Alexander Alusheff

Lansing State Journal

OKEMOS – Weeds have overrun the garden at the abandoned Travelers Club Restaurant and Tuba Museum.

Ivy runs uncontrollably up the brick wall of the building at the corner of Okemos and Hamilton roads, actually growing into an open window in the second floor. Its basement filled with eight feet of water a few years ago.

The former White Bros. Music store on Okemos Road sits empty in a cracked asphalt parking lot, its blue awning sun-faded, black plastic sheets covering the windows.

The buildings have been vacant for nearly four years now. And like the Dr. James Smiley House, the 1870 home-turned-book store that once stood next to the restaurant, they were supposed to be torn down to make way for a $10 million downtown redevelopment project: two three-story buildings with apartments, retail space, beauty salon and corporate headquarters for Douglas J Aveda Institutes and Salons.

But that project won't be built.

Douglas J, which bought the three properties in 2012, pulled the plug last month. The two buildings and empty lot in downtown Okemos likely will sit dormant until another interested developer decides to buy them.

The company's announcement came a day after Douglas J’s development approvals from Meridian Township expired. That means, even if the company wanted to continue with the project, they would have to resubmit all their plans and undergo the approval process again, said Mark Kieselbach, the township’s community planning and development director.

Douglas J President Scott Weaver said that won't happen.

"I have no interest in spending $10 million on a mixed-use development," he said. "Would I occupy a piece of the development? Sure."

Weaver said it was a disagreement with the township and the slow rebound of commercial property values that ultimately changed his mind about the project.

The original plan, put forth in 2012, consisted of building a a three-story, 30,000-square-foot building at the corner of Hamilton and Okemos roads to house the Douglas J Salon and Spa, which operates a block west at 4663 Ardmore Ave.

Next to that development, near the intersection of Hamilton Road and Ardmore Avenue, it called for a three-story, 18,000-square-foot building with retail on the first floor and apartments on the other two. The salon across the street was to be converted into the company's headquarters.

Now Weaver said he is only considering doing a remodel of the 9,500 square-foot salon on Ardmore Avenue. He is waiting to hear back about what that might cost.

"We would have liked to see that project finished," Kieselbach said. "We're hoping somebody is interested in doing a project on that corner."

'A dead zone'

Before Weaver bought the buildings, they were owned by Will White.

White bought a closed ice cream parlor on the corner of Okemos and Hamilton roads in 1982 and turned it into the Travelers Club International Restaurant & Tuba Museum. In 1995, he moved White Bros. Music into a building down the street at 4695 Okemos Road. He rented out the Smiley House to Triple Goddess Bookstore.

Then the 2008 recession hit. Business dropped off. Comerica Bank foreclosed on the buildings in 2010.

"They wouldn't renegotiate the terms of my mortgage," said White. "I was pretty much forced out."

The bank kept the businesses, along with Triple Goddess Bookstore, as rent-paying tenants. White set up a non-profit, hoping to bring the community on board, to buy the properties back and to save his businesses. But his plans didn't stop there.

White said he showed Weaver plans to redevelop the northwest corner of the intersection in 2011. The plan, named Hamilton Square, called for a $10 million mixed-use development that would keep the Travelers Club intact while constructing a four-story building next to it on Hamilton Road that would accommodate a coffee shop and restaurant on the first floor with 25 apartments above. It included another building on Okemos Road that could have worked for Douglas J, White said.

"He wanted to do it with my money," Weaver said. "I'm a business person. I am not going to buy something and give it to someone else to control. A lot of people's reactions were that it was a long shot."

In 2012, while White said was getting financing together, he discovered Weaver had already bought the properties for $600,000.

"I was this close," said White, holding his thumb and index finger a millimeter apart. "I felt like I was stabbed in the back."

Weaver said the decision had nothing to do with White.

"I was approached by the bank," Weaver said. "They asked if I was interested in buying the property ... We reached an agreement."

Weaver said he had one condition from the bank when he bought them: that they would be vacant.

"I didn't want tenants," Weaver said. "If (the businesses) couldn't pay the mortgage, I couldn't trust them to pay rent."

White's businesses and Triple Goddess Bookstore moved out in the fall of 2012. Weaver closed on the properties in December. In October 2015, Weaver razed the Smiley House for safety reasons.

The former Travelers Club and White Bros. buildings are still standing and vacant. CBRE Martin is listing the properties on the 1.5 acre, L-shaped plot for $899,000.

"It was entirely predictable," White said of the project's discontinuation. "It hurt other businesses around the area. Anytime you have vacant properties it brings down the whole neighborhood. Now it's like a dead zone when it used to be vibrant."

Death of a development

Weaver says it was a debate with Meridian Township over who should pay to bury power lines that killed Douglas J's $10 million redevelopment project.

Because the three-story complex would be close to the sidewalk, Weaver didn't want people who rented the apartments to have their view obstructed by power lines. So he thought it was best to bury them. The cost would have been $1.2 million.

"We thought they should be completely underground," Weaver said. "We wanted it to be the responsibility of the township."

Kieselbach said utilities are the developer's responsibility because they aren't on township property.

"It's typical for any development in town that the township doesn't pay for any utility costs," he said. "That's not something they brought up right away. They were under the assumption the township was going to pay for it."

Another option would have been to raise the poles from 40 feet to 100 feet high, but that would have required staggering down the surrounding power lines to the normal height, Kieselbach said. That cost would have been roughly $350,000.

