Grand Rapids city commissioners added three downtown renovation projects to the city’s brownfield list last week, a move that allows the development firms to apply for Michigan Business Tax credits.
Two of the projects are residential renovations and are being undertaken by Karl Chew, who heads Brookstone Capital LLC, a Midland-based investment firm. Both projects are in the Heartside Business District: at 17 Williams St. SW and at 209 and 217 S. Division Ave. The restorations will add a total of 45 apartments to the downtown housing mix. Six of those residences in the S. Division Avenue project will be live-and-work units.
“These two projects total $11 million, and the investment is coming from out-of-state,” said Kara Wood, city economic development director.
Work on the projects is expected to begin in December. The Williams Street renovation is slated to be finished by September 2011, while the S. Division project is set to be done in December. Both will be completed using historic standards and both will seek LEED certification.
The city and the Downtown Development Authority have granted both projects a Payment In Lieu Of Taxes, or PILOT. The properties will be off the tax roll for 18 years. Instead of paying property taxes, Brookstone Capital will pay the city 4 percent of its total annual rental income for each of those years.
Brookstone Capital is doing the Williams Street project as Serrano Lofts LDHA LP and the S. Division project as Division Park Avenue LDHA LP. Both developments have applied for low-income housing tax credits and historic renovation tax credits with the Michigan State Housing Development Authority.
The third brownfield went to the Christman Capital Investment Group for its planned renovation of the former Federal building at 148 Ionia Ave. NW. Christman Capital plans to invest $28 million into the project and renovate the structure for use by Ferris State University and the Kendall College of Art & Design.
“This is a very exciting project,” said Mayor George Heartwell.
The city owns the building, which has been vacant since the Grand Rapids Art Museum moved to Monroe Center, and spends roughly $100,000 annually to maintain it. Christman Capital will lease it from the city and then sublease the building to FSU. This project will also seek LEED certification.
Most of the renovation cost will be financed by $25 million worth of Recovery Zone Facility Bonds made available by Congress last year through the American Recovery and Reinvestment Act. Kent County and the city each allocated $12.5 million of their RZF bond allotments to the project. RZF bonds are only available to private firms and are tax free. Robert W. Baird will market the bonds, which have to be issued by the end of the year.
Wood said none of the projects will seek tax-increment financing because all three are in the DDA district.
In addition to approving the brownfield amendments, commissioners also set a public hearing date for another project. On May 11, they will receive details on the construction of a new single-story, 25,000-square-foot office building at 3045 Knapp St. NE. A developer from Sandusky, Ohio, doing business as Grand Rapids GSA Properties Ltd. for the project, wants to build the structure and then lease it to the Federal government’s General Services Administration.
City officials learned that if the project goes forward, the Social Security office will likely move from 50 College Ave. SE to the building, which would be located near the East Beltline and in the development that is home to the Celebration Cinema movie theater. Commissioners were concerned if that location was accessible for all seniors living in the city, and Wood said it would be on The Rapid bus line.
Commissioners are also considering whether to allocate $4 million of the city’s remaining $12.5 million RFZ bond allotment to the GSA project.