A City For Sale?
GRAND RAPIDS — While city officials are eagerly looking forward to Friday’s arrival, they haven’t sat around idly waiting for the day to come.
Friday is the deadline for developers to get their RFPs to city hall for the Public Works Island, the 15.8 acres of city-owned property at 201 Market St. SW that accounts for the largest single piece of land in the “mystery development.”
The city is offering the riverfront property for $35 million, or almost $51 per square foot. Atlanta businessman Duane Faust, who made a confidential inquiry to the city last year about buying multiple downtown properties, reportedly will place a bid on the island.
“I’m expecting at least one, and I’m hoping for more than one,” said Susan Shannon, city economic development director, of proposals for the most expensive piece of property the city has perhaps ever offered for sale.
“In just the last week, we’ve gotten some calls from out of state,” she added.
But the island isn’t alone on the must-sell list, as the city or Downtown Development Authority is selling or listing eight other properties in seven different transactions. Two more parcels could go on the market in the near future, too. Commissioners made selling unneeded city lands a priority last year in order to raise revenue and incite development, which leads to higher tax receipts.
Here are the seven transactions that are under way.
- The city is selling two properties that make up what used to be called the Northeast Complex. LaCati Development LLC, a firm owned by Chad Cassiday and Keith Cannon, has offered $226,000 for the parcels at 629 Michigan Ave. NE and 417 Benson Ave. NE. LaCati Development plans to build retail space totaling 12,000 square feet, from eight to 10 loft-style apartments or condominiums, and a two-story parking structure along the Michigan-Benson corridor.
The housing units would range from 1,000 to 1,200 square feet with two bedrooms and two baths, and would be targeted to medical students. Cassiday and Cannon also own LaCati Custom Homes, which produces single-family houses that range in price from $800,000 to $1.5 million, and Heritage Investment Group, which specializes in mixed-use developments.
Shannon said city commissioners agreed to sell the parcels a year ago and that a sale would maximize a return to the city and stimulate a re-use of the entire corridor.
“The development that they presented meets the goals and objectives set by the city,” said Eric Soucey, a real estate specialist with the Economic Development Department.
Cassiday and Cannon said they had verbal agreements with other nearby property owners and that the proposal they submitted is a preliminary plan for the parcels. Shannon said the transaction wouldn’t close until the developers lock in the other properties.
- The city is selling one acre of a three-acre parcel on the northwest side near Seward Avenue and Fulton Street to Grand Valley State University for the appraised value of $948,000. The city bought the property when it extended Seward to Fulton and had always planned to sell the excess land not directly part of the street project.
GVSU will build parking spaces on the site to partially replace the 65 spaces in a lot it owns at Fulton and Watson. The college will lease those spaces to Paul McGraw, president of McGraw Construction, for his renovation of a 15-year vacant and obsolete building at 514 Butterworth NW.
“We only have 10 (spaces) on site,” said McGraw. “We could use some on the railroad property; they’ve said we could, but we don’t want to do that.”
McGraw plans to invest $4 million into turning a former bicycle factory that was built in the late 1800s into a mixed-use development that will feature commercial and residential space. The land-locked building needed additional parking for the project to go forward.
“Because of our interest in seeing this project go forward, we are willing to consider making some GVSU parking available near the bicycle factory, which will enable the project to go forward. To replace the parking lost to GVSU, we need to acquire some property currently held by the city that is adjacent to existing university property,” wrote GVSU Counsel Thomas Butcher.
The sale, which would lower the city’s annual bond payment for the original property purchase by $100,000, is contingent on GVSU and McGraw coming to terms on a parking arrangement. They have a year to accomplish that.
“This sale will continue to facilitate the university’s presence and partnership in our community. The remainder of the Adobe site, with frontage on Fulton and Lexington, will be marketed separately through an RFP process designed with the stakeholder community,” said Shannon of one city-owned site that could be on the market soon.
Commissioners added the project to the city’s Brownfield Redevelopment Plan last week, which gives McGraw up to 18 years to capture nearly $410,000 in taxes at an interest rate of 4.5 percent and a chance to qualify for a Single Business Tax credit.
- Commissioners agreed last week to put the Area 5 parking lot on the market for an asking price of $4 million, or $57.97 per square foot for the 68,992-square-foot parcel at the corner of Cherry Street and Oakes Avenue SW. The city has issued an RFP call for the lot situated south of Van Andel Arena.
“We’ve received quite a bit of unsolicited developer interest in Area 5,” said Parking Services Director Pam Ritsema. “A surface parking lot isn’t the best use for the site.”
Developers interested in purchasing the site must submit their proposals by Aug. 25. The winning bidder has to meet six evaluation criteria, including the project’s proposed use and how that use meets the goals the city has set for downtown.
- One developer that may be interested in the Area 5 lot is the same one that made a $3 million offer to the Downtown Development Authority for the Area 4 lot, which sits just west of the Area 5 lot. KG Development, a metro Detroit firm comprised of Gershenson Realty & Investment and Kirco Development, has proposed a multi-screen movie theater with retail space for the Area 4 lot and indicated that it might be interested in also acquiring the adjacent Area 5 lot for a mixed-use project that would include residential.
But the bid from KG Development averages out to be about $25 per square foot for the 121,968-square-foot lot, a rate well below prices for other city-owned downtown properties. About an acre of the site, though, can’t be developed easily because of a U.S. 131 overpass that runs across the southern part of the parcel. Removing that section from the site leaves 87,120 square feet that can be built on and raises the square-foot price to nearly $35 — still under the going rate.
The DDA entered into a six-month exclusive negotiation agreement last week with KG Development that runs through Oct. 2. Board members agreed at the same time to get the lot appraised, at their expense, taking into consideration that the city will retain the “air rights” for a parking ramp to be built above the theater.
“They will want to know what they will pay for the property, and we’re so far apart,” said Dick Wendt, DDA counsel. “Really, the appraisal is for our benefit.”
The DDA isn’t required to put the lot up for bid.
“But you must receive fair market value for the property,” said Wendt.
DDA Executive Director Jay Fowler said KG Development wants to wrap up the deal before October.
- The city is also selling the former City Centre parking ramp site to Two West Fulton, a joint venture between RSC Associates of Chicago and Second Story Properties of Grand Rapids, for $2 million. Two West has completed its due diligence on the 37,000-square-foot site and plans to build a mixed-use development there that includes condominiums. The square-foot price for the site is $54.
- The Gilmore Collection, owner of The BOB at 20 Monroe Ave. NW, and the owners of 50 Monroe Place are negotiating over the use of a city-owned parking lot at Fulton Street and Ottawa Avenue NW. The 31,345-square-foot lot is selling for $1.725 million, or $55 per square foot.
- The DDA is selling roughly half of the Area 3 lot on Ionia Avenue SW, just east of the Van Andel Arena, to Tall House Enterprises for $130,184 for 3,809 square feet, or $34.17 per square foot. Tall House plans to build a nine-story office, retail and residential building on the 21,000-square-foot site, most of which was owned by Cherry Street Landing West.
One piece of property that 3rd Ward Commissioner James White suggested be put up for sale last year but that hasn’t been listed yet is the Indian Trails Golf Course. The city-owned, 18-hole course on Kalamazoo Avenue SE near 28th Street opened in 1928.
City Manager Kurt Kimball told the Business Journal that the course, which has a pro shop, is turning a profit and remains an affordable and easily accessible place for city youngsters to learn the game.
Kimball said that the city has received inquiries from developers about the course and added that if the city does decide to sell the property, it would draw an attractive price.