If the township actually owned the property, it might have paid to raise the poles, Kieselbach said.

Because Douglas J couldn't reach an agreement with the township, Weaver said, they couldn't close on bank loans to start the project.

Today, Weaver said Douglas J is longer interested in being in the business of commercial real estate. Property values haven't rebounded quickly enough from the 2008 recession.

Weaver's father, Douglas Weaver, founded Douglas J and moved the salon to Okemos from East Lansing in 1970. But it's Scott Weaver, who took over as president of Douglas J in 1995, who has overseen the company's expansion, starting with the opening of an East Lansing salon in 2003.

Over the next nine years, it would open Aveda Institutes in Ann Arbor, Grand Rapids, Royal Oak, Chicago and Knoxville, Tennessee. It added salons in Ann Arbor and Rochester Hills.

But in the past year, that momentum seems to have slowed.

Weaver had plans to relocate the Douglas J Exchange, the salon in the East Lansing Marriott, to Eastwood Towne Center. Earlier this year, he announced that they were on hold. Then, in May, the East Lansing salon closed and all the employees were moved to the Okemos location.

Weaver said that the Eastwood site had double the space the salon required, and the company couldn't negotiate for less. And he wasn't willing to renew the lease at the Marriott after Michigan Flyer buses kept blocking the storefront, he said.

"It didn't make sense to stay there," Weaver said. "We're constantly looking at what is the best business decision for the company and staff. We're sitting where we are at and stabilizing."

The company, he maintains, isn't experiencing financial problems.

As a private investor, Weaver also was involved in the Walnut Hills Country Club. In 2014, he and his partners, former Michigan State University hockey player Kip Miller and Vlahakis Companies president Paul Vlahakis, defaulted on a $2.7 million mortgage. The property is now owned by Summer Park Realty LLC.

Weaver explained that the bank wouldn't refinance their mortgage because "they didn't like the direction the business was going in."

While Weaver said they never once missed their $28,000 monthly payment, they did stop paying once the bank didn't refinance their loan as part of an exit strategy.

"Did it change my opinion of getting into that stuff? Of course," Weaver said. "But you learn from everything you do."

And it made him a little more reserved when it came to commercial real estate, he said.

With regard to the Okemos project, Kieselbach said his office hadn't been in contact with Douglas J in about a year, despite the fact that he and Weaver both sit on the Meridian Township Downtown Development Authority.

The project wasn't brought up in DDA meetings nor did they talk about the status of the project outside of the meetings, Kieselbach said.

"I'm saddened this is no longer happening," said Milton Scales, a township trustee. "One thing we should have done was help Douglas J with the power line issue. It would have benefited the entire area."

When it came to power lines, Weaver dealt with the township administration directly, Scales said.

"I'm sad we didn't sit down and talk about it," Scales said. "There is a historical belief that we are extremely difficult to deal with. Investors are still shy about the way we regulate."

Resolving that power line issue, he said, might have been a way change that view.

Signs of life

At the main intersection of Okemos and Hamilton roads there is a bank, a hardware store, a mixed-martial arts academy and a dance apparel store. Further down, there are two salons, a tailor, a travel agent, lawyers' offices and a hydroponic store.

They are all service-based businesses. Aside from the New Thai Kitchen, there isn't much that might get customers to stay downtown once they've gotten what they came for.

"If there were another restaurant down there, it would make (downtown Okemos) a destination," Kieselbach said. "There are 20,000 cars a day that go through that intersection. The trick is getting people to stop there."

Tavern & Tap in downtown Lansing plans to add a second location in downtown Okemos at the former Meridian Asset Resource Center building at 4675 Okemos Road. Developer Kris Elliott, of Evergreen Companies, bought the building in April 2015 and was granted a zoning variance last week to add 1,700 square-feet. It is unclear when the restaurant might open.

"It's going to be an improvement to get something moving there," Kieselbach said. "Somebody has got to start making the improvements to the buildings."

Sherry Fisher, vice chair of the DDA, owns Bottoms Up Dancewear. and has operated downtown for 30 years. She said the vacant block across the street isn't helping much.

"It's still an inviting property for someone. I just want to see it get going," Fisher said. "It just needs the right person to come along to develop them."

Alexander Alusheff is a reporter at the Lansing State Journal. Contact him at (517) 388-5973 or aalusheff@lsj.com. Follow him on Twitter @alexalusheff.

Timeline

1982 – Will White opens Travelers Club Restaurant at the corner of Hamilton and Okemos roads in a former ice cream parlor.

1995 – White moves White Bros. Music store down the street behind the restaurant at 4695 Okemos Road.

2010 – Comerica Bank forecloses on White's properties, including the Dr. James Smiley House. White sets up a non-profit to buy the properties back.

Summer 2012 – Scott Weaver, president of Douglas J, announces plans to build a two-building, mixed-use complex along Hamilton and Okemos roads.

Fall 2012 – Triple Goddess Bookstore, Travelers Club Restaurant and White Bros. Music move out of the buildings. Weaver closes on the properties in December.

2013 – Douglas J and Meridian Township come to a disagreement on who should pay to bury the power lines for the project at a cost of $1.2 million. The issue is never resolved.

October 2015 – The former Smiley house is demolished.

September 2016 – Douglas J announces it is no longer pursuing the $10 million project and seeks to sell the remaining two properties. Its development plans expire with the township, meaning it would have to resubmit everything to continue on.