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Riverfront Mystery Finally Solved
GRAND RAPIDS — A reliable source told the Business Journal last week that many city officials had doubts that Grand Rapids Development Corp., headed by Atlanta businessman Duane Faust, could finance the River Grand project, a scheme that would have invested up to $2.5 billion in downtown properties.
The same source said the media coverage of the so-called “mystery development,” mostly that of WOOD-TV8, pushed city officials to act on the plan in an effort to be accountable to the public — despite their misgivings of the project’s credibility.
The constant reporting of a potentially record-setting investment coming to downtown drove the city to offer for sale 15.8 acres of riverfront property at 201 Market Ave. SW, the Public Works Island, for $35 million, through a two-tiered process that first involved letters-of-interest and then requests-for-proposals.
Whether everyone agrees with that source’s scenario is doubtful, too, but the outcome of the past year’s activity isn’t. The development is no longer a mystery. What some had hyped a year ago as the real deal, last week was revealed to be a never deal.
“We are rejecting this proposal as incomplete and as non-responsive,” said Eric DeLong, deputy city manager, at a news conference last week.
“We will send them a personal letter,” he said, adding he hadn’t told Faust before he told local reporters.
DeLong said GR Development Corp. owed the city some money but he wouldn’t reveal the figure. He added that the city probably wouldn’t pursue those dollars.
“We’re just glad to be done with it,” he said of the project and likely the stress that came with it, as at least two media outlets sent two reporters to cover a one-man press conference.
“They didn’t send a check. They didn’t submit a qualified development,” he said.
In addition to not including the necessary $65,000 with its RFP reply, the firm didn’t follow the document’s directions. The city’s consultant, Stainback Public-Private Real Estate of Houston, evaluated the firm’s reply and found it lacked responses to 21 of the 28 parts that comprised the six-section RFP.
In the all-important Section 4, the proposed financial plan, SPPRE reported the firm did not provide the required analysis to three of the section’s four parts. Stainback said the company also didn’t respond to any of the six items located in Section 5, which included an estimate of the jobs that would be created from the project and a release that would allow the city to conduct a background check on the developers.
“It was essentially devoid of specifics,” said DeLong.
GR Development Corp. did offer details on what it would build on the island. Leading its proposal was a “low rise (office) tower and hotel” valued at $180 million. A movie theater, an amphitheater, space for retail, restaurants and nightspots, residences, a parking deck, a marina basin, landscaping and infrastructure improvements rounded out the proposal.
In all, including the $35 million purchase price, GR Development Corp. would spend $355 million on a 1.5 million-square-foot development on the site — an investment of more than $22 million per acre. The firm’s proposal said the island’s project would be the “initial phase of a larger development that would expand to the east side of
GR Development Corp. requested that Grubb & Ellis|Paramount Commerce receive a 6 percent commission on the property’s sale price, which would have given the commercial real estate firm a check for $2.1 million had the transaction been completed. Faust also enlisted other local companies to work on the River Grand project, and those firms are looking at a lost payday, too.
A reporter asked DeLong if the city considered its sale process a failure. He said no and likened it to a learning experience. He added that he found the question to be inflammatory, but not unexpected.
DeLong said the island remains a viable piece of developable property as downtown expands to the south along the east bank of the Grand River, and that it will go on the market again when the time is right.
“I think we had a very thorough process. If we had a qualified developer, we’d be moving forward,” he said. “This is one of the next legitimate edges (of downtown). This property has a future.”