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The city of Traverse City is looking at possible acquisition of the half-acre parking lot near the intersection of Cass and State streets for a "town square" as part of the Cherry Republic redevelopment project along Cass Street.

Plans for Cherry Republic's proposed downtown redevelopment expanded to include a potential civic square at State and Cass streets.

The Downtown Development Authority board on Friday approved an agreement between the developers, Grand Traverse County's Brownfield Redevelopment Authority and the city to discuss creating a public square as part of Cherry Republic's mixed-use project.

Cherry Republic, a growing retail and mail-order company owned by Leelanau County businessman Bob Sutherland, rolled out a redevelopment plan this spring to expand his business at the corner of East Front and Cass streets downtown.

The plan expanded to include construction of 14 to 16 bayview condominiums in the top two floors of the four-story, $14 million project, with retail and production operations on the bottom floors.

Officials said the city needs to come up with about $2.3 million in local expenditures to free up a similar amount of state brownfield and other tax credits. Discussions involved adding public restrooms in Sutherland's building, road and streetscape improvements and burying overhead utility lines. City officials then approached downtown developer Gene LaFave about including his parking lot at Cass and State streets -- kitty-corner to Sutherland's site -- in the brownfield plan.

DDA Executive Director Bryan Crough said the city's role in the Cherry Republic project could involve a combination of those items, since all -- including a downtown civic square -- are in the downtown's TIF 97 tax increment financing plan.

"I think we're trying to respond to an alternative to the Cherry Republic plan," Crough said. "It's a question of which way do we participate."

Crough said the city could purchase the parking lot, or seek a public-private partnership to provide civic space along with some private development or underground parking.

"I'd like to see a lively discussion on what the possibilities are," Crough said.

The city hasn't appraised the parking lot, officials said. The approximately half-acre lot has an estimated cash value of $630,000 for property tax purposes, city Assessor Debra Chavez said.

LaFave was part of a redevelopment proposal with Sutherland two years ago involving the former Whiting Hotel property along Front Street. That plan would have left Cherry Republic in its present location and included almost 40 affordable and low-income housing units. But the city commission in August 2009 rejected the brownfield plan for that project; commissioners balked at the proposed use of more than $2 million in public dollars.

LaFave said Friday he "lost a lot of money" on that project and he's staying out of the public debate over the latest plan.

"I'm not going to have any comment at any time," LaFave said. "If they want to make it happen, let them make it happen."

Crough said the agreement approved Friday is subject to city commission and county brownfield board approval. It includes no financial commitments from the parties but allows for continued negotiations toward a formal development plan.

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