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City Approves DDA DeVos Place Bonds
GRAND RAPIDS — City commissioners easily approved the Downtown Development Authority's request last week for a $5 million bond package that will help pay for the final phase of construction at DeVos Place. The city has to ratify each DDA expenditure that exceeds $50,000.
But before commissioners made their decision last Tuesday, Mayor John Logie told board members that the city's latest gift to the new convention center would push the city's overall donation to the building project past $100 million.
The mayor explained that the city's total commitment to the project included giving the $77 million Van Andel Arena to the Convention and Arena Authority, a group he chairs.
He also said that the city gave the arena's annual profit margin, which has averaged $1.5 million for the past few years, and the $3 million in its reserve account to the CAA.
The city, he said, also gave its 45 percent share of the Hall of Justice property to the project, the first $5 million the DDA pledged a few years ago, and now the $5 million the DDA ratified in August.
"We've contributed a huge amount," said Logie, who added that the county gave him a cold shoulder when he tried to involve Kent in the arena project.
The mayor also remarked that the county has contributed to the project, including giving its 55 percent share of the Hall of Justice site to it. But he noted that the majority of county funding for DeVos Place — its $87 million bond package — is being backed by the lodging excise tax and not by money from the county's general fund.
"The county has not put their public works projects at jeopardy with their contributions," added 2nd Ward Commissioner Rick Tormala.
Another city commissioner, however, saw the scenario a bit differently.
"We still own the arena, a part of it," said Lynn Rabaut, who also represents the Second Ward.
"There are a lot of little things in here," she said of the funding pot for DeVos Place. "I don't think you can blatantly say we gave away the arena."
That pot includes $65 million from the state, about $33 million raised from private sources by the Grand Action Committee, and nearly $100 million from Kent County.
The City-County Building Authority will issue the latest DDA bond package, which will be backed by Kent County.
DDA Executive Director James Knack said the board's annual bond expense for the new package will run about $400,000 and the panel can only use its school-increment tax revenue to make that payment. The DDA gets about $5 million each year from that tax source, and another $3 million annually from property taxes in the board's district.
"Projections show that the DDA fund balance will be reduced to $5 million, and we will have to cut some projects from the agenda," said Knack, who added that the DDA has about $120 million in principal and interest payments to make over the next few decades.
Projects likely to be cut are street and parking improvements that the DDA has regularly made downtown over the past two decades.
The DDA is also expected to lose about $150,000 annually for roughly the next 15 years when the Monroe Center Renaissance Zone takes effect in January. But Knack noted that the board could make up that loss from a larger district.
DDA Chairman Verne Barry and Kent County Chairman Steven Heacock created the funding compromise for the DeVos Place shortfall. The last leg of construction was nearly $13 million short when both pledged that their respective bodies would each donate $5 million to the funding gap. County commissioners approved their $5 million donation in September. Budget reductions are expected to cut the remaining $3 million from the project.
DeVos Place will cost nearly $220 million by the time it's fully completed in January 2005. The final construction phase will start in June and will run slightly more than $51 million.