State officials have approved a $7.5 million loan for the redevelopment of the former McCamly Plaza hotel in downtown Battle Creek that’s being led by an affiliate of the city’s economic development arm.
The Michigan Strategic Fund Board approved the $7.5 million Michigan Community Revitalization Program performance-based loan at its meeting this morning.
The roughly $59 million project has already secured nearly $30 million in local funding, including $4.5 million in federal American Rescue Plan Act funding from the city of Battle Creek and Calhoun County and $20 million from the W.K. Kellogg Foundation.
50 Capital Ave Development Corp., a wholly owned subsidiary of Battle Creek Unlimited, the city’s nonprofit economic development arm, leads the uniquely structured project.
“This project is extremely important for the continued revitalization of downtown Battle Creek and frankly is strategic to the state of Michigan with its proximity to the Marshall Megasite,” said Joe Sobieralski, noting the nearby 1,600-acre development-ready industrial site in Marshall. Sobieralski leads both 50 Capital Ave Development Corp. and Battle Creek Unlimited.
Plans call for redeveloping the 15-story, functionally obsolete hotel into a 239-room DoubleTree by Hilton. Originally built in 1982, the hotel has failed to meet code compliance since it closed in 2019. The hotel also is connected to the 6,000-capacity Kellogg Arena, providing key conference capacity for the downtown and surrounding business areas.
At today’s MSF Board meeting, Battle Creek City Manager Rebecca Fleury noted the importance of capturing overnight stays in the city following the widespread shift to remote work caused by the COVID-19 pandemic.
“It’s important for us to capture overnight stays and it’s an important component of our downtown strategy,” Fleury said, noting the “iconic building” that often is the first feature visitors see in downtown Battle Creek.
Sobieralski and Fleury also noted the downtown’s proximity to the Fort Custer Industrial Park and the need for a nearby full-service hotel and conference facility.
“It’s just critical that we service the corporate needs,” Fleury said. “We see this as a project that addresses an industry that’s been most hard hit by the pandemic, and it’s an important part of our local economy.”
The city of Battle Creek is supporting the development with an Obsolete Property Rehabilitation Act (OPRA) tax abatement valued at $3.23 million, while state lawmakers have appropriated $2 million from the current budget.
Michigan Economic Development Corp. staff noted in a memo that the project developer is contributing “significant equity” of 41 percent, more than $18.7 million, for the project with a return expected at less than 1 percent over 20 years.
“This project is a very high priority for the City of Battle Creek, Calhoun County and other local stakeholders, as it redevelops one of the largest buildings in the heart of downtown into a quality, operational hotel to accommodate overnight guests in the core business district,” according to MEDC staff. “Bringing visitors to the community’s downtown will support existing local businesses and help drive demand for new enterprises.”