Institutional buyers may get a chance this week to buy 30-year, tax-exempt bonds issued by the Grand Rapids Building Authority and backed by the city through a lease agreement commissioners recently ratified with the authority.
The sale will go forward if the interest rate falls within the parameter set by the city.
Parking Services will use the revenue from the sale to build a parking ramp as part of a mixed-use development going up on the downtown corner of Commerce Avenue and Weston Street. The development is known as Thirty-Eight.
“This project is still moving forward,” said Jana Wallace, city debt and authority finance officer.
The bond sale can’t exceed $9 million and the interest rate the city offers can’t top 6 percent. Wallace told commissioners the city was looking at a rate of 5.6 percent but was hoping to be able to drop it to 5.5 percent.
“If we get 5.6 percent, we will go ahead with that,” she said. “Our bonds are a big part of anyone’s portfolio who is concerned about taxes.”
Wallace added that the ongoing meltdown of the financial markets has forced the city to up its interest rate by 75 basis points. She also said that the city’s double-A rating had been confirmed prior to the sale.
“Double-A is about as high as a city can get,” she said.
Parking Services plans to build a seven-story ramp with 379 spaces to serve the office, retail and residential floors Locus Development is designing across the two buildings that will make up Thirty-Eight. Parking in the ramp will also be available to the public.
Parking Services Director Pam Ritsema said each space will cost about $32,000, which means the cost for the ramp will be roughly $12.1 million. Ritsema said that total includes all hard and soft costs. For contrast purposes, she said each space in the city-owned ramp at the corner of Commerce and Cherry Street that opened last year cost $30,000. Each space in the city-owned ramp at Division Avenue and Fulton Street, being built as part of the Gallery on Fulton project, will reportedly cost $36,000 each.
Ritsema said the construction bids were in for the Thirty-Eight ramp, but are being kept confidential until the bonds are sold. If the bonds aren’t sold, she said the work will be re-bid.
Locus Development, a partnership between John Green and Andy Winkel, plans to build 68,000 square feet of space in the buildings. One structure will run along Commerce and the other will front Weston. The ramp will go up behind the buildings and be hidden from sight.
In late October, Green and Winkel announced they secured their first office tenant when Adtegrity.com agreed to take 15,000 square feet on two floors of the Weston building. The firm, which helps advertisers and Web-site publishers with online campaigns, will move from its current home in Cascade Township to Thirty-Eight in the second quarter of 2010.
The buildings will be LEED certified and the project is expected to take a year to build.
Parking Services will be responsible for making the bond payments and the ramp’s down payment. The bonds are expected to be on sale until Dec. 23. The city held a retail sale for local individuals last week.