News Photo by Steve Schulwitz The new Hamilton Inn and Suites in Alpena towers over the ground on Monday. The new hotel could be open by the end of the year.

ALPENA — A $2.5 million grant that could have led to the partial demolition of the former Fletcher Paper Mill was denied by the State of Michigan.

Local development officials say an effort to obtain the needed funding will continue in hopes of moving the project forward.

Target Alpena, the City of Alpena, property owner Jeff Konczak, and the Alpena County Land Bank positioned themselves to apply for the grant with Konczak committing $500,000 from his own pocket to remove select sections of the plant for a yet unannounced development project.

Target President Mike Mahler said the application scored well and, if more funding becomes available, another run for the money will be made.

“I was told we were right on the cusp, but we’ll try again,” he said. “This project brought all of us to the table and now we have a little clearer picture of what will work better next time. This entire process made us better, even if we didn’t get the money this time.

Konczak said in a text, that without the grant, part of the project will move forward, but other aspects of it are up in the air.

“We’ll have to see,” Konczak said.

Despite the bad news from the state, development in Alpena continues to chug along. The mild winter has allowed contractors to make great progress on the new Hampton Inn and Suites and Aldi that are being built on M-32 past the Home Depot.

Mahler said the developer is chomping at the bit to get the new businesses built and open. He said Aldi, a discount grocer, could open in the not-too-distant future.

The company is already holding job interviews to begin assembling its staff.

“The mild weather has been great and I believe the developer hopes to open Aldi late in the spring,” Mahler said. “People are excited about it and, overall, it is a great project and addition to the Alpena community.”

The hotel continues to come along too, as the walls are completely closed in and the entire facility is taking shape. Mahler said constructing a large hotel is more intricate than the smaller grocery store across the street, so it likely won’t be done and open for some time.

“It looks like sometime late in the year,” he said.

Although the addition of the Holiday Inn and Suites in downtown Alpena helped to fill the need for more hotel rooms in Alpena, Mahler said more are needed, even beyond the new Hampton Inn. He said Alpena is in line to have large-scale events that draw thousands of people, but the lack of lodging often takes Alpena out of the running.

In 2014, Alpena hosted the Marine Advanced Technology Education (MATE) International Remotely Operated Vehicle (ROV) Competition at the Great Lakes Maritime Heritage Center which drew families to the area from around the globe. The problem was there were not enough hotel rooms or campgrounds to meet demand. That forced people to stay in Gaylord, Oscoda, and Rogers City and commute back and forth.

“If the community ever wants to be a destination for large-scale events, we will need more lodging, period,” Mahler said. “The new hotel will help, but once that is done, we’ll begin work to find more, if the community wants them.”

Jeff Gray, superintendent for the Thunder Bay National Marine Sanctuary, said an effort is being made to bring back the competition and other large events that would require more lodging for out-of-towners.

Mahler is working on several other projects behind the scenes but isn’t ready to announce. He said an investor is working with Alpena County to purchase land near the airport for a project that could lead to about $4 million in new investment.

He is also working with the Alpena government on another project, which could be brought before the Alpena Municipal Council in the coming weeks.

“We definitely have some great things in the works and it won’t be too long before more details are available,” he said.