$1 billion plan would demolish Lakeside Mall, redevelop it into housing
The owner of the Lakeside Mall in Sterling Heights has a billion-dollar redevelopment plan that calls for demolishing most of the struggling 1970s mall, then building lots of new housing, retail and of a hotel.
Out of the Box Ventures, a subsidiary of Miami-based investment firm Lionheart Capital, is proposing to demolish nearly all of the 1.5 million square foot gated mall, except for the Macy’s, JC Penney buildings and old Sears buildings.
Once the mall begins to collapse, likely in the spring of 2024, the 110-acre site would then be redeveloped over a 10 to 12-year period, according to Sterling Heights Mayor Michael Taylor.
This proposed future “Lakeside City Center” would have:
- 2,803 new homes (market price plus senior homes).
- Nearly 150,000 square feet of new retail space.
- Renovation of Macy’s and JC Penney stores.
- A hotel with 120 rooms.
- 60,000 square feet of office space.
- New restaurants.
“Right now it’s just Lakeside Circle and a sea of sidewalks with the (mall) in the middle,” the mayor said. “The building is going to be taken down, the sidewalk is going to be taken down, and we’re going to put in a whole new grid of streets with sidewalks, streetscapes, trees, landscaping, park benches – you name it. It’s going to look like a downtown.
On Tuesday, Sterling Heights City Council is expected to accept a proposal in which the city would partner with Lionheart for development and help fund only the pre-development and public infrastructure parts of the project, such as roads, sidewalks , water and sewer lines.
Under the proposal, Lionheart would be reimbursed for the $71 million cost of this pre-development work and infrastructure construction with future tax revenue generated from the new development.
Additionally, to cover a temporary cash shortfall between when debt payments are due and when future tax revenues begin, the city would issue $45 million in bonds. Lionheart would then draw on these bond products to complete the work.
The city would pay off the bonds using new tax revenue from the new development — not money from the general fund.
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“I think everyone on the board wants to see this vision come to life, and that’s why on Tuesday I expect a strong vote of support,” Taylor said.
Lionheart is later expected to seek state-level approvals for a Brownfield grant that would cover the costs of demolishing the mall. It will also have to obtain a construction loan of $636.8 million. The company would donate approximately 30 acres of land for public use as parks, streetscape and infrastructure.
Additionally, Lionheart is expected to apply for a “transformational brownfield,” which is a one-time state-level grant for major development projects.
This type of brownfield would redirect decades of future property taxes that will be generated at the new development site to Lionheart, plus state income taxes paid by construction workers employed at the site and taxes on state income of future residents residing there.
Last December, Michigan lawmakers relaxed the requirements of the Transformational Brownfield program so that more projects can benefit from the powerful incentives. So far, only two projects have qualified since the program began nearly five years ago: the redevelopment of an abandoned Vicksburg paper mill into commercial and residential space, and the four major downtown developments of Detroit by Dan Gilbert, including the Hudson 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 located on one of the busiest retail corridors in the state and a short drive from the mall in outdoors of Partridge Creek in Clinton Township.
Lionheart’s Out of the Box Ventures purchased Lakeside Mall for $26.5 million in late 2019 on the eve of the COVID-19 pandemic.
“We are honored to work with the City of Sterling Heights to help breathe new life into an area that has been underutilized for decades and, in the process, create thousands of new jobs,” Allison Greenfield, Principal and Director of Lionheart Capital’s development, said in a statement.
The company’s $1 billion mall redevelopment plan bears similarities to the one underway at the former Northland Center site in Southfield, where Bloomfield Hills-based Contour Companies is razing much of the former shopping center and building the “Northland City Center” with over 1,500 homes, as well as rehabilitating the original Northland Hudson store into new retail and housing.