Michigan wants to give Lansing a new $40 million city hall. City leaders are thinking it over

LANSING — Does the city want $40 million from the state that would allow it to move to a new city hall?

Probably, but more than six months after state legislators OK'd the potential bankroll, city council members still have questions — and the city has yet to say yes to the money.

The city could get half of the money right away, and start earning interest on it while officials finish reviewing at their options, Deputy Mayor Shelbi Frayer said during a Feb. 12 committee of the whole meeting at which the council tabled the issue.

The city's current city hall sits on a prime piece of land across Capitol Avenue from the Michigan's Capitol. With state money in hand from a line item in the state's approved 2024 budget, city offices could move two blocks down the street to the currently vacant Masonic Temple building.

If the city moves its offices, the current city hall is likely to become a hotel. A Chicago developer has, since at least 2017, floated plans and submitted bids to the city. That reconstruction of the city hall would take two to three years, according to a slideshow presentation by the city.

A new city hall has been on mayoral wish lists for decades, but has always been pushed off for a lack of money, Frayer said. This time, the money is there.

The state money comes with a few strings: It has to be used for a municipal building and should give consideration to historic preservation, as well as helping other governmental entities. The state also expects the money to be spent by the end of September 2027.

Council members Brian T. Jackson and Ryan Kost told the State Journal they anticipate using the state money, likely a one-time windfall, but want to do due diligence and see whether the city can renovate its current city hall or find another location before they agree to take the state dollars.

The Boji Group, the owner of the former Masonic Temple, is asking for $5 million: $3.65 million for the building and $1.35 million for carrying costs and for not developing a neighboring parking lot so the future city hall could have windows on the south side, said Scott Bean, Mayor Andy Schor's director of communications.

The Boji Group also would potentially be the contractor for the deal, renovating the historic building to allow city offices, and using the rest of the state money to do so.

In a statement following the Feb. 12 vote, Boji Group President John Hindo said the developers hope the city acquires the building in May or June. The construction timeline is estimated to be a year to 16 months, with the project completed before October 2026.

How much will a new city hall cost?

In addition to purchasing the building for $3.65 million, spending $1.35 million for the visibility rights means a flat parking lot adjacent to the building would not be developed, so the city could put in windows on what is now a windowless seven-story wall.

The purchase price is based on an appraisal from the city and the other costs are "a typical approach in development deals," Hindo said, in a statement.

The former Masonic Temple was purchased by The Boji Group in about 2019 for $1.75 million, but, Hindo said during the Monday meeting, the building was part of a three-building deal with Western Michigan University's Cooley Law School.

Where is the money?

If the city council approves a purchase agreement, the city would need to complete a contract with the Boji Group for the Masonic Temple building and council members would then need to vote to sell the current city hall in order to help fund the move.

The current city hall had an appraisal in March 2023 of about $2.8 million, Freyer said.

The next steps, if the city decides to move rather than renovate, would depend on which of three versions of a new city hall that the city council approves.

Multiple options at new location

The seven-story former Masonic Temple is smaller than the current city hall, but police and the city prisoner lockup will be moved into a separate public safety building. After city workers move into the former Masonic Temple, the top three floors would remain empty in the first option.

In the first scenario, the city could buy the building and renovate the first four floors for $40 million, plus the sale of the current city hall, but it would need more money to renovate the top floors, according to estimates presented to city council members.

To pay for those renovations, the city is proposing that when the current city hall is sold, brownfield tax increment revenue from a future taxable development on the current city hall site would be used to help pay for the Masonic Temple work.

Those brownfield dollars could total up to $23 million and since they would fund a relocation they could be used to support the new city hall. The city is proposing spending about $8 million of that money for the renovations at the new city hall. The current site would undergo surface cleanup and the city hall building is expected to remain, Bean said.

As a second option, the city could move its Economic Development and Planning offices from its North Capitol Avenue parking garage space to the top floors of the Masonic Temple once they are renovated. That would leave empty space in the parking garage.

The third option would be to lease the upper floors to the Lansing School District, which would provide a revenue stream for the city.

Ryan Gilding, a spokesman for the school district, said Monday that the district has no firm plans to move into the Masonic building, but "we are always looking at options benefiting our students." The Lansing School District's main office is currently on West Kalamazoo Street.

Gilding said the Masonic Temple is one of several options the district has considered, but those plans have not been firmed up enough to say whether a potential move would leave empty space in existing buildings or expand the district's footprint.

Freyer said the school district wants to rent, not purchase, the space. The city's income from the rent, and potential to share costs on services such as security, could help the city save money, she said.

The city's attorney, Jim Smiertka, said there is a current legal case that may mean having the school district in the building could allow the city to make the building a gun-free zone, which may not be possible for a government building without a school component.

What else can the city do?

The state money doesn't require the city to stick to its plan of relocating city hall into the former Masonic Temple building but would require preserving a historic building.

The current building would qualify, Freyer said, but the city has not done a recent estimate on the cost to renovate the current city hall.

The city's most recent estimate, in 2016, placed the cost at $50 million to $65 million, and the city is estimating construction costs have risen by more than 150%, which could put current costs at $78 million to $102 million.

Council member Peter Spadafore said Monday that those estimates would have included police and lockup, so the cost could be significantly cheaper. He asked for an updated renovation estimate.

Contact Mike Ellis at mellis@lsj.com or 517-267-0415

This article originally appeared on Lansing State Journal: Lansing City Hall plans still up in the air despite lure of state funds