Brown Does Wonders For Projects

August 20, 2004
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GRAND RAPIDS — The brownfield designation awarded the project’s backers by the state last week was greatly appreciated because the investment is a challenging one in light of the less-than-stellar occupancy rate that has afflicted local hotels for a few years.

The Michigan Economic Development Corp. (MEDC) granted HP3 LLC, a division of Alticor Inc., a $5.9 million Single Business Tax (SBT) credit for its intent to build at least a $60 million hotel on a blighted downtown corner at a time when the lodging occupancy rate has been seemingly frozen forever at 55 percent.

“This is an important piece to our development because it allows the project to get a little bit more momentum,” said Joseph Tomaselli, president of the Amway Hotel Corp., which operates Alticor’s Amway Grand Plaza Hotel.

“It’s a challenging investment right now given the state of occupancies in Grand Rapids and Kent County,” he added. “It was very important to us. It’s a tight deal.”

Tomaselli said the new hotel, set to go up on the corner of Pearl and Campau NW, would help to draw larger conventions to DeVos Place by offering more rooms within a few blocks of the new convention center.

“This whole project is just another example of the co-founders’ commitment to our area, to provide another great opportunity to our community to continue to grow,” said Tomaselli of the Richard DeVos and Jay Van Andel families, who together started Amway Corp., which is now Alticor.

The hotel will have from 300 to 400 rooms, a 1,500-square-foot ballroom, at least one restaurant and one lounge, and parking for 500 cars. Bert Crandell, HP3 spokesman, said the construction would cost from $60 million to $70 million, and the hotel would create 250 jobs and pay about $650,000 in lodging excise taxes each year. A health club also is on the list of possible amenities.

The hotel’s initial conceptual design is due in December. By then it may be known if the four-story Israels building will be incorporated into the design. Tomaselli said an architect should be on board within the next few weeks and that the hotel’s brand could be known by late September.

“We are talking to national chains. It will be a flagged property and within the next 30 days we hope to have an announcement on that,” he said.

The project is getting the tax credits because it will clean up the site, which consists of two surface parking lots and the 105-year-old Israels building.

“Each step of the way we were encouraged. There seemed to be terrific support at the state level and, of course, at the local level, too. We’ve had a lot of support to make this happen here because it will benefit many people on an economic basis,” said Tomaselli.

The MEDC also announced last week that it would provide tax assistance to Mid Towne Village LLC and Steelcase Inc. The office furniture manufacturer plans to spend $3.4 million to consolidate its wood division by transferring operations from Indiana and North Carolina to Gaines Township. The move is expected to directly add 350 jobs to the local work force and indirectly possibly add up to another 350 jobs.

The state awarded Steelcase an SBT credit of $2.4 million for the project.

Mid Towne LLC, which was allowed by the state to capture $3.4 million in brownfield cleanup costs last month, was awarded $2 million worth of SBT credits. The Mid Towne project will build 182,000 square feet of residential, retail, office and medical office space on six acres just north of Michigan Street in the hill district.

Mid Towne now plans to invest $39 million in the project, up from the $30 million that was announced earlier. Another 350 jobs are expected to emerge from this project.

Two weeks ago, the state awarded De Vries Properties an SBT credit of $497,500 for its $4.9 million renovation of the former city-owned water filtration plant at 1430 Monroe Ave. NW. The development company, headed by Ed and Mike De Vries, will convert the plant into retail and office space on the ground floor and apartments on the upper levels.

“If Michigan is to be competitive in the 21st century economy, we need to attract new businesses and commerce, along with encouraging investment and growth in our urban centers. I am pleased with the potential of these projects and the positive impact they will have on our community,” said State Rep. Michael Sak, D-Grand Rapids.

City Hall and the Downtown Development Authority have committed roughly $6.3 million in abatements and tax-increment financing incentives to the Grand Rapids projects, while Gaines Township has agreed to abate about $96,000 in property taxes over the next four years for the Steelcase consolidation effort.

“The Grand Rapids area is on a roll,” said Don Jakeway, MEDC president and CEO. “The economic challenges of the recent past have been replaced by business growth, job creation and a series of excellent downtown redevelopment projects.”    

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