Local architect Rich Craig enjoys putting the pieces together to form coherent, well-designed building.

Two projects approved for brownfields
David Czurak

While city commissioners approved brownfields this month for projects being undertaken by Seward LLC and Meridian Building Co. LLC and set hearing dates for two others, they also altered a purchase agreement that Parking Services had with Irish Twins Group III for the renovation of the former Imperial Metals building at 801 Ionia Ave. NW.

The city's parking department was considering buying roughly 48,000 square feet across two parcels on the developer's property for $1.6 million and put two surface lots around the building for $1 million. The city had the property appraised twice.

But after a closed-door session, commissioners decided to buy only one parcel for one of the lots now, and wait to buy the second parcel for the second lot when the project's build-out is finished.

"I do have concerns about the completion of the development," said Rosalynn Bliss, 2nd Ward city commissioner, who suggested changing the purchase contract.

Then commissioners tabled the amended contract to give city staff and the developers time to adjust the purchase and development agreements, and pro-rate the purchase price.

The parcel is about 40 percent of the total property Parking Services had an interest in. At 40 percent, the city would buy 19,200 square feet for $640,000, still at the appraised price of $33 a square foot.

Whether that purchase price is enough to allow Irish Twins Group, led by developer Jack Buchanan, to go ahead with the project is another matter because revenue from the property sale was a key element of the development's complex financing plan.

Commissioners amended the purchase agreement because the Imperial Metals property has gone into receivership, and that situation has brought the developer's financial state into question.

According to Kent County records, nearly $43,000 in taxes is owed on the property for 2006 and 2007, and the site's status is listed as being "in forfeiture." Mayor George Heartwell said the receivership label would be removed from the property if the city buys a parcel and doing that would give the project a chance to proceed.

First Ward Commissioner Walt Gutowski, who argued earlier that the asking price for the land was too high, said the development firm didn't tell the city it defaulted with the bank.

"It is very hard to move forward with the deal," said Gutowski.

Heartwell said when he heard the land was in default, it shook his confidence in the developer's financial situation. "I'm concerned that the project can't go forward," he said.

Second Ward Commissioner David LaGrand added that it would be "problematic" and not a good use of taxpayer dollars for the city to buy land and then hold it.

The development agreement requires the Irish Twins Group to invest at least $1.04 million into the development and create a project with a minimum taxable value of $2.86 million. The developers also have to provide the city with two letters-of-credit and make personal financial guarantees. Their plan is to turn the vacant former factory into 40,000 square feet of contemporary office and retail space.

Buchanan told the Business Journal that the project has received $750,000 in financing from Pioneer Construction Co., but offered no further comment after the city made its decision to only buy one parcel. The new purchase agreement is expected to come before the City Commission this week.

Meridian Building Co. LLC, headed by developer Robert Tol, plans to invest about $26 million into a 10-story, 115,000-square-foot building for residential and retail uses with 286 enclosed parking spaces at 20 E. Fulton St. The site is currently a parking lot at the southwest corner of Fulton and Sheldon Avenue.

"This is a really, really important corner — it's the center of our city," said Gutowski.

Robert and David Israels are the lead investors in Seward LLC. They are investing $10 million into reviving the Enterprise building at 528 Fourth St. NW and the Drueke building at 601 Third St. NW. Both are being renovated for office space — a total of 13,000 square feet in the Enterprise and 24,000 square feet in the Drueke.

"Boy, David, you've got your work cut out for you if you're going to make the Drueke building look like this," said 1st Ward Commissioner James Jendrasiak to David Israels after he saw the project's rendering.

Commissioners will hold two more hearings on brownfield requests next week. One is for M Retail Solutions and Catalyst Partners, which are planning to renovate the building at 502 Second St. NW (see relates story). The other is for Harris Lofts LLC, which wants to transform 107 S. Division Ave. into multiple uses that include classrooms, corporate meeting rooms, offices, and art and photography studios. Both renovations will seek LEED certification.