The Grand Rapids Brownfield Redevelopment Authority approved a revised brownfield plan last week for the massive $40 million mixed-use project Brookstone Capital plans to build at 20 E. Fulton St., but the eventual reimbursement won’t match the developer’s requested amount.
Brookstone Capital Principal Karl Chew told the authority his firm will spend more than $7.5 million to remediate the development site, a 28,800-square-foot parking lot at the corner of Fulton Street and Sheldon Avenue. The work includes demolition, site preparation and an environmental assessment of the property.
“There are a tremendous amount of physical and environmental challenges to the site. We really won’t know what type of soil is there until we do some excavations. Depending on the soil conditions, we may have to take all of it off site,” said Chew.
The brownfield the board awarded is for 30 years, lasting until 2043, but the authority’s executive director, Kara Wood, pointed out there isn’t enough tax-increment financing available from the site to fully reimburse the $7.5 million Brookstone Capital requested. Instead, the reimbursement has been projected at $6.3 million, with $4.8 million to come from the state and the rest from local tax captures.
Brookstone Capital also is applying to the state’s strategic fund to amend the Michigan Business Tax credit awarded years ago to an earlier project the Meridian Building Co. LLC proposed for the site. The credit totaled $4.68 million.
Meridian Building was granted a brownfield for its $26 million, mixed-use development proposed for the property in 2009, but the project never went forward.
Brookstone Capital also will request $300,000 in financial support from the Downtown Development Authority, which could come before the board next week.
The development firm plans to build a 14-story structure with 108 one-bedroom and two-bedroom apartments equally split between market rate and affordable units. The affordable units are expected to be funded through $22 million of low-income housing tax credits from the Michigan State Housing Development Authority.
Chew said both types of apartments will be the same size and have the same design, finish and level of quality. The single bedrooms will be 650 square feet, while the two-bedroom units will have 950 square feet. Progressive AE designed the project.
“That’s the most important thing to me. I’m thrilled that same model is being used in all the units,” said Brian Smits, brownfield authority vice chairman.
The 147,000-square-foot project also will offer 9,000 square feet of ground floor retail space fronting Fulton Street.
“The retail will be on Fulton and the residential entry will be on Sheldon,” said Chew.
The plan also calls for a four-story parking deck.
“Overall, there will be 180 parking spaces on site,” said Chew.
“The parking deck is a major component of this (brownfield) request,” added Wood.
A parking facility and underground parking qualify as a reimbursable activity under state law, while a surface lot does not.
“It’s a monster — a big building. It’s a great project,” said Terry Nicholas, brownfield authority chairman.
“It will be complementary to UICA,” said City Commissioner Walt Gutowski, a member of the brownfield board.
Chew said construction will be done according to green standards, and he didn’t think it will be too difficult to fill the 108 apartments.
“There is a very strong need for downtown housing. We don’t feel there will be any marketing challenges,” he said.
City commissioners have to ratify the amended brownfield. They have already awarded the project a payment-in-lieu-of-taxes, or PILOT, for the 54 affordable apartments. Brookstone Capital will pay the city 4 percent of its annual rental income from those units instead of property taxes.
The project is expected to generate almost $100,000 annually in new tax revenue for the city once it’s completed.
Brookstone Capital has secured an option on the property with 20 E. Fulton LLC. The site has a 2013 State Equalized Value of $130,100. Work is set to begin next summer and be finished by late 2015 or early 2016.
“It’s a pleasure to work with the city. It’s a very knowledgeable staff you have,” said Chew. “We really hope we can bring this to fruition.”