March 21 2012 12:00 AM

The other Gillespie says rentals, not owner-occupied, is key to success in developing a prime city block near downtown and across the street from the Capitol Complex


In the living room of Gretchen Cochran’s Sycamore Street home Thursday in the Genesee Neighborhood, downtown Lansing residents were given a game plan that was oh so familiar.

Development plans were being floated for the mostly green space one block south from this living room, which was packed with about 20 neighbors. It’s the second major development announcement in four years (and the third in eight years) for the 5.3 acres bounded by Ottawa, Sycamore and Ionia streets and Butler Boulevard. And it’s the second Gillespie brother who’s announcing plans for it.

Scott Gillespie, whose brother, Pat Gillespie, first pitched to the city upscale housing plans for the area in 2004, is making the case to neighbors that he’ll be the first to walk away with a successful development on the property. After Pat Gillespie, local developer Gene Townsend pitched his “Sobi Square” project — a $20 million vision for 76 condominiums, lofts and retails space — but his firm, Sycamore Street Partners, lost the property in a bank foreclosure in fall 2010 after buying it from the city’s Brownfield Redevelopment Authority (which had bought it from the state) for $460,000 in 2008.

Gillespie hasn’t formally taken ownership of the property, but he has a contract to purchase it for about $160,000.

Townsend is a respected developer in the Lansing area, and he and city officials pointed to the housing downturn and lack of demand for owner-occupied housing as the reason Sobi went down.

But Scott Gillespie has different plans.

“His plans were beautiful,” Gillespie said of Townsend. “It was a great design for the property. But the significant difference between the two is his was primarily for-sale residential and mine is for-rent residential. … I believe that this, given the market today, moving forward will be very successful.”

Gillespie is hesitant to pitch exact designs and rental numbers, but he has a pretty good idea of the direction he’s taking on the $6 million to $6.5 million project. He’s planning on four buildings, three of which would be all apartments (two on Ottawa and one on Butler). The corner of Ottawa and Sycamore calls for a mixed-use residential building with roughly 4,000 square feet of commercial space on the first floor. In all, he’s planning on 84 rental units that would be a mix of one-bedroom and two-bedroom apartments. The project would come in two phases, an “east” and a “west phase.” Two houses closest to the Ottawa and Butler intersection would be torn down, while the other seven structures — some built in the late-1800s and owned by a variety of individuals, the state and Booth Newspapers — would remain. The north side of the property along Ionia Street would remain green space, Gillespie said, with the possibility of community gardens. Gillespie also plans to pursue a brownfield redevelopment plan for the property to reimburse him certain costs of the project, though that is subject to City Council approval.

Gillespie was hesitant to share plans he says are not set in stone. “It really puts me in a predicament to try and do that. I’m trying to make adjustments to the plan so that it satisfies the neighbors’ comments. It’s preliminary, and I can’t stress that enough,” Gillespie said.

And neighborhood concerns weren’t hard to come by Thursday night. Some worried about the possibility of “low income housing,” others the possible spreading of contaminated soils during demolition. But recurring themes were the potential of increased traffic, the sheer density of what’s proposed and aligning its design with the surrounding neighborhood.

“I hate these numbers,” said Georgia Ellis. “It’s too high density for this neighborhood. It’s like adding a neighborhood into our neighborhood. I don’t like at all the amount of traffic and amount of noise. This is just a lot.”

Chris McCarus, a Butler Boulevard resident, said to Gillespie during the meeting, “You’ve got a really high standard” in satisfying these neighborhood residents.

Added Penny Zago: “These are homes we’re trying to protect. Those are treasures. We’re trying to protect this way of life.”

Indeed, the Genesee Neighborhood has been significantly improved in the last decade. Drug deals even in daylight were once common, and scores of drug houses existed. They were largely driven out by an active neighborhood organization led by the late Ruth Hallman, mother of Councilwoman Carol Wood, and by a neighborhood police patrol. Though the latter has disappeared with budget cuts, the neighborhood has held its own in recent years, despite the economy.

If all goes well, Gillespie hopes to start on the mixed-used building by the end of this year and open in spring 2013: “Assuming the market response is good.”

Eastside progress

Gillespie said he’s built and manages 1,800 apartments throughout the state, including at Washington Square and Kalamazoo Street downtown and in Muskegon, Allendale, Jackson, Portland, Ionia and Charlotte.

And his most recent project — replacing a decrepit gas station with a three-story mixed commercial and apartment space at the corner of Michigan Avenue and Marshall Street on the east side — is “moving forward as planned.”

Subway is the first and so far only tenant to sign a lease on the first floor of the building and did so for three years. There’s still 1,800 square feet of available commercial space, Gillespie said.

Drywall interior and masonry exterior work is scheduled to begin this week, he added: “We still plan on opening in May.”