GRAND RAPIDS — Nearly halfway through the final year of her second term on the City Commission, Lynn Rabaut said, “My only concern was how the financing would work, and you’re about to find that out.”
Rabaut made her comment in May 2005 when commissioners agreed to sell the former City Centre parking ramp site to RSC Associates of Chicago and Second Story Properties of Grand Rapids, who have since formed Two West Fulton LLC for the residential, retail and entertainment project they want to build on the 37,000-square-foot site at Fulton Street and Division Avenue.
Nineteen months after Rabaut’s remark, the city has found out that the financing isn’t there yet, because lenders aren’t lining up right now to finance residential projects with the number of condominiums being built downtown and slumping home sales everywhere.
The developers told the city they also need to capture some tax credits to go ahead with the development, which is going to take some time to do, and that they are waiting to find out if a key potential tenant will relocate to the project.
So Two West Fulton has asked the city for a six-month extension on the closing date, which is Jan. 31.
“The developers have spent over $250,000 to date on plans and have made good progress. They have met the timeline requirements for completing preliminary and final plans,” wrote Susan Shannon, city economic development director, in a memo to the City Commission.
Shannon added that Two West Fulton has agreed to add another $30,000 to the $2 million purchase price the firm submitted for the property in exchange for an extension.
The developers are also waiting for the Urban Institute for Contemporary Arts to finalize a capital campaign, sell its building at 41 Sheldon Blvd. SE, and become the anchor tenant in a project that would also include 72 residences.
The UICA board first expressed interest in moving to the new site last October. But UICA Executive Director Jeffrey Meeuwsen told the Business Journal last week the organization still has more work to do before it arrives at a final decision.
“What the board approved was to be able to take action to pursue the next step, which is to begin investigating the (capital) campaign and all the things related to a potential move. But there were still, and still are, issues pending that we’re waiting for answers on. We are in a time of getting a lot of answers to a lot of questions,” said Meeuwsen.
“I don’t have any comment right now. We’re getting close to having a comment, but we’re not quite there yet,” he added.
If UICA chooses to stay where it is, Two West Fulton said that space could be turned into rental apartments that would have the option of being converted into condominiums when the housing market improves.
Parking commissioners agreed to the extension last week, but city commissioners will have the final say. If the commission grants the extension, it will become the third one the developers have received for the project. The city gave them an additional 90 days to get their due diligence done and another week to finish the conceptual drawings of the project. Two West Fulton met both extended deadlines.
City commissioners selected Two West Fulton last year over four other groups that made an offer on the property. The developers initially proposed an 11-story building for the site that would have a jazz club, bookstore and 74 condominiums.