Zingerman's Deli expansion earns favor of Ann Arbor City Council, leaving one more hurdle to clear

Zingerman's Deli in downtown Ann Arbor will significantly grow in size if plans approved by the City Council on Monday are also approved by the city's Historic District Commission.

Ryan J. Stanton | AnnArbor.com

"The Zingerman's community businesses have shown to be excellent corporate citizens in this city," said Council Member Sandi Smith, D-1st Ward, adding it's one of the most sought after destinations by visitors to downtown Ann Arbor.

Council Member Stephen Kunselman, D-3rd Ward, said Zingerman's has helped put Ann Arbor on the map nationally and perhaps internationally. He also said land values have gone up significantly in the Kerrytown area over the years due to the deli's presence.

"There was a time when it was one of the more affordable areas of town, but it also was not as safe as it is now," he said. "And I think that's a testament, again, to the investment that Zingerman's has put into the community, and particularly into that neighborhood."

The council's three votes Monday night were: to approve the development site plan for the expansion at 422 Detroit St.; to approve a brownfield redevelopment plan that will allow Zingerman's to seek tax incentives on its $6.7 million investment; and to approve a resolution in support for the project that will be relayed to the city's Historic District Commission, which still must give its blessing for the project to move forward.

Council Member Christopher Taylor, D-3rd Ward, said the resolution in support of the expansion affirms what most already know.

"And that is that Zingerman's is a wonderful place, and that we are far the better for having it among us," he said. "We can hopefully move this process forward and enjoy the wonders that the good folks at Zingerman's have in store for us."

Zingerman's must take its proposal before the HDC, which denied the deli's previous plans to expand two years ago. The project is located in the Old Fourth Ward Historic District, so tampering with buildings there — let alone demolishing a house — is a sensitive matter.

Zingerman's is proposing to knock down a fire-damaged home at 322 E. Kingsley St. — directly behind the brick deli building — to make way for a two-story, 10,340-square-foot addition that would be connected to the current 5,107-square-foot deli building via a glass atrium.

A two-story orange building at 420 Detroit St. — between the deli building and Zingerman's Next Door — would be incorporated into the addition. That building was proposed for demolition two years ago under previous expansion plans that the HDC rejected.

Typically, projects within a historic district are approved by the HDC first before going to the Planning Commission and City Council. Zingerman's is going the reverse route this time under a special-circumstance process. 

To demolish the blighted structure that stands in its way, Zingerman's must convince the HDC the project offers a "substantial benefit to the community."

The City Council's resolution of support states that it would be.

Zingerman's Deli has been one of the most successful small business enterprises in Ann Arbor history. Founded in 1982, the deli sold an estimated 2,000 sandwiches in its first year in business. In 2009, it reported selling close to 300,000. Its staff has grown from three to 180.

Grace Singleton

To accommodate its growth on such a small footprint, the deli has added onto its facility in a piecemeal fashion throughout the years. That includes an addition to the deli in the 1980s and acquisition of the next door property in the 1990s. In recent years, the deli also added a tent area.

"We're very lucky just to have such a high demand for our business and to be in the Ann Arbor community, and we've done everything we can to maximize our current site to handle the operations as they've grown," said Grace Singleton, one of four managing partners at Zingerman's Deli.

"We still have the same size kitchen that we started with, so there's a lot of infrastructure that's kind of lacking," she said. "What we're looking to do now is to really do a large upgrade and add additional facilities to our campus to let it grow for long into the future."

Singleton said company officials have spent long hours working with Quinn Evans Architects to design a plan that will fit the site. She said one of the biggest challenges has been finding a way to stage the project so the deli can remain open during construction.

Preserving the current character of the deli also is important, Singleton said, which is why customers will still walk through the original deli to get to the new building.

"It's going to be the same kind of entrance and streetscape," she said.

Singleton said the expansion will give Zingerman's enough space to allow improved service to customers and staff, increase revenue so the business can continue to be a positive economic influence in the community, and hire about 65 more employees.

"It will also increase our energy efficiency, give us new greener technologies, and also we are going to pursue a LEED certification," she said.

Earlier this month, the Ann Arbor Downtown Development Authority approved a grant of up to $407,000 in support of a brownfield application by Zingerman’s.

A brownfield property is one in which conditions present an obstacle to redevelopment. The Zingerman's property qualifies for brownfield financial incentives because a portion of the property — due to the fire damaged building — is considered "functionally obsolete."

The City Council's approval Monday night allows Zingerman's brownfield plan to advance to the Washtenaw County Brownfield Redevelopment Authority. That body will be asked to authorize tax-increment-financing to reimburse Zingerman's for $817,265 of its costs for site preparation, demolition, infrastructure improvements and lead and asbestos abatement.

Zingerman's also intends to apply for Michigan business tax credits from the state.

Singleton said her company knows brownfields aren't popular with everyone in the community and that — although a base level of taxes would continue to be paid — there is a period of time in which the additional incremental taxes from the expansion would not flow to the taxing jurisdictions, which would otherwise reap the benefits.

"But that is for a limited period of time, and we're looking for this brownfield plan to help make our project economically viable," she said. "It is a difficult proposal to put up $6.7 million for this project. It's a risk."

Smith said she hopes the project and the tax incentives are approved.

"It's a nice homegrown business that wants to stay in its location, and this brownfield plan will allow them to do the renovations to stay where they are," she said. "I think it would be a travesty if that could not go through and they could not stay."

This site plan was presented by Beckett & Raeder Inc. The long rectangular building to the east of the existing deli building is the proposed addition. The buildings would be connected via the atrium in between. The annex building in the middle would remain, as well as the outdoor seating area and tent space shown in darker orange.

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.