The former post office building in Chelsea will house a new restaurant if a developer's plans come to fruition.

Rene Papo and Chelsea Post House LLC plan to invest $1 million into the property, which has been vacant for almost three years, and lease the space for a restaurant called Bistro 52.

Papo plans to rehabilitate the historic building at the corner of Main and South streets, upgrade the heating and cooling system, plumbing and electric systems to current standards and building codes and return the iconic building back to the city's tax rolls.

The post office opened its doors in the late 1930’s on Main Street, but has since moved to a new location in a portion of the former Polly’s grocery store in the Village Plaza Shopping Center, at the corner of M-52 and Old US-12.

“After all these years as a post office, I’m glad the building won’t be torn down, and it will live on to become something else,” said Chelsea Postmaster Ted Duve, who said he turned over the keys to the building to Papo about two weeks ago.

Duve said the staff at the post office is looking forward to returning to the building as customers and is eager to see the changes that will be made to the interior.

The bar and restaurant is expected to employ about 40 people and offer American regional cuisine, according to a project summary submitted to the city.

“Bistro 52 will feature a cozy dining room, cocktail lounge and an outdoor patio for summertime dining,” the summary states, while the cuisine will “focus on American regional cuisine with international influences and locally sourced products when possible.”

The owners, who will lease the building from Papo, have 50-plus years of experience in owning and operating various area restaurants, according to the project summary.

Tuesday night, Papo won permission from the City Council to apply for a redevelopment liquor license under the Michigan Economic Development Corporation’s Pure Michigan program.

This program allows additional licenses in municipalities where restaurants are in a redevelopment area and planning to open for business at least five days a week for at least 10 hours a day. The license is not transferable by the business owner or to another location.

In addition, Papo plans to seek the assistance of the city's Downtown Development Authority through its new "REU Program," which offers funds for utilities, similar to tax abatements, for upgrades in service for new businesses in buildings in the DDA district.

The cost of water and sewer is based on a formula called a residential equivalent user (REU) fee schedule that takes into account the amount of usage, the square footage, and the impact on the cost of operating and maintaining the city’s water and sewer systems.

If granted, the DDA would pay the city based on an agreement between the owner of the property and the DDA that would “provide for periodic forgiveness of the installments of principal and interest,” as part of a special assessment district for the property. This, too, would need City Council approval.

Christine Linfield, Chelsea’s zoning and planning director and city engineer, said the city has not seen a formal site plan for the project.

But if there aren’t any major external changes, it might not need Planning Commission approval, rather just city staff approval and Chelsea Area Construction Agency permits and final inspections for the inside improvements, she said.

“It depends on the plan,” Linfield said.

Currently, the lot on the property has about 13 parking spaces, but because it will be located in the city’s Central Business District, it would not be required to provide on-site parking.

The business is expected to be up and running in six months, according to the summary. Bistro 52 would join about a dozen other restaurants and shops serving food in the downtown.

Lisa Allmendinger is a regional reporter for AnnArbor.com. She can be reached at lisaallmendinger@annarbor.com. For more Chelsea stories, visit our Chelsea page.