Grand Rapids developer Jonathan Rooks' took possession of the 11-story Shoreline Inn & Suites on the shore of Muskegon Lake, just a couple of blocks away from the downtown high ground where his Highpoint Flats condo project is located.

Development still alive in downtown Muskegon
Pete Daly

MUSKEGON — This lakeshore city has had to roll with the economic punches many times over a lot of years, so a little old recession isn't going knock out all new development or scare off plans by its entrepreneurs.

"It's real difficult to get some economic development projects going because of the state of our economy, but I will also say I think we've been very fortunate in Muskegon to still have a number of projects ongoing — either continuing or beginning during this economic time," said Bryon Mazade, Muskegon city manager.

Grand Rapids developer Jonathan Rooks' business involvement in downtown Muskegon increased dramatically in May when he took possession of the 11-story Shoreline Inn & Suites on the shore of Muskegon Lake, just a couple of blocks away from the downtown high ground where his Highpoint Flats condo project is located.

The Shoreline Inn property entails 20 acres and includes Terrace Point Marina — with 114 slips — plus an adjacent restaurant that has been known as Rafferty's. The 9,000-square-foot restaurant is temporarily closed pending the transfer of a liquor license, according to Rooks, but the hotel has remained in continuous operation.

In December 2007, Rooks bought the mortgage on the property, which was owned by John and Susan Payne. The Paynes built the 140-room hotel in 2002; the marina and restaurant were already there. In May, Rooks received a deed in lieu of foreclosure from the Paynes. He did not reveal how much he paid for the property.

Rooks said he has "a lot of plans" for the marina, including the installation of wireless Internet service throughout, a new laundry in the clubhouse, new mooring pilings and other improvements. The slips can accommodate boats up to 50 feet in length, and the marina has direct access to Lake Michigan via Muskegon Lake. Rooks said he may also invest in small boats, kayaks, bicycles and jet skis for rent at the marina, and perhaps put in a launch ramp for boaters staying at the hotel. There is even a possibility of creating a beach on the forested portion of the Shoreline Inn property further west on Terrace Point.

He said he is looking for a restaurateur to lease and run the restaurant, which may re-open in late July.

Rooks' Highpoint Flats condominium project was launched in 2007 but there was little visible progress last year. It began moving again in June when construction began on a demonstration condo on the sixth floor, which Rooks hopes to complete by the end of July. Highpoint Flats is Rooks’ name for the 90-year-old, eight-story office tower on Western Avenue that was the Hackley Bank building for many years, and then Comerica Bank.

He said he ultimately will have 70 condos in the building, which he said has "stunning views" of Muskegon Lake from every floor. The condos will sell from $89,000 to $299,000, and the top floor units will have 20-foot-high ceilings, which will allow for a loft level. Rooks also is planning a two-story addition on Western Avenue adjoining the tower, with a parking area behind it out of sight of the street.

Rooks said he has invested less than $1 million in Highpoint Flats thus far but he plans on an $11 million project before it is completed.

A few months ago, the state of Michigan extended the Renaissance Zone tax-exempt status for the downtown area that once was the site of the Muskegon Mall and is now largely vacant. That was good news for Rooks and another downtown developer, Gary Post, because it means their residential developments will be more attractive to buyers for a longer amount of time. Residents there will be free of state and local income taxes through 2023.

Post, who is semi-retired from a career in construction, now owns Port City Construction and Development Services LLC, which plans to build a 22-unit condo project called Heritage Square Townhomes on Clay Avenue between Second and First streets. The first unit was completed last year, and Post and his wife, Beth, moved into it. A second unit is about 60 percent complete.

"I've had a lot of interest in it but nobody that's signed a purchase agreement, and we really didn’t care to finish it until we could finish it to an individual's specifications," he said.

Post said he will build more units as they sell. He has four plans to choose from, ranging from about 1,000 square feet to almost 3,000, with prices ranging from $180,000 to $400,000.

"The economy is no doubt an impediment, a hindrance at this time," said Post. "But I think in spite of that, there's been some great things happening here downtown."

