Development Minervini-Style

Ray MinerviniRay Minervini Sr. heads the Minervini Group, a family-run development company that has spent the past 14 years turning the former Traverse City State Hospital property into a mixed-use community that features shops, restaurants, offices, residences and more than 400 acres of preserved parkland.

Minervini, 74, recently spoke with the Traverse City Business News about recent developments and past accomplishments at The Village at Grand Traverse Commons. The following is a Q&A with Minervini, edited for length and clarity.

BN: What’s new at The Village?

RM: We’re working with a group that wants to do a boutique hotel in the three historic cottages that are connected to each other behind the main building. That would bring new people here on a daily basis.

We put the ELF Café in the old carpenter shop. It’s a café for kids that’s like a McDonald’s play area on steroids. But it features health food. And Oneupweb, a digital marketing firm, just moved into the other end of the building.

We’re talking to two groups that want to put a restaurant, a brewpub and a banquet facility seating 400 to 500 people in the old power plant building. We’re in the process of constructing a microbrewery that should be open in the next couple of months. We’ve often said we need a place to get a beer here.

There’s a 60,000 square-foot warehouse in front of the carpentry shop. We’re looking at using 20,000 square feet of that for residential apartments and the balance for office space.

BN: How much of the development is filled?

RM: We’ve completed the main building (historic Building 50), which has 400,000 square feet. I’m not sure why they call it Building 50. That building is fully occupied.

We have about 100,000 square feet of retail, and 100,000 square feet of office space and condos and apartments in the main building.

There’s another 250,000 square feet in the other buildings and there’s 250,000 square feet of capacity for additions to those buildings. There’s one million square feet of capacity. There’s a lot to do.

BN: What attracted you to undertake this project?

RM: I grew up in Detroit. We lived near Eastern Market. Everybody walked to the market to get their food for the day. Detroit had many beautiful buildings, but urban sprawl after World War II resulted in many of those buildings being neglected and torn down.

I saw the same thing happening in Traverse City. But I thought there was an element of the market looking for a community in the way we used to have communities.

What we did was unusual at the time. When we started 14 years ago there wasn’t much discussion of new urbanism. The mixed used concept was at its beginning stages. It was ‘cool cities’ for awhile, then ‘smart growth,’ then ‘new urbanism.’ Now ‘placemaking’ is the new buzzword everyone’s latched on to. We’ve been doing it since the beginning.

BN: How have you developed a sense of community at The Village?

RM: We have a lot of activities. We have a beer festival, a wine festival and a film festival. We have an indoor farmers market in the winter. The ELF Café did a May Day activity for kids. There were hundreds of little kids, and moms and dads hiking up the hills.

We have million dollar condos, and small, affordable condos and apartments. There are about 350 people who work here and about 400 people living here. There are so many people who understand what we’re trying to create.

BN: What has surprised you about how The Village has developed?

RM: We thought that the tiny condos – they’re 300 to 400 square feet – would be the place for young people. But they’ve attracted a lot of older people who wanted to downsize. They sell instantly now for $100,000 or so.

BN: The Village is a state Renaissance Zone that abates most state and local taxes on the property. When does the Renaissance Zone expire, and how do you thank the expiration will affect additional development?

RM: The Renaissance Zone expires in 2017. It definitely has been an aid to help in the redevelopment of the project. We also used some state historic tax credits, but the state has abolished those.

The expiration of the Renaissance Zone does have an impact on potential purchases. But wherever you go in the city, you have to pay taxes. It just levels the playing field.

We’re dealing with two-foot thick walls. We tell people it costs a little bit more to live in a castle. These buildings will be here for 500 years if we keep putting shingles on the roof.

BN: What is the ownership structure of the development?

RM: Initially we acquired the whole site – 63 acres and the buildings. We’ve condominumized the site, some of which we sold and some of which we retained. We own the retail space and a portion of the first-floor office space. We’ve financed the project by selling parts of the buildings. Our intent is to sell a portion of the space and retain a portion. That model has worked well for us.

BN: How much money has been invested in the development?

The total investment, including the parts we’ve kept and the parts we’ve sold, is well over $100 million. We’ve been somewhat under the radar because we’ve done a bit at a time. If we would have announced at the beginning that this was going to be a $200 million project, the president would have been here cutting the ribbon.

BN: The city and Garfield Township worked for years to find a developer with the vision and wherewithal to develop this historic piece of property. How did it end up being you?

RM: I was active with a group trying to save the property but we were unable to find a developer to take on the project and the building (Building 50) was going to be demolished. I said to the chairman of the Grand Traverse Commons Redevelopment Corp., “Let me shingle the whole roof. If I fail, at least the building is preserved for 40 years and will give you 40 years find somebody else to redevelop it.” It cost $1.5 million to fix the roof.

BN: How long do you think it will take to complete the development?

RM: It will depend on the economy. We need a strong market and low interest rates. The demand is strong now. We’ve seen a definite upswing in the economy. We’re doing it one bite at a time. It will never be overdeveloped. This is a pristine place with remarkable buildings.

BN: How satisfying has it been for you to work on this project?

RM: It’s been really rewarding. We’re into nepotism big time here. My wife, Marsha, sons Raymond and Jeffrey and daughter Laura are involved. All five of my kids moved here and all of my grandkids are here. I’m a lucky guy. I stay active and that’s important.

BN: Are you planning to retire anytime soon and turn the development of The Village over to your family?

RM: No. I’m having too much fun. It’s pretty exciting to go to work every day and enjoy what you do.

 

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