The Ann Arbor Planning Commission voted 7-0 Tuesday night to approve a site plan that would significantly expand Zingerman’s Deli in downtown Ann Arbor.

But one of Zingerman's biggest hurdles remains to be cleared.

The scene outside Zingerman's today. The line was so long inside the cramped deli, customers had to wait outside.

Ryan J. Stanton | AnnArbor.com

Even if the project receives the necessary next approval from the Ann Arbor City Council, it still requires a notice to proceed from the city's Historic District Commission. The HDC already 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.

But from the discussion Tuesday night, it appears Zingerman's has made headway with the HDC.

"We've been working on developing this plan for almost four years now," said Grace Singleton, one of four managing partners at Zingerman's Deli. "There's been a lot of time spent planning and investment into getting to where it is now. We feel it's really good to be at this stage of the process."

Zingerman's is proposing to knock down a fire-damaged home at 322 E. Kingsley St. to make way for a two-story, 10,340-square-foot addition to the current 5,107-square-foot deli building at 422 Detroit St. An orange, two-story annex building at 420 Detroit St., which also was proposed for demolition two years ago, now would remain intact and be incorporated into the addition.

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

When Zingerman's last submitted an application to the HDC in 2008 requesting permission to demolish two houses, the HDC determined both were "contributing structures" in the historic district. That means the HDC cannot authorize demolition through the typical approval process. Rather, Zingerman's will need to receive a special notice to proceed from the HDC.

City Planner Jill Thacher, the city's historic preservation coordinator, said only four circumstances exist under which a special notice can be granted. Zingerman’s will apply under the exception that states a structure may be demolished if it is found to be a "deterrent to a major improvement program that will be of substantial benefit to the community."

Still, the $3.5 million project must go through several hoops.

"In order to apply to the HDC for a notice to proceed, the project must have an approved site plan from City Council, have proof of financing, and have any other zoning or environmental approvals that may be necessary to build the project," Thacher said. "In order for the HDC to grant the project a notice to proceed, Zingerman’s must prove that their project will be of substantial benefit to the community. How that benefit is defined and whether it is substantial enough to warrant the removal of contributing resources is determined by the HDC."

Zingerman’s officials have been to three working sessions with the HDC during the course of the project and say they're confident it will win approval this time. Thacher said the HDC is aware of the process Zingerman’s has chosen to pursue, and Zingerman’s is aware of the approvals necessary.

"We just really want to develop an efficient and well-designed and unified plan that's going to take us over the next 25 to 50 years," Singleton said. "We want to really preserve some of the key elements that we think give us the biggest character of the campus — the original deli brick building, the next door cafe, as well as our outdoor plaza area. I really feel that's something special that kind of draws people into the site and gives really a nice gathering spot for the community."

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, one of the managing partners of Zingerman's Deli, addresses the Planning Commission Tuesday night.

Ryan J. Stanton | AnnArbor.com

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 for seating and outside freezer units.

Singleton said there's a strong need for more storage space, a bigger kitchen, and added amenities and space for staff and customers. She said the improvements would lead to less standing time with trucks in the loading zone because of more efficient receiving areas, and increased storage space would mean significantly less-frequest deliveries that might disrupt the neighborhood.

The deli also anticipates handicapped-accessibility improvements to meet requirements of the Americans with Disabilities Act, energy-efficient upgrades and use of greener technology that will give the deli silver or gold LEED certification for environmental design.

"We've always been committed to Ann Arbor and especially to the Kerrytown neighborhood," Singleton said. "We've tried to be really great neighbors to the area and really bring a vibrancy to the site. This community has supported us over the years, and we want to give back to it and continue to be a vibrant part of it for many years into the future."

A small number of residents spoke at a public hearing before the site plan was approved. Most said they liked the project, but some had concerns about noise and delivery traffic.

Chris Crockett said she lives about a block and a half away from Zingerman's and hears nuisance complaints from residents in her capacity as president of the Old Fourth Ward Association. Overall, she spoke positively of the project Tuesday night.

"We're very happy that Zingerman's has worked with the Historic District Commission. That's our understanding, and we think that the size and scale of the addition appears to be appropriate based on what we've seen tonight," Crockett said.

Her only concern was the city must be careful not to set precedent that homes in the Old Fourth Ward can be knocked down for commercial use. She said the fact that the home in question was gutted by fire makes it a special exception.

"We want this particular case to be framed in such a way that it is so special — a truly special exception — so that it will not be used as a precedent to take other bits and pieces out of the Old Fourth Ward residential area and make them commercial," she said.

Gary Boren, an attorney who lives in downtown Ann Arbor and serves on the Downtown Development Authority, told the Planning Commission he strongly supports the project.

"I think that what we have here is a really very, very clear case — and a case that is not really capable of being confused in the future," he said. "It's true that economic interests will destroy any character in a neighborhood if it's given the chance to over time, but we have a house right now that is completely nonfunctional and it's not employing anybody, it's not feeding anybody, nobody's sleeping in it, and I think that's just such an easy case."

Planning commissioners offered praise for the project.

"I think it's a great site plan," said Eric Mahler. "I think it fits in well with the character of the area. I appreciate the attempt at energy efficiency. I appreciate the wise use of the space."

Diane Giannola applauded Zingerman's for the "green roof" concept proposed on the existing one-story wing of the deli. She said that was a welcome surprise.

Commissioners Wendy Woods and Kirk Westphal were absent.

One landmark tree on the site is proposed to be removed, a 20-inch Norway spruce near the front of the house at 322 E. Kingsley St. It would be replaced by four 2.5-inch trees. 

A six-foot privacy fence is proposed along the east property line to screen the building from the adjacent residential area.

City staff noted Zingerman's has a lease agreement through 2035 for parking spaces owned by the Ann Arbor Public Schools, where the trash enclosure is proposed to be located. It also has a 99-year lease agreement for a small triangular area at the rear of 414 Detroit St., which is currently is used as patio and would remain as one.

Zingerman's is exploring alternatives for loading zone access off Kingsley. If it determines a curb cut and driveway are necessary, a variance from the Zoning Board of Appeals would be required to allow a one-way drive opening. That must be resolved before City Council approval.

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 for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.