HighPoint Flats Gets First Residential RenZone Extension
The state government's first extension of the tax-free life of a residential Renaissance Zone in Michigan was an early Christmas present for supporters of economic development in downtown Muskegon.
Grand Rapids developer Jonathan Rooks of Parkland Properties LLC agreed last summer to purchase the old Hackley National Bank building from the Downtown Muskegon Development Corp. and turn it into HighPoint Flats, with retail space and condominiums. However, a critical condition had to be met before the sale was final: state approval of an extension of the Renaissance Zone there for 15 years.
"All the (Renaissance Zones) in Muskegon are set to begin phasing out in 2012," said Dan Rinsema-Sybenga, Main Street manager at the Downtown Muskegon Development Corp.
A state law passed last year allows extensions of the years of tax-free status on specific properties within Renaissance Zones, if the local municipality gives its consent and if the state is satisfied that the extension is merited. The city of Muskegon had approved the extension on the property Rooks wants to develop, and all parties were waiting for the Michigan Strategic Fund to give final approval.
That came just a few days before Christmas.
"Our request, I believe, was the first one made to the state of Michigan," said Rinsema-Sybenga. "This is the first Renaissance Zone extension under the new law."
He said the Michigan Strategic Fund approved the extension because Rooks' plans "would be a catalyst for other investment" at the 23-acre site of the former Muskegon Mall, which gave up the ghost in 2002.
A spokesperson for the Michigan Economic Development Corp. confirmed that the Muskegon extension is indeed the first for a residential Renaissance Zone.
The former site of the Muskegon Mall takes up eight city blocks, according to Rinsema-Sybenga. All but five of the buildings there have been cleared away; the remaining five are considered "historic," and the Downtown Muskegon Development Corp. wanted to save them if possible. Four of the buildings were sold, but the fifth — the original Hackley National Bank building — did not sell.
The eight-story building, which was last occupied by Comerica Bank, is almost 90 years old and "sort of an albatross," said Rinsema-Sybenga, so Rooks' proposal last summer to turn it into 37 condos plus commercial space was well received.
Rooks also will buy two lots adjacent to the building and said he plans to invest $4 million in the property, which includes renovation of the tower plus construction of two-story additions next to it. The additions will contain retail space and parking garages with condo units on the top floor, making a total of 43 condo units at HighPoint Flats.
Rooks said some people expressed interest in the condos but that was "premised on whether we got the Renaissance Zone (extension) or not. Now we feel very confident."
The basic condos will range in price from $69,000 to $199,000, but units can be combined, he said. Rooks said he plans to break ground in the spring.
"I just started selling them," said Rooks. "I've got 14 reservations already," he said in an interview just before Christmas.
Rooks said that the support of the Downtown Muskegon Development Corp. and the state's extension of the tax abatements for 15 years "is the kind of partnership that transforms lives and communities and gives our company the confidence to break ground in 2008."
The waiver of state income tax and local property tax until 2023 for the future condo dwellers serves as an incentive to "attract buyers to properties that can become cornerstones for change for a city," said Rooks.
"In our experience with similar development projects in downtown Grand Rapids, incentives like these reduce the development and sales timeframes and get urban areas rocking again with a group influx of local activity and spending," he said.
Rooks is the developer behind a number of condo projects in Grand Rapids, including City View, Monroe Terrace, Union Square and The Boardwalk.
The Hackley National Bank building, sometimes referred to more recently as the Comerica Bank building, was erected in 1919 and has 60,000 square feet on its eight floors.
In 1870, Muskegon National Bank became the first U.S. chartered bank based in Muskegon. In 1890, it became the Hackley National Bank. In the mid-1970s, Hackley Union National Bank was bought by Detroit Bank Corp., which changed its name to Comerica in 1982. Comerica, which occupied the ground floor, moved out in 2001 when the Muskegon Mall was suffering the effects of competition from two new malls relatively close by: the Lakes Mall in adjacent Fruitport Township and RiverTown Crossings mall in Grandville.
Sears was the largest anchor store at the Muskegon Mall; it moved to the Lakes Mall in 2001. The second-largest retailer in the Muskegon Mall was Steketee's, which closed in 2000.
Rooks has named his project HighPoint Flats because the former bank building is the tallest building in downtown Muskegon and is located on high ground near Western Avenue and First Street. Rooks said the upper floors will offer tenants good views of Muskegon Lake and Lake Michigan.
The Downtown Muskegon Development Corp. is a joint venture of the Muskegon Area Chamber of Commerce, the Community Foundation of Muskegon County and the Paul C. Johnson Foundation. The group purchased the property shortly after the mall closed and has marketed its efforts through the area's economic development agency — Muskegon Area First — as part of its Muskegon Main Street program.
The former Muskegon Mall site's first new tenant in years moved in a few months ago, and there are at least 10 separate projects planned or in progress at the site. CQX