Big Project For A Key Corner
City commissioners entered into an agreement with Two West Fulton last week to sell the site, which held the City Centre parking ramp for over 40 years, for $2 million.
“We selected this project primarily because of the mixed use,” said Susan Shannon, city economic development director. “We think we’ve put together an agreement that will ensure the success of the development.”
Two West Fulton, a partnership between RSC Associates of Chicago and Second Story Properties of Grand Rapids, submitted a proposal for a $24 million residential and retail development that was chosen over a handful of others last May in a city-backed competition for the site. Negotiations for the binding contract had been going on until earlier this month.
The agreement calls for Two West Fulton to build roughly 82,000 square feet of market rate condominium space and about 32,000 square feet of commercial space. The contract allows the condo space to vary by 20 percent and the retail space to rise or fall by 30 percent.
The contract also calls for the project to have 111 parking spaces for the condo owners and 149 spaces for public use, though those totals can vary by 20 percent. Parking Services, and possibly the Downtown Development Authority, will buy the public spaces from Two West Fulton for an estimated $4 million, or $27,000 per space — a higher cost than most parking spaces because some will be built below ground, and doing that raises the price tag.
“We are paying for the actual cost of the parking spaces and a fee for the property,” said Shannon.
Two West Fulton has until Jan. 31, 2007, to close on the deal, and that’s also the deadline to pay the city the $2 million for the property. But before the partners can complete the transaction, the contract calls for them to pre-lease and pre-sell half of the retail and residential spaces, have their financing in place, and have all the building plans done.
If the firm fails to meet those requirements, then the city can re-market the property, and Two West Fulton would have to pay the city $175,000.
“We’re not giving any money to this development,” said Shannon.
But commissioners will hold a public hearing next month on possibly adding the property to the city’s approved brownfield list. Two West Fulton is asking for a Single Business Tax credit of $1.9 million from the state, and the city has to approve that request before the state will consider it.
Second Story Properties President Sam Cummings said due diligence on the site and the preliminary design work for the project can now get started with an agreement in place.
“It’s a huge risk,” Roy Schmidt, 1st Ward commissioner, said of the developers’ investment. “I’m very happy for this investment.”
Seeing the closing deadline is more than a year away, Mayor George Heartwell suggested that Parking Services pave the property and offer public parking on the site until then. He noted the department could earn back the cost of building a surface lot on the property by the time the sales papers are signed.
“Let’s put that site into a productive use,” said Heartwell, who added that businesses in the area are in need of parking.
Parking Services wanted to build a lot on the site last spring, but the Historic Preservation Commission nixed the idea. Still, Shannon said the city would go back to the preservation board with the same request.