'Island' RFP Strands Developer

December 1, 2006
Print
Text Size:
A A

GRAND RAPIDS — The three firms interested in the city-owned Public Works Island have 10 design principles they have to incorporate into their response to the RFP that the city commission recently approved for 15.8 riverfront acres at 201 Market Ave. SW.

Most of the guidelines are standard issue and call for a mixed-use project that integrates with the Grand River, can be LEED certified, and is accessible to all members of the public. But one principle found in the 32-page document could directly affect what is built on the site and how many firms actually respond to the city, which is seeking a buyer for the land that carries an asking price of $35 million.

“Any civic facilities incorporated in the development should not compete with existing downtown facilities,” reads the principle on page 7 of the RFP.

“What we’re suggesting is, if they’re going to do something like a performance hall or like an arena, we want this to be complementary and not something that would be competitive. There is only so much money available in the region, I guess, to support those types of things,” said Deputy City Manager Eric DeLong.

“We want to make sure that they’re working together and not against each other.”

Two of the three firms that responded to the letters-of-interest request the city put out last spring included concert halls roughly the size of the publicly owned DeVos Performance Hall in their proposals, but only one located it on the city’s land.

Moch International of Grand Rapids said it would build a 2,400-seat concert hall on the site as part of its performing arts center, which was one of the developments it proposed for the property.

GR Development Corp. of Atlanta had a similar venue in its mixed-use project that would be built on 36 downtown acres, which would include the city’s land, but the firm didn’t specify where the concert hall would be constructed.

Barnes-Stevens Redevelopment of Buffalo, the third firm that responded to the LOI, didn’t list a concert hall as part of its response.

“I think they should demonstrate coordination. They’re not precluded in any way, but they certainly should be coordinated. And in the end, whatever is on the site, they have to produce enough tax increment in order to be viable,” said DeLong.

That last point — that a project has to raise enough tax-increment revenue to satisfy the city — could force Moch International out of the competition or push it to change its proposal because the firm planned to incorporate the performing arts center as a nonprofit.

Doing so likely wouldn’t give the development the city-mandated minimum taxable value of $55 million three years after closing and $70 million five years after closing, as a major part of the overall $150 million project would be tax exempt.

A development needs to hit those numbers to help the city finance its move from the island, which has been projected to cost $63.9 million. The city will use the revenue from the property sale and the tax-increment revenue from the site’s development to buy a new site and to cover its relocation cost.

It’s uncertain how those tax figures would affect the plan GR Development Corp. has for the site because the company didn’t specify what it would build on the city land in its LOI response.

The firm, led by Atlanta businessman Duane Faust and incorporated in Illinois, could construct its concert hall on a parcel near the island that it buys from a private owner and still make the venue a nonprofit organization. The city likely wouldn’t interfere with that move as long as it gets the tax revenue it needs from the development that lands on the island.

But should GR Development Corp. actually locate its concert hall on the island like Moch International has, the firm, like Moch, would have to “coordinate” the venue with the Convention and Arena Authority, which oversees operations at DeVos Performance Hall and Van Andel Arena.

“It all depends on how they build it and what is the long-term sustainability plan for the facility,” said DeLong.

CAA Chairman Steven Heacock and CAA Executive Director Rich MacKeigan told the Business Journal in April they would welcome a new concert hall downtown.

“I would view another small concert venue in the market as a positive thing. It gets more people out for live entertainment,” said MacKeigan.

“We’ve become a large enough city and venue that we can probably sustain both, and getting people out for live entertainment is generally a good thing for all,” said Heacock.

Responses to the RFP are limited to the three firms and are due by Feb. 23, 2007. When commissioners approved the RFP, Mayor George Heartwell failed in his attempt to lock in a date for the commission to make a decision on the property.

“We ought to think about putting an end date on this,” he said.

Responses will be reviewed by the nine-member 201 Market Steering Committee before they go to the commission. The committee also reviewed the LOI responses.

“The steering committee is made up of people with excellent expertise,” said Rosalyn Bliss, 2nd Ward city commissioner.

The city’s other 2nd Ward commissioner, Rick Tormala, was the only board member who voted not to go forward with the RFP. Tormala told DeLong that he wanted to know how much money the city has spent on marketing the property in addition to the $83,415 the Economic Development Corp. has invested in the effort. He asked DeLong to come up with a cost figure for the time city staff has spent on the island project.

Tormala also raised doubt about whether GR Development Corp would follow up on its widely reported “mystery development,” which would invest from $1.5 billion to $2.5 billion in a southwest sector of downtown near the Grand River. Two buildings on Grandville Avenue SW that the firm once had under option were sold recently to a local developer who plans to build student housing in the structures.

“I don’t think anyone in their right mind believes we’re going to see a $2 billion project there,” said Tormala. “I think we’re wasting money on something that isn’t going to happen.”

But 1st Ward Commissioner Roy Schmidt countered that many people said the same thing about the arena before it was built.    

Recent Articles by David Czurak

Editor's Picks

Comments powered by Disqus