Shayne Malone and Cherry Street Apartments LLC can begin renovating two vacant buildings in the East Hills neighborhood into residential units now that Grand Rapids city commissioners approved obsolete property tax exemptions for both structures last week.
“There is significant investment that needs to be made,” said City Economic Development Director Kara Wood. The firm is investing more than $800,000 into the structures.
Cherry Street Apartments plans to turn a building at 220 Eastern Ave. SE into a dozen market-rate apartments. The three-story structure, which was built in 1915, has 8,400 square feet of space.
The firm will invest $406,000 into a conversion that requires major work. The roof and the mechanical, electrical and plumbing systems need to be replaced, and the building’s interior also needs to be fully rehabbed.
The other vacant building is at 822 Cherry St. SE. The firm plans to create six apartments and 2,000 square feet of office space in the split-level, two-story structure with 8,300 square feet of space. Cherry Street Apartments will spend $454,000 on the building.
“Both properties are currently not on the tax roll,” said Wood.
The East Hills neighborhood and business association support the projects. The firm will save about $16,000 a year in state and city property taxes for 10 years because of the abatements.
“There was overwhelming support for this,” said Commissioner Rosalynn Bliss.
Brookstone Capital will come before city commissioners for a second time next week regarding its proposal to build a $40 million residential development at 20 E. Fulton St. at Sheldon Avenue NE.
In July, commissioners awarded the Midland-based developer a payment-in-lieu-of-taxes, or PILOT, for the 54 affordable apartments that are part of the 14-story project, which also includes 54 market-rate units, ground-floor retail and a five-story parking deck with 180 spaces.
This time Brookstone Capital is requesting the transfer of a brownfield designation that was awarded in 2009 to a previous project for the site, which is currently a parking lot that measures two-thirds of an acre. The property qualifies under state law as a “facility” and is contaminated with various organic compounds and metals.
“It’s been vacant for 20 years,” said Deputy City Manager Eric DeLong of the site.
Brookstone Capital Principal Karl Chew said he plans to spend $7.5 million to remediate the site and is asking for a reimbursement in the form of tax-increment financing, but the firm will receive only about $6.3 million over the reimbursement’s 30-year lifespan. A reimbursement will come from the school tax, as the property-tax portion goes to the Downtown Development Authority. The DDA plans to provide $300,000 in support to the project through a 10-year reimbursement plan.
Brookstone Capital has also applied for low-income housing tax credits from the Michigan State Housing Development Authority for the affordable apartments. Wood said it will be a few months before the firm receives word on whether it will receive the credits.
Brookstone Capital is building comparable units for the affordable and market-rate apartments, something not often done due to the rent differences between the two types. “That is a great way to build a diverse-income development,” he said.
“We all know the value of diversity, whether it be financially or ethnically. It’s going to be a challenge, but it’s going to make a point. There is a lot of risk there for him,” added Gutowski about Chew.
If commissioners approve the brownfield, the company also will become eligible for a $4.68 Michigan Business Tax credit that was approved for the development previously planned for the property. They will hold a public hearing on Brookstone Capital’s request Aug. 27 after 7 p.m. in City Hall.
“There is a huge demand for housing,” said DeLong. “If the surveys are right, there is more demand than construction.”