Just some recent developments for the City Club Tower.
‘The city is growing up before our eyes’
Written by Lawrence Cosentino
Wednesday, 12 December 2007
City Pulse
We pick up this story in thin air, where all plans begin.
Last week Lansing developer Shawn Elliott and his Grand Rapids-based partner, Dan Wert, climbed with me to the top of River House, a blue slab of apartments and penthouses rising above downtown Grand Rapids.
We rode a wobbly service elevator to the 14th floor, joined by workers in overalls and hardhats. Five wooden ladders brought us past the upper floors to open sky, where a self-erecting crane rose 50 feet above our heads and the silver Grand River threaded through a tabletop city 200 feet below.
The building is already one of the tallest in town, and it’s only about half done. When completed, it will reach 34 stories — the tallest building in Michigan outside of Detroit. On clear days, people living on the top floors will see Lake Michigan.
Despite its stature, it won’t be the world headquarters of anything, except perhaps the growing club of frustrated commuters and suburban exiles eager to mothball the lawn mower, move downtown and eat supper over city lights.
For now, these penthouses lacked certain amenities — the side of the building, for example. December winds whipped through orange safety netting. Instead of Persian rugs, the concrete floors were pooled with glare ice.
The climb was exhilarating, but Elliott wasn’t there for fun. He and his Lansing partner, developer Allen Drouare, are teaming with Wert’s firm, the Grand Rapids-based Robert Grooters Development Corp., to put up a similar residential tower in Lansing.
For Elliott’s team, River House is a bellwether of Lansing’s future. Tenants have signed purchase contracts for 136 of River House’s 200-odd units, and Elliott is sure he can tap a similar demand for high-rise Lansing living.
It looks like Elliott will get his chance. Monday night, the Lansing City Council approved two development agreements paving the way for a new downtown high-rise, Capitol Club Tower, which will rise to at least 12 and as many as 24 stories (most likely 20, Elliott predicts).
They approved the sale of an adjoining parking ramp and a surface lot.
If all goes as planned, the tower will break ground in February and poke above the surface this spring on the site of the old Lansing City Club.
If Capitol Club reaches 24 stories, it will be the tallest building in Lansing (surpassing the Boji Tower) — a small town in a box, with at least 80 living units (double that figure if demand warrants), restaurants, a gym, perhaps even a grocery store and swimming pool. Even if the building doesn’t reach the maximum, it will alter the city’s skyline.
Elliott’s team has agreed to spend at least $22.5 million on the tower, and about $7 million to improve the parking ramp and other expenses. He expects the total cost of the project to reach “the ballpark of $30-$40 million.”
“I tell people about it and they say ‘Yeah, right,’” Elliott said. “But it’s going to happen. We will show the market how big the market is.”
It’s still a paper tower, and not a final one at that, but Elliott says he has already taken 70 non-binding reservations for dwelling units.
Lansing’s chief neighborhood planner, Bob Johnson, called the project “transformative,” particularly when in tandem with several other downtown developments announced this year.
“Here you have something that has never been presented, not just in Lansing, but in this entire region,” Johnson said. “It’s as if the city is growing up before our eyes.”
Elliott loves nothing more than to haul scoffers to the River House and freeze their doubts in an icy wind.
Wert, a bit of a showboater, stepped onto a wooden service platform hanging off the edge of the building.
“There’s nothing underneath me right now,” he said with a grin.
Elliott hung back, next to a concrete support wall, staying grounded as his dreams. If a big residential tower can go up in Grand Rapids, he asserted, it can happen in Lansing. “This isn’t a drawing. This isn’t a virtual tour,” he said. “This makes it real.”
Swinging hammers, swinging deals
Allen Drouare, Elliott’s East Lansing-based development partner, has known Elliott for 20 years, since they were neighbors.
“He’s a fireball,” Drouare said. “He’s up there in the top three or four cheerleaders for the city of Lansing.”
Born in East Lansing, Elliott, 34, lives in Laingsburg with his wife and two children. His restaurateur brother, Kris, owns Troppo and Tavern on the Square in downtown Lansing and The Post in East Lansing.
In the past five years, Shawn Elliott has taken a keen interest in restoring downtown buildings, concentrating on the old South Washington Square commercial strip downtown. Most recently, he put up lofts at 109 S. Washington Square (the Capitol Pharmacy building) and 401 S. Washington. His biggest coup thus far is the restoration of the Ranney Building at 208 S. Washington, an architectural gem designed by Darius Moon.
The Ranney rehab was a joy for Elliott, a self-described “hammer swinger” with enoughpatience to remove the thousands of Famous Taco cinderblocks blocking the graceful Ranney façade.
The loft projects also gave Elliott a hint of the demand for downtown living.
“I love it when gas prices go up,” he said. “People are thinking twice about living in Dewitt, Okemos or even further out and spending thousands of dollars a year for gas.”
In January 2007, Elliott and Drouare cast their eye on a “very expensive and difficult land combination” close to Elliott’s downtown rehabs — a patch of Grand Riverbank occupied by the old Lansing City Club building at 213 S. Grand Ave., a vacant office building at 217-221 S. Grand Ave. called the “Goodrich Building” and a city-owned parking garage.
