$1B proposal would demolish Lakeside Mall, redevelop the site with housing
The owner of Lakeside Mall in Sterling Heights has a $1 billion redevelopment plan that calls for demolishing most of the struggling 1970s shopping mall and then building lots of new housing, new retail and a hotel.
Out of the Box Ventures, a subsidiary of Miami-based investment firm Lionheart Capital, is proposing to tear down nearly all of the 1.5 million-square-foot enclosed mall, except for the Macy's, JC Penney and former Sears buildings.
Once the mall starts coming down, likely in spring 2024, the 110-acre site would then get redeveloped over a period of 10 to 12 years, according to Sterling Heights Mayor Michael Taylor.
This proposed future "Lakeside City Center" would have:
2,803 new housing units (market-rate plus senior housing).
Nearly 150,000 square feet of new retail space.
Facelifted Macy's and JC Penney stores.
A 120-room hotel.
60,000 square feet of office space.
New restaurants.
“Right now, there is just Lakeside Circle and a sea of pavement with the (mall) in the middle," the mayor said. "The building is going to be removed, the pavement is going to be removed and we’re going to put in a whole new street grid with sidewalks, streetscapes, trees, landscaping, park benches — you name it. It’s going to look like a town center.”
On Tuesday, Sterling Heights City Council is scheduled to take up a proposal in which the city would partner with Lionheart on the development and helping to finance just the pre-development and public infrastructure portions of the project, such as roads, sidewalks, water and sewer lines.
Under the proposal, Lionheart would get reimbursed for the $71 million cost of this pre-development work and infrastructure buildout with future tax revenues generated at new development.
Also, to cover a temporary cash flow shortfall between when debt payments are due and the future tax revenues start flowing, the city would issue $45 million in bonds. Lionheart would then draw on those bond proceeds to complete the work.
The city would pay back the bonds using new tax revenues from the new development — not any general fund money.
“I think everybody on the council wants to see this vision come to life, and that’s why Tuesday I’m anticipating a strong vote of support," Taylor said.
Lionheart is later expected to seek state-level approvals for a Brownfield subsidy that would cover the mall's demolition costs. It also will need to obtain a $636.8 million construction loan. The firm would donate about 30 acres of land for public use as parks, streetscape and infrastructure.
In addition, Lionheart is expected to apply for a "Transformational Brownfield," which is a unique state-level subsidy for big development projects.
That type of brownfield would redirect to Lionheart decades of future property taxes that will be generated at the new development site, plus state income taxes paid by construction workers employed at the site and the state income taxes of future residents who reside there.
Michigan lawmakers last December eased requirements for the Transformational Brownfield program so that more projects could qualify for the powerful incentives. So far, only two projects have qualified since the program began nearly five years ago: redevelopment of an abandoned Vicksburg paper mill into commercial and residential space, and Dan Gilbert's four big downtown Detroit developments, including the Hudson's site.
The fully enclosed Lakeside Mall opened in 1976 and was developed by A. Alfred Taubman and Rodamco. The mall expanded in 1990 and was last renovated in 2007. It is situated on one of the busiest retail corridors in the state, and it's a short drive to the open-air Mall at Partridge Creek in Clinton Township.
Lionheart's Out of the Box Ventures bought Lakeside Mall for $26.5 million in late 2019 on the eve of the COVID-19 pandemic.
"We are honored to be working with the city of Sterling Heights to help breathe new life into an area that has been underutilized for decades, and in so doing, create thousands of new jobs,” Allison Greenfield, principal and chief development officer of Lionheart Capital, said in a statement.
The firm's $1 billion mall redevelopment plan has similarities to the one underway at the former Northland Center site in Southfield, where Bloomfield Hills-based Contour Companies is razing much of the old mall and constructing "Northland City Center" with more than 1,500 housing units, plus rehab of the Northland's original Hudson's store into new retail and housing.
Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
This article originally appeared on Detroit Free Press: $1 billion plan would demolish Lakeside Mall, redevelop as housing
