By Invitation Only

September 1, 2006
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GRAND RAPIDS — At least one of the three firms that answered the first call hadn’t decided last week whether it would reply to a second one for the city-owned Public Works Island on the east bank of the Grand River.

“We haven’t made that decision yet. We’ll probably wait and see what happens and just take it from there,” said Joseph A. Moch, who owns Moch International of Grand Rapids with his father, Joseph W. Moch.

City commissioners decided last week to restrict an RFP invitation for the 15.8 acres at 201 Market SW to Moch International, Grand Rapids Development Corp. of Atlanta, and Barnes-Stevens Redevelopment of Buffalo. Only those three replied to a national call last spring for letters of interest to buy and develop the $35 million property.

Third Ward Commissioner James White led the charge to limit the RFP response to the three companies. He got just enough support from the board to overcome a steering committee’s recommendation to request proposals from anyone interested.

“If you open it up, then you’d be unfair to those who met the deadline,” said White of the city’s first marketing round. “We have time, so we can go with the three. And if we don’t like any [projects], we could open it up.”

But Moch told the Business Journal last week that he didn’t think opening the process up to everyone would have drawn more interest and created more competition for the property.

“I don’t think it really matters who they open it up to, because they don’t know what they want, and they really don’t have a set plan in terms of what to do. They said the price was going to be $35 million when we started, and then it’s $35 million plus a percentage of the brownfield, and they don’t know how much of a percentage. They wouldn’t give us a number on that,” he said.

“They didn’t have the report that told them what they were going to do with the existing facility. You can’t do anything until that happens. I really don’t see the city being able to take it anywhere, because they haven’t shown that they’re committed to doing this.”

Deputy City Manager Eric DeLong revealed last week it would cost the city nearly $64 million to vacate the Public Works Island for new sites — a main “campus” and up to four other new or existing locations. (See related chart.) DeLong said the city would pay for the relocation with receipts from the property sale and from the tax-increment revenue the city would get from the new development at the old site.

DeLong said the project’s taxable value has to range from $55 million three years after the closing date to $70 million five years after closing, to net the city $35 million from tax receipts and make the relocation financially feasible for the city. That means a developer would have to invest from $110 million to $150 million in the property, in addition to the purchase price and remedial cost.

DeLong didn’t pinpoint any potential locations for the relocation, but said he had “several ideas in mind.”

City Public Works Director Patrick Bush said the cost estimate was “very conservative” and was inflated to 2008 dollars, meaning it would take a couple of years for the city to move from the site.

“To pay $35 million for a piece of property that you can’t even start construction on for two years — and for something that significant you’re going to have to move a lot of utilities; you’re talking about five years worth of construction and development. To carry $35 million plus for five years is a huge hurdle to overcome, and I just don’t see it happening,” said Moch.

The three companies that submitted letters of interest proposed mixed-use projects for the site, and all were reviewed by the members of the 201 Market Steering Committee, which decided last month that the city should issue a wide-open call for detailed proposals.

They said an RFP should require more information than the letters had, including project renderings and financial statements that show a developer has the ability to buy the site, clear it, and build the development.

“I think the whole process was rather disappointing, and it really just doesn’t make sense. The whole purpose of establishing the committee was to screen interested parties and see what passed through to the next round,” said Moch.

“They decided that none of the parties were qualified, and yet everyone was going to be able to go to the next round. So it just doesn’t make any sense.”

The city’s next step is to write the RFP and decide how long the trio of firms will have to respond to it. So far, the city has committed $65,500 of the $125,000 it has available to market the

Market Avenue
property. But 2nd Ward Commissioner Rick Tormala voted not to spend any more money on the process, as he wanted to scrub the entire effort, one he has opposed from the start.

“Sixty-three million dollars is a lot of money to risk, and it could become a financial tsunami that could drown us in a sea of red ink,” said Tormala of the relocation cost.

“We don’t have to move. The developers don’t know the remedial cost. There wasn’t a lot of interest the first time. I don’t want to gamble with the taxpayers’ money.”    

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