At first, Elliott and Drouare considered wrapping new development around the Goodrich Building.
“Then we said, let’s just see how many units you’d have to have to absorb the land costs for clearing the whole site,” he said.
The answer hovered around 100 units, dwarfing any other recent development in town, but local pride sauced up the partners’ business sense.
“We’re not inventing the high-rise,” Drouare said. “It’s a proven housing option, something other cities have.”
Elliott said Lansing is long overdue to join the club. “How is it that they’re doing this in Grand Rapids, Ann Arbor, Madison, Wis., Columbus, Ohio, and everywhere else?” he asked. “We put ourselves to task.”
In 1997, the Michigan Economic Development Corp. created a residential version of the Renaissance Zone, a package of local and state tax breaks aimed at jumpstarting development in challenged areas. After nine years, the exemption is lifted in 25 percent chunks each year, and phases out completely after 12 years.
Over 150 buildings in Grand Rapids sit on such zones. Wert and Elliott said the tool proved crucial in bringing hundreds of new residents to Grand Rapids since the mid-'90s.
The Lansing City Council approved the Renaissance Zone application for Capitol Club Tower Nov. 24.
Elliott knows some critics view the zone as a tax break for wealthy penthouse dwellers, but he vehemently defends its application here.
In an untried market, he said, the tax breaks are a “silver bullet in your pocket.”
Although he won’t turn away customers moving from elsewhere in Lansing, Elliott said the project is not aimed at moving people “from a taxpaying situation in Lansing into a non-taxpaying situation.”
“All those lawyers at the law firms downtown and most of the people at the Capitol come and draw their paycheck downtown, but then they go and live in Delta Township or Okemos or Dewitt, because there hasn’t been an exciting enough choice for them downtown,” he said.
Elliott said the ripple effects of the project, from restaurants to retail to services, will bring millions of dollars into the city. He estimates that Capitol Club residents will spend about 70 percent of their disposable income in Lansing.
Elliott is also tickled that the project is drawing investment money from Grand Rapids. It’s the first time Grooters has reached beyond the metropolitan Grand Rapids area, where they have developed over 500 million square feet of space, including a key development of a run-down railroad depot that now employs 250 people.
Elliott recalled the flap over using Grand Rapids labor on Lansing street projects last summer. “We’re doing the opposite,” he said. “We will use a local work force on Grand Rapids’ dollar.”
Elliott said he’ll use “98-100 percent” local labor on the build. He has already tapped local lawyers, local accountants and a local architectural firm (Studio Intrigue in REO Town) to handle a quarter-million dollars’ worth of preliminary work. He’s also contacting MSU for expertise on making the building and grounds environmentally sound, with an eye toward LEED (Leadership in Energy and Environmental Design) certification.
Serious reservations
Dan Warmels, a divorced, 58-year-old East Lansing CPA with grown children, has already made a reservation at Capitol Club. He and 69 others have put $500 in an escrow account for the privilege of being assigned a number. In a careful bootstrap operation bristling with legal safeguards, Elliott and Drouare will use these reservations to prove there is demand and finance construction accordingly.
“The building will design itself,” Elliott said.
When the building plans are final, the “reservists” (Elliott’s term) will be offered purchase
contracts in the same order they signed up.
Warmels has not only reserved a small penthouse (1,200 to 1,500 square feet) for himself, he has persuaded a co-worker and two clients to do the same.
“I have friends that overlook Seattle and Tucson, and I wanted something where I could get a little view,” he said, then the accountant takes over. “The combination of a high-rise setting and tax savings makes it unique in downtown Lansing.”
With the Renaissance Zone in place, Elliott said, the monthly payment for a $200,000 unit will come in under $900 — a magic threshold that has drawn most of the “reservists” thus far. (High rollers can spring for bigger penthouses that may go up to a million dollars.)
As a bookend to the afternoon, Elliott and I hop onto the roof of the Grand Tower, a 16-story office building just north of the Capitol Club site, that will give us an idea of the view from Capitol Club Tower.
The elevation is lower than our River House climb, but the view is far more dramatic and intimate than the sprawling, haphazard Grand Rapids cityscape. It looks like the pulsating nucleus of a young city. Lansing’s two Art Deco landmarks, the Boji Tower and the Ottawa Power Station, burned with orange flame. Cedar Street curved fetchingly to the north, following the smooth evening-gown zipper of the Grand River. Far to the east, bits of MSU glinted in a sea of trees. A crest of hills ringed the horizon.
Elliott looked down at his own little Washington Square lofts, nestled among the storefronts below.
“We have ourselves a city here,” he said.
The View: This panorama from the roof of the 16-story-tall Grand Tower shows what the city will look like from the nearby Capitol Club Tower. (E.J. Jocque/City Pulse)
Forerunner: River House, a 34-story complex of condos and penthouses in downtown Grand Rapids, will be the tallest building in Michigan outside of Detroit. The Grooters Corp., developers of the River House, are helping Lansing developers Shawn Elliott and Allen Drouare build Capitol Club Tower. (E.J. Jocque/City Pulse)
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