the pastor. 

Adam Whitz, property associate for RE/MAX Commercial Group, said the 5.3 acres just went on the market two weeks ago. He said “inquiries” were sent to investment “consortiums,” private individuals and development companies in a 100-mile radius of Lansing. Whitz said it’s a unique property due to its size and location, though the “market is a little soft.”

“No one’s written offers; nothing concrete to report,” he said.

Whitz said the “highest and best use, in my head, is probably office” for the parcel zoned commercial at the corner of Sycamore and Ottawa. For the rest: “Quality, multi-family housing of some sort, for me personally, has some appeal.” 

But at this stage of the game, “It’s speculation.”

On Monday evening, five children were playing with a volleyball on the mowed grass near the corner of Butler and Ottawa. Two nearby residents, Susan and Michael Wey, were walking east on Ottawa Street, out for an evening stroll.

“I’d like to see row houses like what’s on Grand Avenue near Cherry Hill,” Susan Wey said, unaware that, too, was a Gene Townsend project.

Both agreed the downtown area needs more permanent housing options for middle- to upper-income earners. The Weys, retired state employees, moved to the Genesee Neighborhood eight years ago and did so for downtown amenities. Others can do the same and contribute to a downtown vibrancy, if only there were more options, Susan Wey said.

Looking northeast from the Ottawa and Butler intersection, she noted: “This would be a prime spot.”