Lee Plaza renovation runs into delay as it deals with rising costs

David Di Rita stood on a stage inside the decrepit Lee Plaza hotel 13 months ago to share his excitement about the $7 million Detroit City Council earmarked for his planned rehabilitation project of the long-vacant high-rise.

“It’s a preview to coming attractions,” Di Rita, a founder and principal of the Roxbury Group, said at the time. He expected construction at the building at 2240 W. Grand Blvd. in New Center to begin a year later — or, about now.

But Di Rita said last month that rising construction costs have delayed the project, which would turn the 15-story building into 117 units of senior a ordable housing, plus some market-rate units. He said he now expects nancial closing to come at the end of this year, and for construction to begin after that. Rehabilitation of the 1927 building is expected to take between 18 and 24 months.

“We have not begun any physical work on the building yet,” he said. “We’re still in the pre-development stage.”

Di Rita said there was still a $10 million nancing gap for the project, and he has exhausted “all the usual sources” of nancing. But he said he’s “increasingly” sure the numbers will work.

“I have a high degree of con dence we’ll gure this out,” he said. “Lee Plaza, it’s all or nothing.” e building had been slated for demolition when Mayor Mike Duggan took o ce in 2014, the mayor said last year. e city spent $1 million to secure it in the hopes of keeping further degradation at bay. Still, a year ago, there were holes in the walls and ceiling; a main staircase had crumbled; there were piles of rubble in the corners of the building; interior windows were broken; plaster-covered horse hair hung from the ceiling; and many walls were marred with gra ti.

At one point, the building had once had gold leaf accents, intricate designs on the walls, delicate rosettes on the ceiling and sweeping archways.

“We’re looking at a project that already was challenging because of the state of decay in the building,” Di Rita said.

Dan Austin, a spokesperson in Detroit’s Housing and Revitalization Department, said if Di Rita were successful, it would be a huge preservation success for the city.

“Any time you get to save a gorgeous architectural gem while serving low-income housing, it’s a win,” he said.

Di Rita said cost estimates moved between 15 and 20 percent. When the numbers seemed close, “massive in ationary pressure just opened the gap again.” But he said nancing work is moving forward and he’s meeting weekly with the city, which still owns the building, to update leaders on his progress.

Di Rita called Lee Plaza a “very complicated transaction with a lot of moving parts.” But he said past iconic buildings that were demolished likely could have been saved with more time — so he doesn’t want to give up on this one.

Di Rita’s Roxbury group also rehabilitated and reopened e Metropolitan, another structure that many thought was beyond being saved after it sat vacant for nearly 40 years.

“It’s right to say if we can’t save this building in this location, what does it say about supporting future growth?” he asked. “It used to be the re exive point of view was, ‘Let’s tear it down.’ at answer almost never was the right answer.”

Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB