What is the Wheel District?

Harry Hepler is back.

The developer known for creating dramatic living and working spaces will come before the Lansing City Council on Monday (Jan. 8) with his next project: a 134-unit apartment complex called Prudden Wheel Lofts.

Hepler’s $8 million to $10 million plan is to repurpose an old factory building, at 700 May St., between Oakland Avenue and Saginaw Street. That’s in line with two of his earlier projects, downtown’s Case Place, a former tractor factory on Pere Marquette, and Motor Wheel Lofts, his signature residential adaptation of a massive, early-20th century factory that made steel wheels and brake drums.

But there the similarities will largely end. His earlier projects have spacious floor plans and preserve their industrial roots in their décor. The units in Prudden Wheel Lofts will all be sleek, ultra-modern one bedrooms maxing out at 470 square feet.

Moreover, though they’ll be packed with amenities — washers and dryers, dish washers, ice makers — they will be so “green” that Hepler promises no extra charge for utilities.

“This is probably one of the most sustainable projects in the country,” Hepler said, ticking off “solar ray energy on the roof storing energy in a battery, some wind energy, no natural gas or combustibles of any kind, heat pumps throughout.”

And a river will run through it — well, a creek. The plans call for collecting rain water from the the roof that will empty into a 400-foot-long cistern in the basement to flush the toilets.

Hepler said the structure, known as the High Bay Crane space, was built in 1955 to make gun shells for South Korea. Because it was during the height of the Cold War, the U.S. Government required a nuclear fallout shelter beneath. That’s what Hepler is transforming into a creek, as he calls it.

The lofts will take up most of the 70,000-square-foot building. The 1.5-acre site will feature a pool, pickleball courts, cross-training space, community rooms and more.

Hepler said his target audience is 20-somethings. To encourage them to rent, most units will be furnished and top out at $1,195 a month.

This rendering shows an example of an upper-story one-bedroom apartment. Aimed at tenants in their 20s, they will all be one bedroom and range from …

“We’re intentionally keeping the rents down so these 20-year-olds can escape from the couch in their parents’ basement,” he said.

Part of what’s driving Hepler’s plan is the struggle he and other landlords have faced in leasing office space since the pandemic. He has owned the building for two decades and was renting it for offices before COVID struck. It made more sense to him to shift gears into residential.

It also fits into the Schor administration’s goal of more affordable housing in the city. The city is seeking to declare the property part of a Neighborhood Enterprise Zone, a designation established by the state in 1992 that provides a tax incentive for developing or rehabilitating residential housing units.

Called the Wheel District, the zone would span from Saginaw to the south, the CSX Railroad track to the west, Oakland to the north and Pennsylvania Avenue to the east.

“If you look at what’s happened in the last decade, housing has been so expensive,” Hepler said. “Your municipalities will want to see the price go down, but we haven’t done our best job creating the best economic tools for that to take place.”

If the Wheel District is ultimately approved by the City Council, the loft project and homes within the district’s borders would see property tax payments frozen at their current rates for 12 years. Prudden Wheel Lofts would have its tax capped at $55,000 a year through that term. Hepler said he projects property tax payments will be $275,000 a year or more once they are uncapped.

With interest rates high and material costs expensive, the tax incentive makes a crucial difference, he said.

 To prepare for construction, Hepler acquired and demolished 21 homes within the proposed Wheel District boundaries. Hepler believes his Motor Wheel Lofts, which had its own enterprise zone period expire in 2018, serves as an example of how the area could be further transformed through the Wheel District.

“This was a vacant site for 35 years. It had no activity, it was boarded up and blighted, no one was there. The most occupants it had were pigeons. So, this has been a big success for this facility,” Hepler said.

In preparing the new enterprise zone proposal, Hepler worked closely with Kris Klein, vice president of the Lansing Economic Development Corp., or LEAP.

“We’re bringing the NEZ back to the forefront as a tool we can use to build off of,” Klein said. “The last one was East Village, roughly 15 years ago, so there’s not many folks around that saw that one established.” East Village is a suburban-like residential development on Saginaw near Marshall Street.

Initially, Hepler said the city was only looking at incentivizing his development, just as it had for the Motor Wheel Lofts. He asked if the boundaries could be extended to also include nearby homeowners.

“We asked why it had to be just our parcel. Why couldn’t those homeowners on May Street to the east, about 20 of them, take advantage of this, too? They’re the ones who have suffered through all this physical obsolescence,” Hepler said.

Klein and his team agreed the move would promote homeownership, giving the neighborhood and its residents an additional boost.

Hepler on the cover of City Pulse in 2006 for a story on Motor Wheel Lofts, which he was in the process of rehabbing into apartments.

“Now, if you have a home on May Street and you do a full rehab on the property there, taxes would stay at what they are today and remain frozen for 12 years. If you sell, you can transfer that NEZ certificate to the new buyer, who then pays that same rate for the remaining period,” Hepler explained.

The hope is that these perks, coupled with the lofts’ central location, will add younger renters to the mix. When the Motor Wheel Lofts first opened, Hepler said he primarily rented to tenants in their 20s, but economic factors tied to the 2008 housing crisis and resulting Great Recession changed that. Now, the average resident is closer to 40 years old.

“Because of housing market pressure, Motor Wheel moved out of that role of being somebody’s first place to live. We’re hopeful that Prudden Wheel Lofts is a better replacement for that. It will help stop that younger generation from living in the outskirts, create a better balance in the community and give the downtown a competitive edge,” Hepler said.

Ideally, the loft tenants and homeowners would intermingle, creating the foundation for the future of the district. As Hepler put it, “the pair of them, like bookends, will do the heavy lifting for the community.”

He expects little to no opposition from the Council.

“Some leadership has changed. So, there’s going to be some questions, which I think are great, but I haven’t felt any indication that anybody feels differently,” he said.

For his part, Mayor Andy Schor is onboard.

“I am incredibly supportive of the passage of this Neighborhood Enterprise Zone and for the creation of new housing options in this area. These new housing opportunities for residents are key to growing our city, and we need to continue to use these tools to help create a strong, vibrant community into the future,” Schor said.

Added Hepler, “It’s all about physical design of the city. If I can get all this done in the next few years, I will be very happy to see what was once an entire industrial facility prosper and become a whole new community.”

— TYLER SCHNEIDER AND BERL SCHWARTZ