Gallery Package Approved
GRAND RAPIDS — Although city commissioners had already approved a development assistance package proposed by the Downtown Development Authority for The Gallery on Fulton project, the DDA added its OK last week to the $1.5 million package.
The package gives Two West Fulton LLC up to $724,500 in reimbursements for street and utility improvements the firm will make to the site at Division Avenue and Fulton Street, and for providing barrier-free access throughout The Gallery. The reimbursement will come from the tax-increment revenue the $32 million project is expected to generate.
The package also finances the $974,400 purchase of a portion of the 37,000-square-foot site for Two West Fulton. The agreement has the developer making a down payment of $120,000 with the DDA loaning Two West Fulton $854,400 at 4.5 percent interest to cover the purchase price. Two West will begin making interest payments on the note next year and start making payments on interest and principal in 2015, payments that will run through 2024.
DDA Executive Director Jay Fowler said Two West Fulton has given the city a $25,000 deposit for the property, which is owned by Parking Services, so the firm needs $95,000 to meet its required down payment.
DDA member Cathy Mueller said the board’s counsel Dick Wendt met with some of the board’s members before the vote to ease their concerns about how the DDA would secure the loan, an issue that was raised at the January meeting.
“I’m quite comfortable with the agreement,” said Mueller last week.
The terms require Two West Fulton to pay the DDA a prorated share of the principal if it turns any of the rental apartments in the project into condos before the loan is fully paid.
The terms also require Richard Curto of RSC Associates and Sam Cummings of Second Story Properties to personally guarantee the balance of the principal throughout the loan period. Curto is guaranteeing 70 percent; Cummings is guaranteeing the rest. Their firms make up Two West Fulton.
The purchase agreement for the property has to close by March 31. For the closing to occur, the developers have to prove they have their financing in place in order to get the DDA’s assistance. As of last week, that wasn’t the case.
Cummings told the DDA they hadn’t received confirmation of the construction loan or the financing needed for the 66 rental apartments in the project. But he added three banks have expressed an interest in The Gallery.
“I don’t want to throw a skunk on the table, but this is a difficult project to do,” he said.
“We’re already at the window. This is an attractive project for the banks because it’s mixed-use,” he added.
In addition to the apartments, The Gallery will be the new home of the Urban Institute for Contemporary Arts and will have another 2,500 square feet of retail space. Parking Services will keep about half of the site and build a 262-space ramp on it for $9.4 million.
“Staff feels this is an important project for that corner,” said Fowler.
Cummings said Two West commissioned a new residential study that would show a need for downtown apartments, like the ones going into The Gallery. He said the findings would be available this week. He said work on the project would begin this fall and be completed in 2010.
Mueller told Cummings she wanted the construction project to employ as many city-based sub-contactors as possible in light of the financial assistance the city is giving The Gallery.
“I think my record with the city speaks for itself,” replied Cummings. “Adding another level isn’t a problem.”