Kent Will Finance DHS Project

November 21, 2006
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GRAND RAPIDS — The state Legislature and the governor’s office need to approve a lease agreement that Kent County commissioners already ratified so a major construction project can get underway and more jobs can come into the city.

County commissioners gave notice last week that they intend to bond for the project. The plan is to have the county building authority issue a 20-year municipal bond package worth $27 million, with $2.27 million included for the financing cost. The interest rate will likely be 5 percent per annum.

Last month, commissioners approved a 20-year lease, with two five-year options, that would let the state move its Department of Human Services office from a cramped and aging building at 415 Franklin St. SE into a new facility the county would construct on the current site of the Sheldon Complex at 121 Franklin St. SE.

Outgoing State Rep. Jerry Kooiman said lawmakers would take up the lease issue this week. If legislators approve it, the contract would go to Gov. Jennifer Granholm for her signature.

“I think we have everybody on board, including the city of Grand Rapids. It’s been a very painful negotiating process with the state and the county,” said Kooiman, a Grand Rapids Republican, of the talks that began in 2004.

The agreement has the state leasing nearly 80 percent of the building, or 101,365 square feet of its proposed 127,494 square feet. Two other tenants would lease the remainder of the building. The Area Community Service and Training Council would have 22,512 square feet and the Kent County Department of Health would rent 3,617 square feet for a clinic.

“The real winners today are the people who will use this building,” said Dan Koorndyk, county vice chairman.

County Director of Facilities Planning and Management Robert Mihos has pegged the total cost of the new facility at $27 million, with $20.4 million going toward the design and construction of the building. Another $2.56 million will be spent on acquiring the land and $1.72 million will be used for fixtures, furniture and equipment.

The annual debt service is projected to be $2.16 million. Assistant County Administrator Mary Swanson estimates that the state would be responsible for $1.7 million, the county for $252,400 and the city for $191,000. Those numbers represent an annual debt payment of $16.99 per usable square foot, with an additional $7.50 per square foot in the first year to cover operations and maintenance costs.

Mihos told the Business Journal the county’s next step will come after the state approves the lease. When that happens, he said, the county will ask companies to bid on the project for the architectural, engineering and general contracting work.

“That doesn’t mean we’re not working on our plan now,” said Mihos, who expects the building will be ready for occupancy in 2009.

Deputy City Manager Eric DeLong said the city would gain from 100 to 150 jobs, which would add from $50,000 to $75,000 annually to the income tax roll, as employees from the DHS office in Cascade Township would move to the new facility when it opens.

But DeLong pointed out that there were more important aspects to the project than the new income taxes coming to the city.

“The key thing here is the retention of jobs and keeping the one-stop service in a location that is great for customer service. We’re quite excited about it. We think the county has done an excellent job of managing this project,” he said.

The county is buying two parcels for the new facility that total about 4.6 acres. The appraised value of both is $1.46 million. The city is buying 1.3 acres from Grand Rapids Public Schools and will convey that land, which has been appraised at $580,000, to the county.

“We have it under option and the county has an option on our parcel and the other parcel. Everything is all lined up and ready to go,” said DeLong.

“It’s been approved by our city commission and this has been a great joint project with the county.”

Kooiman, who is leaving office in January due to term limits, was praised by county commissioners for his role in the negotiations that took place between the state and the county. Many said his two-year effort was vital to the creation of the lease agreement.

“I want everyone to know how hard Jerry Kooiman worked for us,” said Commissioner David Morren. “Without him, we wouldn’t have this resolution.”    

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