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LANSING, MI-Accident Fund Insurance Co. of America, a for-profit subsidiary of Blue Cross Blue Shield of Michigan, has agreed to lease 280,000 sf at the site of the shuttered Lansing Board of Water & Light’s Ottawa Street Station power plant. Local developer Christman Co. has reportedly purchased the property and will renovate the existing 10-story power plant, located along the Grand River, into class A office space, and will build a 120,000-sf office building that will attach to the former plant structure. A 1,000-car parking deck is also planned. The total cost of the project is expected to be about $182 million.

The city has been looking for a user for the site since the 67-year-old, coal-to-steam generation plant was decommissioned in 1992. The equipment in the plant was removed in the early 1990s. The state asked for proposals in June 2006, with plans for a mixed-use office project for the 7-acre site.

A spokeswoman for Accident Fund tells GlobeSt.com that the site is perfect, as neither the local employees or the Michigan-raised CEO wanted to leave Lansing, where the company started in 1912. “We have a long-term strategic plan to grow. We were in just one state in 2000, and now we’re in 43 states, and we know we have to add more employees. We had been looking at sites in Wisconsin, Illinois and California.”

She says the company hopes to move more than 650 employees, coming from two offices downtown, into the new Ottawa site by 2011. Accident Fund has told the state it plans to hire 500 more employees as part of the expansion. The company now owns a building on Capital Avenue, with about 160,000 sf, that will be put up for sale, the spokeswoman says. The firm also leases space in a building at the corner of Allegan and Washington. The terms of the insurance company’s lease have not been announced.

Christman is receiving more than $20 million in state and local incentives. It’s not clear how much of the land, contaminated with metals and gasoline from former uses, will be remediated, or how the company will remove asbestos and lead paint from the 10-story building, though it’s clear the developer will receive incentive funds for the cleanup. The Acciedent Fund spokeswoman says Christman plans to remove the single smokestack. Also, a public walking path area must be maintained along the river next to the site.

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