KALAMAZOO, MI -- A big renovation is planned for a landmark building that has been a part of Kalamazoo's history since 1917.

The building that houses Heritage Guitar Inc. at 225 Parsons St. will undergo a $12 million renovation with developers PlazaCorp. PlazaCorp plans to develop the 5-acre site in a mixed-use fashion. PlazaCorp will renovate 147,000 square feet of the building's 167,000 square feet, demolishing the remaining 20,000 square feet.

Included in the renovations will be a 2,000-square-foot beer garden, a bar or restaurant and observational areas to see the iconic Gibson smokestack through skylights from within the building and finishing areas for the Heritage manufacturing space. An intimate performance venue also is a possibility.

The building will feature upgraded and expanded manufacturing space for Heritage, along with other rehabilitated space for current and future tenants.

The Gibson Guitar Corp. opened at 225 Parsons St. in 1917. Heritage Guitar Inc. has been operating in the space since Gibson moved operations to Nashville, Tenn. in 1984.

The Kalamazoo Brownfield Redevelopment Authority on Thursday agreed to use tax-increment revenues to reimburse developers up to $1.9 million for site work. Eligible work includes demolition, lead and asbestos abatement, site preparation, infrastructure improvements, environmental assessment, due care and environmental response activities.

The capture of tax increment revenues is expected to start by 2017.

"What I like about it is it's helping an existing company grow," said BRA member Fritz Brown. "Its architecture and concept is helping the history and keeping the Heritage/Gibson guitar story alive."

Another company, Forensic Fluids Laboratories, plans to expand its current operations in the building, said Marc Hatton, development manager for PlazaCorp. Developers expect 40 jobs to be created with the renovation between Heritage and Forensic Fluids' expansions.

Other businesses located in the building include a small woodworking company, a printing company, a window company and a corporate office for a local pizza chain. Developers say they are working on relocating those businesses to other buildings during the renovation. Heritage will move to a different part of the building during the renovation.

Soil samples taken at the property in December 2014 detected polychlorinated biphenyls and other contaminants in the soil that would have to be remediated before renovation.

Developers expect the project to start within six months, and expect work to take about 18 months.