City commissioners are expected to review a new purchase agreement on Tuesday that will have an impact on the proposed renovation of the former Imperial Metals plants at 801 Ionia Ave. NW.
The city’s Parking Services Department and Irish Twins III LLC, the project’s developer, have agreed on a new term sheet that would have the department buy a larger parcel than city commissioners earlier called for and construct 81 surface spaces to support a revival of the building. But the city commission also has to approve the contract and it carries a higher cost than commissioners suggested.
The latest agreement has Parking Services purchasing roughly 60 percent of the site’s 48,787 total square feet that was initially set aside for parking, or 20 percent more square footage than commissioners wanted. Should the board ratify the new term sheet, Parking Services would buy about 29,200 square feet on a larger parcel for roughly $960,000, or for the appraised price of $32.80 a square foot.
“We’ve done what we can for the project. I’m confident, that over time, this will be a successful project,” said Pam Ritsema, director of Parking Services.
In March, city commissioners emerged from a closed-door session and instructed the department to purchase approximately 19,200 square feet on a smaller parcel for about $640,000 and wait until the project was built to buy the other parcel. Commissioners expressed a lack of confidence then that the project could be completed due to the developer’s difficulty in finding financing for construction.
The original offer had Parking Services buying both parcels, or 48,787 square feet, for $1.6 million — still the appraised value of $32.80 a square foot.
Parking Services wouldn’t buy the other parcel under the latest term sheet, as Irish Twins III would incorporate that square footage into its development that proposes to construct office and retail space on the property. The latest term sheet emerged from a counter offer the development firm made to the commission’s request.
Ritsema said the developer has to provide a letter-of-credit worth $80,000 to cover the city’s initial engineering costs as part of the new term sheet, but personal guarantees from the developers are no longer required. Irish Twins III, headed by developer Jack Buchanan, also has to offer a letter-of-credit to cover the lot’s parking revenue for the first three years.
The development firm has to meet other obligations, including providing a clear title to the property, by June 1. Ritsema said Wells Fargo Bank also has to approve the sale; she didn’t feel that would be a problem.
“I think they’ll be happy to take our money,” she said.
But when Parking Commissioner Gerald Schildroth asked Ritsema who was guaranteeing the letters-of-credit she said she didn’t know. “I question whether you’re leaving something on the table,” he said.
Ritsema did say she had faith that the development would go forward because Pioneer Construction Co. has agreed to finance the first phase of construction, estimated to cost $750,000. Pioneer Construction is building the department’s ramp at Weston Street and Commerce Avenue, and Ritsema has been pleased with the relationship her department has had with the firm.
Ritsema also said she believes that the city should be a “patient investor,” that parking ignites economic development, and that the Imperial Metals project isn’t different from any other her department has been involved with.
“It’s been a long road to getting where we are. It hasn’t been an easy negotiation,” said Ritsema.
Last month, city commissioners set Tuesday as their deadline to reach an agreement with Irish Twins III.