- change ups
Two East Meets Two West
GRAND RAPIDS — After hearing that his building was an embarrassment for a critical corner of downtown and that his renovation plan wasn’t the best use for the site, developer Robert Tol told city commissioners last week that he will start renovation work within 60 days or he will sell the vacant Junior Achievement building to another developer.
“I’m trying to develop it and sell it, whichever comes first,” said Tol.
Tol has owned the two-story structure on the southeast corner of Fulton Street and Division Avenue for four years. Back then he planned to renovate the existing floors and build condominiums on the four stories he planned to add to the building, a project that would have cost him $4.6 million. But today, he plans to invest $3 million to refurbish the building for office and retail uses.
Tol told commissioners that a “horrible banking economy” has made it difficult for him to get anything done with the building. He said he has spent $300,000 on the structure in just the past 18 months and needs to get the building developed so he can meet his payments. He also said a start-up bank is in line to lease a portion of both floors.
“We have a contract with them, but we don’t have a lease signed,” said Tol, who is doing business as Two East Fulton for the project.
Tol said he wants to complete the renovation by August, the month the bank wants to move into the building. He also said he was trying to fill the remaining space with a grocery store, but hadn’t had any luck. First Ward Commissioner James Jendrasiak felt that would be a good use for the building.
“It’s needed a lot more than more parking spaces and more condos,” he said. “I think Spartan Stores would be chomping at the bit to get something downtown.”
Jendrasiak didn’t feel the $8 million D&W Fresh Market that Spartan Stores plans to build this year on Fuller Avenue NE near Michigan Street officially qualifies as being a downtown grocery store.
Even though Mayor George Heartwell called Tol’s building an embarrassment for the corner, and even though he warned him he shouldn’t ask the commission to amend the brownfield he was awarded in 2005 to make his structure more marketable to another developer, and even though Commissioners David LaGrand and Walt Gutowski told Tol they didn’t think his tenant plan was the best use for the property in a developing arts and entertainment district, city commissioners unanimously granted Tol’s request last week after they tabled his request the previous week.
Should the state go along with the amendment approved by the city, Tol will get $471,000 at 4 percent interest for interior demolition, site preparation and public improvements, and a Michigan Business Tax credit of $330,000 over a period of years — down from the $443,800 credit the project was approved for back in 2005.
City Economic Development Director Kara Wood said Two East Fulton can’t begin to collect the incentives until the project is completed. Wood also said Tol owns the parcel just east of the JA building and that he tentatively plans to put a nine-story building on the site for retail and housing. Tol said that project would cost $22 million to construct, but added that he needs an infusion of cash from another developer to build it.
“I ran out of that much money years ago,” he said.
In addition to amending the brownfield for Two East Fulton last week, commissioners held a hearing later the same day to amend a brownfield for Two West Fulton.
Two West Fulton, a partnership between Second Story Properties and RSC Associates, plans to build a $34 million project on city-owned land at the southwest corner of Fulton and Division, across from Tol’s project.
Known as The Gallery on Fulton, the building will be a new home to the Urban Institute for Contemporary Arts (see story on page B9), 66 rental apartments and about 2,500 square feet of retail space. An amendment would allow Two West Fulton to apply for a state business tax credit of $3.3 million, which is $2.3 million more than the state gave the initial brownfield when the original development was a $24 million project.
Two weeks ago, city commissioners approved a development package proposed for the project by the Downtown Development Authority. That agreement has the DDA financing the bulk of the property purchase for Two West Fulton through a loan of $854,000 at 4.5 percent interest. The package also gives the developer a tax-increment reimbursement of $724,000 for installing barrier-free access in the building and for other improvements.
Members of the DDA are expected to vote on the development package on Wednesday.