GRAND RAPIDS — A $12 million acquisition and renovation is in the works for a long-standing Southeast Side apartment building that hasn’t seen any substantial capital investment in more than four decades.
The Park Place Limited Dividend Housing Association Limited Partnership plans to make exterior and interior improvements to Park Place Apartment Homes in the 2900 block of Marshall Avenue SE, just south of 28th Street and east of Eastern Avenue.
The complex, formerly known as Village Green Apartments, is expected to feature 165 rental units for low-income individuals and households that are below 60 percent of the area’s median income. One-bedroom units will rent for $621 a month, while two-bedroom apartments will rent for $723 a month. The rent will include utility allowances.
Bradley Froling, of Bloomfield Hills, said the owners would invest roughly $3.6 million into the project and that they hoped to get $8.4 million in tax-exempt mortgage financing from the Michigan State Housing Development Authority for the rest of the work. Froling said the developers would also apply for low-income housing tax credits.
To make the project a reality, the city had to grant Park Place a payment in lieu of taxes, and commissioners did that last week by ratifying a 35-year tax exemption for the project.
In lieu of property taxes, the city will charge Park Place a 4 percent service fee.
The state has calculated the fee at just under $43,000, an overall reduction of $52,000 from the $95,000 tax tab. The city normally gets 17 percent of the tax total and has estimated that it will lose $8,800 in annual revenue from the transaction.
But Assistant City Manager Victor Vasquez said the city could lose a lot more without it.
Froling reported that operating income at the building has fallen from $362,751 in 2004 to $256,451 last year. Based on 2004 revenue, the property’s value was rated at 75 percent of its taxable value. In 2005, its value fell to 53 percent of the current tax base. The building’s expenses were 71 percent of revenue last year, up from 63 percent in 2004.
“The potential exists that the condition of this property will deteriorate without significant reinvestment. It is unlikely a developer would undertake this type of project without using the financing options that MSHDA would provide for the project,” said Connie Bohatch, director of the Community Development Department.
Bohatch said this was the first time the city granted a payment in lieu of taxes for a property that changed from market-rate units to publicly subsidized ones.
The papers Froling filed with the city showed that Park Place would spend $4.5 million to buy the apartments and $4.2 million on the construction work. Another $2 million would go toward soft costs, $453,000 for financing costs and nearly $700,000 would be held in reserve.
In addition to exterior improvements, Park Place plans to renovate kitchens, bathrooms, the plumbing and mechanical systems. Tenants will not be displaced during the work.
