The COVID-19 shutdown threw a wrench into many high-profile development projects, including the Residence Inn planned for 10 Ionia, but the Grand Rapids Downtown Development Authority chose to amend an agreement with the developer to help get it back on track.
The DDA originally approved an agreement with Hinman Company in 2018 for eligible reimbursement related to the Residence Inn development at 10 Ionia Ave. NW. The $36 million project is 13 stories with 130,000 square feet of hotel space and 5,555 square feet of ground floor commercial space.
The developer was approved for reimbursement of 75% of the tax increment revenues generated over 15 years to pay for eligible DDA activities, which were approved at $1,238,000. The reimbursement period was extended beyond the standard 10 years for it to meet the proportionality requirements established by the Michigan Economic Development Corporation.
“When that was approved, the schedule had the project opening Sept. 1, 2020, ready to host Art Prize and all the great activities that typically happen toward the end of summer,” DGRI CEO Tim Kelly said.
But with COVID-19 putting Michigan’s economy on hold, open for Residence Inn has been pushed to at least Nov. 1, Kelly said, a delay that is estimated to cost $1.6 to $2 million, not including COVID-related occupancy reductions that likely will still be in place at the time.
To assist with the project’s viability, Hinman requested an amendment to the existing agreement for reimbursement up to $1,660,555.92 over 20 years, which Kelly said would allow the developer time to capture the additional tax revenue.
The developer also will request an amendment to its agreement with the Grand Rapids Brownfield Redevelopment Authority.
All other terms of the agreement will remain in place; that includes only being reimbursed for actual costs of eligible activities and being entitled to not more than 75% of actual project tax increment revenues generated by the project.
“As we’re scanning the landscape, we’re also in touch with all the other developers and projects to let them know we can look at their agreements, and if there are opportunities for amendments, we can review those as well,” Kelly said.