While it might appear the development of the proposed four-story Hotel Indigo is at a standstill, Grand Traverse County officials have been working on funding the groundwater cleanup that will eventually let it move forward.

The county’s Brownfield Redevelopment Authority last week awarded $1 million in federal and local funds to perform the necessary cleanup of the site on West Grandview Parkway, west of Union Street.

The currently anticipated $2.3 million price tag for the cleanup is more than twice the original estimate, though the funding in hand should be enough to get things started.

“You know it’s a brownfield (polluted site), but before you do the assessment work, you don’t know the depth and width of the contamination,” explains Jean Derenzy, deputy director of the county planning and development department.

Rochester Hills-based JS Capitol Construction Inc. will serve as general contractor for the hotel. JS owner Jeff Schmitz tells The Ticker that the last tenant in the on-site buildings, CDI Engineering, moved out September 1; demolition and asbestos removal will begin this month.

“This is very much welcome by the development team,” says Andrew Smits of Inland Seas Engineering, environmental consultant for the project.

Construction and cleanup will happen simultaneously in the coming months. After soil is removed for an underground, 85-spot parking area, the foundation will have to be made watertight to protect it from remaining polluted groundwater.

“It’s not possible to do one without the other, and that’s why this funding is essential,” Smits says.

The majority of the recently awarded funds – $620,000 – comes from a revolving loan fund the U.S. Environmental Protection Agency had issued to the county. The payback will benefit other local environmental projects.

The remaining $455,000 will come from a local site fund.

The effort still needs another $1 million for completion, and the county plans to seek funds from the Michigan Economic Development Corporation to help fill that gap, Derenzy says.

Though demolition of the buildings on the site can begin now, Derenzy says groundwater remediation can’t start until the EPA says so, because the largest chunk of funding comes from the agency.

“We won’t get the OK from the EPA for probably two months, so from the ground down, we can’t do anything until November,” she says.

The groundwater has been found to contain cyanide, among other contaminants, Derenzy says. The pollution comes from an off-site source. County officials are working with the Michigan Department of Environmental Quality to “mitigate the source and stop the flow,” she says.

Some of the pollution is believed to have come from a long-defunct gas-light manufacturer west of the site.

The $14 million hotel is to have 105 rooms, many of them overlooking West Grand Traverse Bay.