Clock ticking on City Hall hotel plan

A Chicago-based developer who wants to transform Lansing’s City Hall into a large-scale, high-end hotel remains undeterred by the announcement of a smaller hotel just a few blocks away. But he could divert course by the end of the year.

J. Paul Beitler, president of Beitler Real Estate Services, said he wants to lock down plans by January or else he’ll likely take his development to another city.

Beitler wants to renovate City Hall into a ritzy hotel that would cater to regional convention crowds. Developer Pat Gillespie’s latest plans along Michigan Avenue didn’t change his mind, but Beitler urged officials to move quickly or miss the opportunity.

“If I build, I build. If I don’t, I don’t,” Beitler declared. “It won’t be the end of the world for me, but it will likely be the end of the world for the city of Lansing. They’re struggling right now. This city has to start thinking strategically, and it has to take a leap of faith forward and do something.”

Beitler’s proposal was one of four submitted to the city a year ago for City Hall.

The others would either tear down City Hall or build in front of it on the plaza. Beitler’s is the only one that would preserve the building without blocking the view of what preservationists consider the most important example of mid-century architecture in the Lansing region.

Lansing Mayor Andy Schor said Tuesday it is “feasible” that the city can get over the hurdle by January, that is holding up Beitler’s project, which Schor said he still favors. The challenge is finding a place for the courts and the police lockup, which are housed in City Hall.

But he said he will not spend “millions” temporarily locating those facilities in order to accommodate Beitler’s deadline.

The Gillespie Group outlined plans last month to swallow almost an entire city block for a nationally flagged hotel, apartment complex and an “urban market” Meijer in the 600 block of East Michigan Avenue. But Beitler — along with a handful of other developers — sees room for continued growth in the market.

“It’s a good start but that hotel is not going to be the level of quality that I’m looking to bring to the city,” Beitler said from his office in Chicago. “Convention crowds want more of an upscale place they can stay.”

“For years with only one hotel in downtown Lansing?” he added. “That has caused a problem for the Lansing Center. Lansing has one of the most modern and beautiful convention centers in the state but they’re missing out. The Achilles tendon to that model is that there are no hospitality rooms within walking distance.”

Bob Trezise Jr., president and CEO of the Lansing Economic Area Partnership, said at least a half-dozen developers are considering plans for additional downtown hotels “in a serious way.” And the way he sees it, the addition of a hotel downtown would only bolster the need for another. And another. “Let the best developer win,” he added.

“If we have more hotel rooms, we’ll have more conventions, which, ironically, will create the need for more hotel rooms,” Trezise suggested. “Burger King is always built next to other fast food places. The average consumer is also more likely to utilize a specific space nearby if there are other like-minded facilities, so they have a choice.”

City officials noted the City Hall building regularly siphons a half-million dollars annually in maintenance costs alone. Last year, former Mayor Virg Bernero solicited proposals to offload the aging site into the hands of developers and to relocate the city’s offices to another, more cost-efficient location elsewhere downtown.

Beitler’s proposal — which includes plans to lease the building and renovate it into a high-class hotel and restaurant — was selected as the frontrunner before Bernero left office. After Schor arrived in January, he tapped the brakes on the project. And Beitler said time is running out for city officials to stepback on the gas.

“This plan is predicated on a very dynamic environment where interest rates are going up every quarter,” Beitler added. “The cost to build is going up. At some point, regardless of how much the city may desire to do something there, the cost in order to complete this project will just be too prohibitive.”

Schor shares Beitler’s urgency but stressed the importance of first finding another location for the district courts and the police lockup that share the space with city offices. Those discussions resurfaced this week at a City Council committee meeting, but it’ll likely take months before a plan can move forward.

Louise Alderson, chief judge at Lansing’s 54-A District Court, outlined for Council members the early stages of a multi-jurisdictional plan that could potentially merge facilities with other municipalities in Mason, East Lansing and Lansing Township. Proposed legislation requires a symbolic buy-in from each governing body, she said.

“These are just preliminary discussions,” Chairwoman Carol Wood emphasized. “There will be no action.”

Still, Schor believes downtown is primed for additional options. He noted two or three hotels “makes sense.”

“I think a hotel on that site would make for a great location that a lot of people would want to use,” Schor said. “But we have to do our due diligence. We can’t sell him the building and not have a courtroom. I’d like to see this done before the end of the year, but I don’t set artificial deadlines because I actually want to get things done.”

Beitler’s proposal aims to move City Hall into the former Lansing State Journal headquarters, on Lenawee Street. He wants to lease City Hall from the city and renovate it into a Hilton or Hyatt — a plan that he suggested would generate revenue for the city, in addition to better utilizing the prominent downtown space.

Gillespie’s upcoming plans might tighten a limited market but Beitler sees an opportunity to collaborate. The state capital will always have a need for more hotel accommodations, he said. He wants to tap into a more “upper class” crowd but suggested the dueling hotels could refer guests to one another when vacancies run slim.

“I wouldn’t be knocking on Lansing’s door if I didn’t think there was still an opportunity here,” Beitler said.

The historical integrity of City Hall would be preserved while contractors reshape the lower floor into a “glass curtain” adjacent to a plaza that would be kept open to the public. A boutique restaurant and cocktail lounge overlooking the Capitol could play host to a variety of black-tie affairs, Beitler suggested.

Beitler estimated it will take a minimum of three years before the building is ready — assuming officials are even able to OK the project before the end of the year.

Schor has a much more optimistic view of the city regardless of whether Beitler’s plans ever come to fruition. He said he plans to honor Bernero’s commitment to Beitler but isn’t setting any hard deadlines on the project. If the proposal is still on the table when plans for the courts and lockup are decided, he’ll give Beitler a phone call.

“We have quite a bit coming for Lansing,” Schor added. “He picked one of the most challenging projects because it’s City Hall. We have stuff all over the city being developed right now. I’d like to add City Hall to that list, but we need to have a court system before we can ever have a new, bright and shiny building.”

Brett Forsberg, President of Forsberg Real Estate Co., also charted ongoing plans for another hotel development downtown. He expects the City Council later this year to review a rezoning request for a 105 to 120 room, moderately priced hotel where the REO Town sign sits onMalcolm X Street.

“We’re still working on the branding of what type of hotel it’s going to be but we’re thinking it’s something that will be a nice, mid-range hotel,” Forsberg added. “We feel good about the number of hotels that are in the works right now, especially with these being so centrally located to the downtown core. There’s potential there.”

Visit lansingcitypulse.com for continued coverage as developments continue to take shape downtown.