HILLSDALE, Mich. — A historic Hillsdale landmark will see life once again. The Keefer House Hotel is undergoing a $13 million renovation.
The hotel was originally built in the 1880s as rail service to the city was expanding. There was a major fire in the building around the turn of 19th century, but it was renovated and later reopened, according to City Planner and Zoning Administrator Alan Beeker.
“It continued to be an active hotel and restaurant up until the late 1950s, early 1960s when it finally closed its doors. Then, at that point, it became a boarding house and then after that it became transitional housing with the Sheriff’s Department,” Beeker said.
The city condemned the building in 2002, and it has sat vacant since.
Now it's being redeveloped by Illinois-based CL Real Estate into an upscale boutique hotel with 34 rooms, a 45-seat restaurant and three retail spaces.
There is a lot of work to be done on the 136-year-old building.
“When we got to the building in 2018, there was already still some signs of deterioration. Windows have been cracked. The building hasn’t been heated for 20 years. Plaster is falling off the walls. The water was starting to seep in through the ceiling, so there were a lot of things that needed to be fixed,” said Brant Cohen, the Michigan development associate for CL Real Estate.
The city of Hillsdale Tax Increment Finance Authority purchased the former hotel in 2014 and then put out a request for proposals.
“Hotels are tricky beasts and the rooms were small,” Beeker said. “They were fine for the day but…between the cost of renovations, if you were going to turn it into some type of apartment, housing or hotel, you’re talking about a multi-million dollar project. Quite honestly, the city of Hillsdale and local developers don’t have that type of capital.”
It “took someone from outside of the city to be willing and able to come in and take it on and make it successful,” he said.
The Tax Increment Finance Authority accepted CL Real Estate's proposal in 2018.
It would have become “exceedingly expensive” for it to continue under city control, Beeker said, "just because of the nature and condition of the building, what is involved in maintaining a historic structure, especially when the city really didn’t have the resources to develop it and just maintaining it is not beneficial for the downtown, for the city or for any potentially owners. Being able to find a developer that was willing to come in and take on the project was a huge win for the city,” he said.
“The city is in desperate need of rooms for events at the college and other events at the city. That was what the proposal was for,” he said.
CL Real Estate said they were able to receive an equity investment from the Michigan Economic Development Corporation, which they will have to pay back.
City Manager David Mackie said the building’s sale price was $275,000. CL gave the Tax Increment Finance Authority a non-refundable deposit of $10,000, and “once they started construction TIFA agreed to forgive the balance of $265,000 as part of the community’s contribution toward the project."
It won’t stop there. The city of Hillsdale Tax Increment Finance Authority owns Dawn Theater and selected CL Real Estate to operate the theater for them. It will be used as the Keefer House Hotel event space.
Cohen said having both of those buildings next to each other will be transformational for Hillsdale.
“Using this hotel, in conjunction with the Dawn Theater that the city has allowed us to be the operator of, we can really create something that is incredibly impactful for this area,” Cohen said.
Construction is underway. The timeline is fluid but their goal is to have construction finished by November 2022.
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