ANN ARBOR, MI – A major real estate deal to make way for a 19-story high-rise behind the Michigan Theater has been completed.

Bloomfield Hills-based Cerca Trova LLC purchased a 0.24-acre property at 514 E. Washington St. from the Michigan Theater Foundation for about $3 million on June 19, developer Howard Frehsee of Cerca Trova said.

City records list the sale price as $2.9 million. Frehsee said that’s because his company already paid $100,000 for some site cleanup, so he considers it a $3 million deal that “took place in two bites.”

The property includes an old car dealership building that in recent years has housed a camera shop and tattoo parlor, as well as bathrooms and office/storage space for the theater.

Part of the Michigan Theater, 603 E. Liberty St., extends into the back of the Washington Street building, which the nonprofit theater foundation acquired in 1997.

Cerca Trova, along with Chicago developer CA Ventures, is proposing a mixed-use high-rise to replace the old commercial building and a row of four rental houses behind the theater.

Cerca Trova previously acquired the rental houses from separate owners for more than $4 million.

The high-rise development plans include 241 apartments, including 19 dedicated affordable housing units for low-income tenants, plus 6,000 square feet of commercial space.

Cerca Trova and CA Ventures also are proposing an adjacent six-story building with 19 apartments and 24 beds behind Sava’s Restaurant. That’s expected to include workforce housing “micro units.”

The development plans await city approval.

“We couldn’t be happier or more excited to do this here,” Frehsee said of building mixed-income housing in a central location downtown.

It’s a by-right project that meets the city’s zoning and will put the properties to higher and better use, he said.

Frehsee, who brokered the deal with the Michigan Theater, considers it a win-win, giving the theater foundation resources to further its mission while providing land needed for the development. Frehsee suggested it could mean more patrons for the theater.

Since the theater’s current bathrooms will be demolished, the development team has committed to building new theater bathrooms within the first-floor footprint of the adjacent six-story apartment building that’s planned, where an old pottery studio burned down.

That will shift the theater's bathrooms to a more convenient location immediately east of the grand foyer, rather than down the end of a long hallway, said Russ Collins, theater executive director.

The foundation was reluctant to sell the property, but it’s going to be a good deal for the theater, Collins said. The building that’s to be demolished is past its prime and problematic, he said.

“The exciting thing is we’re going to get restrooms that will be better than the ones we currently have,” Collins said.

The bathrooms will be located across from the main auditorium, adjacent to the theater's grand staircase, and will be particularly convenient for disabled and elderly patrons, Frehsee said.

A back screening room the theater added in the late 1990s will stay, though a temporary annex theater added in recent years during State Theatre renovations will eventually go away, Collins said.

Net proceeds from the property sale are being held in reserve for now, Collins said.

“We had to pay off an underlying land contract, so part of the money went to pay that down, and then we’ll be holding the other money essentially to replace offices and storage space that we will lose,” he said, adding it’s unclear where the new office/storage space will be. “If we’re lucky, there’ll be a small amount of surplus funds that we can use as a capital maintenance reserve, which is really needed.”

Pending city approval, the development team expects to break ground on the six-story apartment building by early next year, and then demolish the old car dealership building to begin work on the high-rise once the new theater bathrooms are in working order.

“It was just an older building that wasn’t really built great anyway,” Frehsee said.

Frehsee said he’s working with local historic preservationists to photograph and document the buildings that need to be removed to make way for the high-rise, and he’s open to working with anyone who wants to save and relocate any of the four houses.

The development plans include a mid-block pedestrian walkway between Washington and Liberty streets.

What’s now a blighted alleyway will be transformed into a courtyard with new lighting, security cameras and paving, and unsightly dumpsters will be relocated to a locked enclosure on the ground floor of the planned six-story apartment building, Frehsee said.

Frehsee's past projects in Ann Arbor include the Corner House Lofts/Buffalo Wild Wings building at the corner of State and Washington, and renovations to the former Goldman building that houses Sava's Restaurant on State Street. He’s committed to continuing to improve the area and sees this as the next step, he said.

Name Brand Tattoo, one of the tenants of the commercial building to be razed, has moved to 205 N. Main St.

Frehsee said he plans to assist Camera Mall, the other commercial tenant, with relocating when the time comes.