City Revisits Potential Redevelopment Of Downtown Lots

Traverse City commissioners will receive an update tonight (Monday) on efforts to work with developers and solicit proposals for redeveloping up to four city parking lots, ideally with the goal of bringing housing or mixed-use developments to those parcels. The project aligns with the city’s strategic plan to consolidate parking into decks and convert surface lots to higher and better uses, but has received criticism from some downtown businesses worried about losing parking – particularly at Lot G next to Modes Bum Steer.

Rob Bacigalupi of consulting group Mission North will update commissioners tonight on recent discussions with developers and city staff on the challenges and opportunities related to redeveloping four parking lots: Lot G, Lot O (northwest corner of State and Cass next to The Omelette Shoppe), Lot X (behind the Hall Street utility substation), and Lot T (southeast corner of Union and Grandview Parkway).

Lot G (pictured) has already been approved to be redeveloped as part of a deal to build the new Rotary Square across the street on the TCF Financial Corporation bank site. Under the agreement, Lot G was planned to house a new mixed-use building including the relocated bank offices and rental apartments; however, the recent merger of TCF Financial Corporation and Huntington Bank means TCF may now sell the bank property outright to the city and will not need a new building. Traverse City Downtown Development Authority (DDA) CEO Jean Derenzy says that in either scenario, redeveloping Lot G – with or without bank offices – meets the city’s goal of converting surface lots into more productive uses, like housing.

City commissioners would still need to go through a process to declare Lot O, X, or T as surplus and allow development to take place on any of those sites – and getting input from developers on property options is the first step. According to Bacigalupi, who met with five developers as well as representatives from Housing North and The Watershed Center Grand Traverse Bay, Lot O and Lot G appear to be the top options for redevelopment of the four sites. “It seems Lots O and G are low-hanging fruit and would provide more opportunity for quick success,” he wrote in a report to commissioners. “The other lots could benefit from lessons learned from the first two, and possibly from additional public input.”

Lot O currently has 26 parking spaces, while Lot G has 55 spaces. City staff noted that there are public stormwater facilities and a public snow melt boiler on the Lot O site, and that “care must be taken to not landlock parking on property just to the north” if the lot is redeveloped. A fuel tank was removed from the area in 2009; more could still be present, staff said. Lot G has no city utilities on-site except for overhead electrical (an easement may be required if it is developed so city staff can still access that system) and can accommodate “high-intensity, mixed-use, 24-hour operations.” One developer told Bacigalupi that developing Lots O and G was a “no-brainer,” but expressed wariness about the other two sites.

Those lots, T and X, have more significant barriers to redevelopment. Lot T, which has 150 parking spaces, is used for downtown permit parking and handles spillover parking for the Sara Hardy Downtown Farmers Market. The lot is also used for city snow storage in the winter and for some National Cherry Festival events in the summer. An easement would need to be granted to the city to provide continued access to an eight-inch water main that runs under the lot. Lot X, meanwhile, is owned by Traverse City Light & Power – requiring a deal for the utility to divest of that property – and has 42 parking spaces with major utilities on-site including electrical circuits, an electrical substation, and a 36-inch sewer trunkline. Both parking lots are near the Boardman River, offering opportunities to enhance the waterfront and public access to the river as well as challenges to ensure the watershed is properly protected.

Developers overall expressed interest in the idea of partnering with the city to redevelop one or more downtown lots. “Each developer has a different approach, but they all are interested in the opportunity to develop one or more of these lots,” according to Bacigalupi. “One developer, for example, specializes in workforce housing and would want to have at least 80 percent of the units at or below 80 percent AMI (area median income). Another would not want to be restricted by targets, but would rather allow the market to dictate unit mix. A third would welcome income targets in exchange for incentives, such as a Neighborhood Enterprise Zone.” City commissioners are set to discuss a separate project tonight, a proposed development at 309 West Front Street next to the new 4Front Credit Union building, that also aims to bring rental apartments geared toward those at 80 percent AMI through a Neighborhood Enterprise Zone, which is a type of tax break for housing developers.

Developers and staff also shared some concerns about redeveloping downtown surface lots, including the utilities present on some of the targeted parcels, high city taxes (a particular challenge if the goal is to develop rental apartments), and the loss of downtown parking spaces. “The issue of parking related to a general question about whether all of the lots would be offered, and possibly sold, at once,” wrote Bacigalupi. “Or, will they be sold in sequence according to plan to allow for the systematic replacement of parking?” Mary Zacks, a downtown property owner, sent the DDA a petition signed by several dozen downtown employees – including some business owners – protesting in particular the redevelopment of Lot G next to Modes Bum Steer. Zacks said the parking provided by Lot G was “essential to downtown business success” and that redeveloping the parcel would reduce “much used and needed parking spaces.”

Derenzy acknowledges that providing enough parking to support downtown merchants and restaurants while also making the best use of land and bringing much-needed rental housing downtown remains a tricky balancing act. “You need to get to a place downtown where you are developing surface lots without harming retail,” she says. “Is it easy to do? No. But you need infill development to have housing. You try to get to the best practices for having a healthy, thriving downtown. It all goes to the larger vision of how you stack the parking and have better land use.”

Those are likely to be some of the considerations city commissioners take into account as they move forward with potentially developing one or more lots, a process that could soon lead to creating a formal request-for-proposals (RFP) from developers once commissioners decide which lots they want to pursue first. Bacigalupi says commissioners will need to discuss whether to attach “hard-and-fast” requirements for housing targets in the RFP, or give developers more flexibility to propose different options. Developers going forward will need “clear guidelines in order to respond to the RFP, more clarity on the issue of relocating utilities that may be in the way, (and) more detail on what easements are needed by the city,” according to Bacigalupi.