Bernero announces developer for current Lansing City Hall, site for new location

LANSING — A Chicago-based real estate company has been selected to redevelop the current City Hall into a hotel and to redevelop the former Lansing State Journal building as a new City Hall, Mayor Virg Bernero announced Thursday. 

Beitler Real Estate Services was chosen for the project, according to a news release. The plan was chosen out of four proposals received since September.

The city's statement says Beitler would purchase the former LSJ building at 120 E. Lenawee St. to redevelop into the new City Hall, taking about 24 months to do the work. The new City Hall would be completed before refurbishing the current City Hall into a hotel. The timeline would eliminate the need for temporary space for city operations. 

The real estate agreement, which was filed Thursday with City Clerk Chris Swope, says the developer will purchase the East Lenawee building, which is now owned by The Eyde Co. The LSJ moved into the Eyde's Knapp's Centre on South Washington Square building in January 2016.

The city would purchase the redeveloped Lenawee property for an amount not to exceed $50 million, subject to fair-market appraisals of the completed project, the release stated. The agreement includes a proposed 99-year ground lease between the city and the developer for the current City Hall site across from the Capitol building.

“The corner of Michigan and Capitol will soon become an important emblem of Lansing’s accelerating momentum and continuing transformation as a city and region," Bernero said in a news release. "The additional downtown hotel capacity will bring more and larger conventions to the Lansing Center and that, in turn, will reduce the city’s ongoing subsidy of the region’s main convention facility.”

City Council currently has three general meetings scheduled before Bernero's term expires Dec. 31 and Mayor-elect Andy Schor takes office on Jan. 1. 

Council will probably need to schedule at least one more meeting after Dec. 11 - the last scheduled meeting of the year - to determine if council members will vote to approve the City Hall redevelopment proposal. Council's next meeting is Nov. 13.

A sale of City Hall for redevelopment would require at least six council votes, Council President Patricia Spitzley said.

It takes at least two votes from council members to schedule a special meeting. The mayor also has the authority to call a special meeting.

"I’ve always been in favor of looking at the City Hall property for potential redevelopment," Spitzley said. "I would have to see the proposal before setting a special meeting.”

Schor said Thursday night he spoke with Bernero earlier in the day about the redevelopment proposal, but is not "actively involved" in the process. 

If city officials don't finalize plans for a new City Hall, Schor said his administration will study it further once he takes office. 

"This has been a priority," Schor said of City Hall redevelopment. "If (Bernero and council members) can get this done by the end of the year, and it makes sense, then I’m supportive of that.”

Bernero said developer J. Paul Beitler has the "financial wherewithal, experience and vision to repurpose City Hall for a new life, while preserving the essential historic character of the building."

Beitler, a 1967 Michigan State University alumnus, is the company's president. A State Journal review of campaign finance records earlier this fall showed that he was the only developer among the four submitting proposals who had not contributed to Bernero's political campaigns. 

"We are totally transparent and at the end of the day, our primary objective is to maximize the returns to the city of Lansing," Beitler said at the time.

The 256-room Radisson Hotel has been the only full-service hotel in downtown since 1985 due to a non-compete clause the hotel had with the city. That agreement ended in January when the Radisson's owners opted not to make their final payment to the city.

Adding another hotel to downtown Lansing is a “critical part” of growing the tourism and convention industries in the area, said Tim Daman, president and CEO for the Lansing Regional Chamber of Commerce. 

“The possibility of a new downtown hotel is very attractive,” he said. “The need has clearly been identified.” 

The $4.2 million sale price of City Hall is expected to help offset the costs of a new City Hall. A professional appraisal of the building to determine the sale price was completed in September 2015.

Haley Hansen contributed to this report. Contact Julie Garcia at (517) 377-1088 or jgarcia@lsj.com and follow her on Twitter @ReporterJulie.