Midland developer Brookstone Capital is developing yet another property to answer downtown residential living needs. It started construction in June on an Ionia residential-retail project and last week announced another project at 20 E. Fulton. Courtesy Progressive|AE
The cost of the project has been reduced slightly, dropping from $40 million to $37 million, but city commissioners see the downtown development Brookstone Capital intends to build at 20 E. Fulton St. as a significant revenue generator.
Brookstone Capital plans to put up a 14-story mixed-use building at Fulton Street and Sheldon Avenue that will contain about 108 one- and two-bedroom apartments equally divided between work-force housing and market-rate units, about 9,000 square feet of ground floor retail, and a five-story parking deck with 180 spaces.
When completed, 20 E. Fulton has been projected to generate $596,000 in new property tax revenue each year with more than $99,200 going to the city. The city is also expected to gain around $40,000 in new income-tax revenue annually from the building’s residents and employees.
Neither figure includes the revenue the city will receive from the PILOT — payment in lieu of taxes — commissioners earlier awarded the project’s work-force housing units. The PILOT comes to 4 percent of the rent from those units.
So it is little wonder commissioners agreed last week to revise a brownfield plan that was issued for the site earlier and transfer it to Brookstone Capital.
“There is a lot of risk in this project,” said Commissioner Walt Gutowski.
“We’ve all seen all the changes he has made in the South Division corridor. He has done some amazing things,” added Gutowski about Brookstone principal Karl Chew.
It was back in 2009 when the original brownfield plan was authorized by the commission. The Meridian Building Co. announced then it was planning to invest $26 million into a 10-story mixed-use building for the same site that would also offer rental units and retail space with parking. That project never went forward.
Brookstone Capital has estimated it will spend $7.5 million just to remediate the site, which is a parking lot. Having the brownfield will allow the Midland-based firm to collect reimbursements over a 30-year period to cover most of that spending. The brownfield also will let Brookstone collect a $4.68 million Michigan Business Tax credit that was initially approved for Meridian four years ago — if the state goes along with the plan and gives the developer additional time to build the project.
Brookstone Capital also has asked the Michigan State Housing Development Authority for low-income tax credits that could be used to help finance the workforce housing portion of the development.
The Downtown Development Authority has agreed to back the project with $300,000 of financial assistance.