Two new buildings were completed last year at a major downtown intersection that is shaping up as the epicenter of the city's cultural and social scene. One is the Hines Building, which houses the Muskegon Area Chamber of Commerce and several businesses. Opposite the Hines Building on the corner of Western Avenue and Third Street is the new Sidock Building, which just received Silver LEED certification from the U.S. Green Building Council. It is the second LEED building certified in Muskegon, although others — including the Hines Building — may also receive certification.

On another corner of that intersection is the historic Frauenthal Theater, one of several major cultural venues in downtown Muskegon. Nearby at 333 Western Ave. is a popular new sports bar/restaurant, the Muskegon Athletic Club, also known as the MAC.

Post also owns three nearby buildings on Western Avenue that were part of the enclosed Muskegon Mall. One, the Century Club building, was completely renovated two years ago and is now occupied by a retail furniture business. The other two are the so-called Daniels Building and the Muskegon Savings Bank.

Post said he is in the process of turning the Daniels Building into an indoor marketplace. He said he has tenants lined up, "but here again, the financial piece" of the project is lacking.

"I haven't met my original schedule but I think we're making some good progress, and my goal is to open it yet this year," he said.

Just a block away, close to Heritage Square Townhomes and adjacent to the site of the former mall, is the new $11 million Baker College Culinary Institute of Michigan. The 39,000-square-foot building is being built by Clifford Buck Construction Co. Inc., which has been the contractor on many recent downtown developments.

When the culinary institute classes begin in September, it is expected to bring more than 400 people — students and faculty — downtown each day, according to Post.

"I think that's going to have a huge impact," he said. "We need people on the streets (downtown) and that helps do that."

The culinary institute also will have its own restaurant and delicatessen, open to the public.

"We are very happy to be part of the redevelopment of the downtown area," said Baker College interim president Mary Ann Herbst, noting that the community has welcomed the institute "with open arms."

The Downtown Muskegon Development Corp. is the nonprofit group redeveloping the site of the old Muskegon Mall, with Muskegon Main Street serving as its marketing agent. Dan Rinsema-Sybenga of Muskegon Main Street said there was no housing downtown back in the days of the Muskegon Mall, and housing is what is needed now to "add more vibrancy" downtown and help drive commercial development there.

"I think the additional housing in Highpoint Flats and the Heritage Square Townhomes is going to drive more economic development in downtown Muskegon. Hopefully, they will be catalyst projects," said Rinsema-Sybenga.

"Downtown living will be something that people consider," he said. "I know a lot of people were considering it before the bottom fell out" of the housing industry.

Developer Dan Henrickson, who has a significant investment in downtown Muskegon, said it is going to be a tough business "until the world gets back on its axis."

Henrickson, CEO of True North, an architecture/construction/investment firm in Belmont, said there was an RFP recently for a government building, and his firm was prepared to present a proposal but couldn't nail down financing.

A few years ago, True North acquired 25 acres in a 32-acre site on Muskegon Lake, former industrial land now called Harbor 31, a designated Michigan SmartZone. The state will help start-up companies there that invest in new technologies.

Henrickson said Harbor 31 is not a typical development site; it is practically in downtown Muskegon and on a beautiful lake with direct access to Lake Michigan. It also should have perceived value to companies or organizations that want to invest in sustainable technologies. Adjacent to the True North parcels is GVSU's Michigan Alternative and Renewable Energy Center. MAREC recently received a federal grant of $1.4 million to experiment with commercial generation of power using offshore wind turbines but is now searching for the required matching funds to be able to use the grant.

"The city is very cooperative," said Henrickson, adding it has done a lot of things to spur development in Muskegon.

He said True North is "fortunate to be in position where we don’t have to do anything today"— but he added that "the city wants us to move along at a better pace."

Last year, True North's Harbor 31 property was improved with the help of brownfield loans, but so far there have been no takers on any of the parcels.

Henrickson said if demand for development property picks up again in the next year or two, "we are in a position to go fairly quickly on development."

Investors who might have been thinking about launching a project in Muskegon "might be stepping back for a period of time, just to see how long the economy is going to play out the way it has," said Muskegon Mayor Steve Warmington.