La-Z-Boy a ‘big step’closer to new headquarters; Michigan OKs $3.7M aid for $50M project

La-Z-Boy Inc., the nation's second-largest furniture maker, has its headquarters on Telegraph Road.

MONROE — La-Z-Boy Inc. now can go “full speed” on plans to build a new world headquarters in Monroe after state approval this week on a $3.7 million incentive package that will help move the $50 million project forward.

“We’re about 90 percent there,” Kurt Darrow, chief executive officer of the nation’s second-largest furniture maker, said Thursday. “There’s a few other loose ends to tie up, but this is the big first step.”

Mr. Darrow said La-Z-Boy can progress with the purchase of 120 acres at its preferred site on Monroe’s north side now that the incentive package has been approved. He said the package could be worth $12.7 million over nine years when the package’s grants and tax breaks are combined and if company job projections are met.

If no complications arise, he said, the company will file a site plan with the city of Monroe in January, seek approval at a public hearing in February, and break ground in the spring, possibly in May. Construction is expected to take two years.

“We want to get that land [purchased] as soon as practical, then start breaking ground in the spring,” Mr. Darrow said. “We’ve done some work on a site plan, but until we knew that the whole package was going to come together, we haven’t spent any hard dollars on something that might not happen. But now we can go full speed.”

The Michigan Strategic Fund on Wednesday approved the incentive package that provides a $3 million Michigan Business Development grant that is contingent on La-Z-Boy adding 50 jobs and generating investment of $50 million in the project.

Strategic fund board members also approved a federal community development block grant of $700,000 to pay for water, sewer, road, and other infrastructure improvements on the new headquarters site, which is on land owned by the Sisters, Servants of the Immaculate Heart of Mary. According to the block grant restrictions, La-Z-Boy must hire 31 workers from low to moderate-income families.

La-Z-Boy, which was founded in Monroe in 1927, is buying about half the 250-acre campus controlled by the religious order, also headquartered in Monroe. The La-Z-Boy site is partially in the city and partly in Frenchtown Township. The sisters will remain on the other half of their campus, which currently stretches from Elm Avenue to Cole Road.

Lastly, the strategic fund approved the creation of a “renaissance zone” around the site that allows Monroe to give the furniture maker an estimated $9 million in tax breaks over nine years on its headquarters project.

Dan Swallow, director of economic and community development for Monroe, said the two grants and the tax abatement were the three big components that were keeping La-Z-Boy from fully committing to staying in Monroe.

The company had stated it would remain in Monroe if everything could be worked out, but if it couldn’t, it might be forced to go to another county or state.

“They had indicated verbally that they were committed to this site, subject to closing on the property. But if one of those dominoes didn’t fall, there was going to be some concern,” Mr. Swallow said.

La-Z-Boy said in August it was in the market for a new headquarters after 85 years on Telegraph Road in a building that was part factory, part showroom, and part headquarters over the years.

Renovating the headquarters would have been difficult and expensive, but more importantly, the company’s image was starting to suffer with the existing building.

Motorists on oft-clogged Telegraph Road frequently used La-Z-Boy’s entrance as a cut-through road, Mr. Darrow said in August at the company’s annual shareholder meeting.

Owens-Illinois Inc. spent $20 million to build a new headquarters in Perrysburg in 2006. But that headquarters houses just 330 workers and O-I was able to cut costs because it owned the land where its headquarters was built.

Mr. Darrow said $50 million is the current price tag for a 200,000-square-foot, state-of-the-art headquarters that can house 500 employees.

“That is the range now. What you pay depends on how many people you have and what types of jobs you’re keeping. If it’s jobs that need a lot of space, that drives the price up,” Mr. Darrow said. “That also includes fixtures, furniture, site prep, [and] driveways.

“But it’s the kind of building we would have wanted to build regardless. The company is evolving, our image is evolving,” the CEO said. “We just wanted to make sure that what we build is harmonious with the area. We don’t want a structure that would look out of place.”

Since August, La-Z-Boy has been working with The Collaborative Inc. of Toledo on preliminary site plans.

Land around the site is zoned residential, so La-Z-Boy will design its new headquarters to be aesthetically compatible with the surrounding area, which includes an oak tree savannah ecosystem that will serve as a buffer between the headquarters and a nearby subdivision.

A barn, known as the Vistation, and four other campus dwellings used for religious retreats by the IMH sisters will be razed.

La-Z-Boy expects to spend about $41 million on land acquisition and construction, and another $9 million on furnishing the building.

The company has committed to build using Leadership in Energy and Environmental Design, often called LEED, techniques, which is a comprehensive “green” construction program that uses strict standards and guidelines.

The project is expected to create 50 jobs and retain 450.

Early plans call for an up to 200,000-square-foot headquarters with a three-story, glassed-in lobby that would allow visitors approaching from the front to see directly through to the oak savannah behind it. The building would use natural lighting wherever possible.

Mr. Darrow said he was very pleased by the cooperation La-Z-Boy has received from the city of Monroe, Frenchtown Township, and Monroe County.

“The county, city, and township have all been very supportive. What they committed to us, they have done,” he said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.