Making Comebacks With Help

December 10, 2007
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GRAND RAPIDS — When the 110-year-old bicycle factory building burned last winter, some thought any project that was planned for the near southwest-side site went up in smoke, too.

But that wasn’t the case, and city commissioners will hear about the new development targeted for the property soon when they consider amending the brownfield they awarded Bicycle Factory LLC in May of 2006.

On top of that, another proposed development that has seemingly languished for years is apparently ready to roll, as developer Robert Tol is set to breath life back into the old Junior Achievement Building at 12 S. Division Ave.

Both projects need to have amendments made to already-approved brownfields.

The bicycle factory development group, headed by McGraw Construction President Paul McGraw, received a tax credit 19 months ago totaling $338,675 for site preparation, some demolition work, and infrastructure improvements to 514 Butterworth St. SW.

But since the fire left the site littered with soot and covered with rubble, clean-up costs have risen and the partners have requested a credit of $877,195 to help fill the financial gap the fire created.

The city’s Brownfield Redevelopment Authority approved the amendment last month.

Instead of a renovation, the partners plan to put up a new five-story building and do the project in two phases. First, they will build three floors of commercial and office space at an estimated cost of $3.7 million. Then they’ll build two stories consisting of a dozen 900-square-foot apartments for $2 million, and those units will be set back from the lower floors.

“We wanted to be sensitive to the scale of the building, and we don’t have all five stories at the front elevation because we wanted to be pedestrian friendly,” McGraw said.

“We didn’t want to be cold and overwhelming at the street, so we pushed those apartments back,” he added.

Lott3 Metz Architecture designed the building and McGraw’s firm will manage the construction. The building will have a total of 70,000 square feet and the overall project, including construction, design and remediation work, is expected to top $8 million.

“It’s an attractive building,” said Mayor George Heartwell.

City Economic Development Director Kara Wood said the developers are also requesting a Michigan Business Tax credit of $570,625, or $200,000 more than they initially requested before the fire destroyed the factory.

“The project will create 10 full-time jobs,” said Wood, “and 20 part-time construction jobs.”

McGraw said he wants to get the project going the day after his tax credits are awarded and would seek LEED certification for the new structure. Commissioners will hold a public hearing on the change to the brownfield early next week.

Early next month, commissioners will hear Tol’s revised plan for the vacant JA Building and review his brownfield request. Tol has scrapped his original idea of adding four floors of residences to the two-story vacant structure at the southeast corner of Division Avenue and Fulton Street. Instead, he will renovate the existing two floors into commercial space.

Tol has done the necessary interior demolition, will invest $3 million into the project he calls 2 East Fulton instead of the original investment of $4.6 million, and plans to complete the work by the end of 2009.

But because the project no longer contains the four residential floors, the brownfield Tol was awarded in 2005 has to be amended to reflect the current proposal. He is now asking for $470,000 for eligible activities like site preparation, public infrastructure improvements and demolition work. Two years ago, he asked for $130,000 for those activities.

Wood said it would take at least 25 years for Tol to capture his reimbursement for those activities. She also said the business tax credit of nearly $444,000 the city and state approved two years ago would apply to the current project and doesn’t need to be amended.

“I have some concerns about this,” said 1st Ward Commissioner James Jendrasiak.

“The size of the development has significantly decreased, but the developer wants the same reimbursement. What’s going on here?” he asked.

The project includes $1.7 million of public money to be spent on improvements, the costliest of which is a $1 million reconstruction of Division from Fulton to Weston streets. Wood said Tol would make the improvements and be reimbursed through a tax capture.

“This isn’t our money up front, it’s his money,” said Mayor George Heartwell.

Commissioners are expected to receive a detailed explanation of those costs before the public hearing on Jan. 8.

In addition to Tol’s request, commissioners will hear two others at the same meeting. One will come from 38 Commerce LLC, a development group headed by Kelwin Properties President Andy Winkel. The partners plan to put up two buildings at the corner of Weston Street and Commerce Avenue at a cost of $14 million for office, retail and condominiums. The city plans to build a 360-space parking ramp in tandem with the project.

Wood said the developers aren’t seeking tax-increment financing, but are asking for a $1.26 million business tax credit. She said the project is expected to create between 60 and 70 full-time jobs. Because the property is within the Downtown Development Authority district, she said the DDA will likely use its tax-increment financing to reimburse the developers for the elevator, the ramps and streetscape improvements they’ll make. Those activities are estimated to be worth $640,000.

The other request will come from Kim Beyer and Stratus Properties LLC. The firm wants to renovate 345 State St. SE and add two floors to the two-story building. Offices would go on the two lower levels and condos would be built on the two upper floors.

The $4.5 million project is being seen as a catalyst development for the Neighborhood Enterprise Zone designation the surrounding Heritage Square neighborhood is seeking from the city. The project is expected to be completed by the end of 2009.

“The NEZ benefits only go to the residents of the condominiums and not to the developer,” said Wood.

Wood said Stratus Properties has asked for $334,000 for the demolition work, lead and asbestos removal, and site preparation. She said the project will create 30 to 40 full-time jobs and that Stratus Properties is requesting a business tax credit of $366,500.

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