- change ups
Third Coast Gets Its Brownfield
GRAND RAPIDS — City commissioners unanimously approved a brownfield tax credit last week for Third Coast Development Partners LLC, which plans to put up a new building at 1697 Michigan St. NE.
Commissioners also gave Two West Fulton LLC more time to close on a piece of city-owned property at the southwest corner of Fulton Street and Division Avenue, although not unanimously.
Third Coast, owned by developers Dave Levitt and Brad Rosely, plan to build a single-story, 22,000-square-foot building on the former Bishop’s Furniture site and then lease the structure to Spectrum Health. Spectrum will use the building as a child care and development center for its Grand Rapids and East Grand Rapids employees and close its current child care center on Lake Drive SE. The property is situated about a mile east of the Michigan Street “Medical Mile” developments, which include the Spectrum Butterworth campus.
“If you think about it, strategically it’s located kind of at the nexus of Kent Community Hospital, Spectrum Health Butterworth and Spectrum Health Blodgett. It’s about a mile from each of those campuses that Spectrum runs,” said Levitt of the property.
Third Coast will invest $3.44 million into the project, which could get under way with the razing of the furniture store later this month. The state’s date for approving Third Coast’s brownfield request is April 22. The firm is asking for a state tax credit of $344,425 and a brownfield reimbursement of $380,545 for demolition, site preparation, and lead and asbestos removal.
“It should take approximately nine years to reimburse them for this project,” said Kara Wood, city economic development director. “Once the reimbursement is done, the tax reverts back to the city.”
Wood told commissioners that Spectrum will transfer 15 employees from East Grand Rapids to the new center, and that shift should add $5,625 to the city’s income-tax roll each year. Wood also said Third Coast made changes to the site plan to keep parking on Michigan Street to a minimum.
“This helps pave the way for the development Spectrum is doing in East Grand Rapids,” said Levitt of the health system’s $100 million project planned for Spectrum Blodgett.
Deputy City Manager Eric DeLong told commissioners last week that despite all the progress Two West has made in the last two months on delivering The Gallery on Fulton project to the former site of the City Centre parking ramp, the developers needed a fourth extension to close on the property sale with the city. Commissioners responded by extending the closing deadline another 60 days until the end of May.
“I want to applaud the developer for moving forward with this project,” said 1st Ward Commissioner Walt Gutowski of the development, which is valued at $34 million.
Mayor George Heartwell favored extending the deadline, too, because Two West and the Urban Institute for Contemporary Arts, targeted to be the anchor tenant in The Gallery, have made strong financial commitments to the project and have enough at stake to make sure it gets built.
“This developer has another $600,000 invested in this project. The UICA has several millions invested in this project,” said the mayor.
The only holdout in giving Two West the extension was 1st Ward Commissioner James Jendrasiak. He argued that the current project, which is comprised of UICA, 66 rental units and 2,500 square feet of retail space, wouldn’t have been approved a few years ago when Two West won the RFP competition the city held for the property.
DeLong said the developers needed an extension because a financing partner they were counting on has backed out of the project. That move has forced Two West, a partnership between Second Story Properties and RSC Associates, to find another source of revenue, and DeLong said the partners were working closely with a local bank to finance The Gallery.
“The project is before another financing institution and is tracking well,” he said.
Downtown Development Authority Counsel Dick Wendt said he has met with the unidentified lender, which has ordered an appraisal of the project. Wendt said bank officials told him the appraisal should be done by next week, a date that is past the March 31 closing date for the sale, and then it would be about another 30 days before they make a decision on the loan, which pushes the timeline into the middle of May, or two weeks prior to the next closing date.
“Except for the financing piece, all the other conditions for closing have been met,” said Wendt.
Wendt is involved because the DDA is financing the purchase of the city-owned parcel for Two West. The firm is buying half of the site for about $950,000. The DDA is lending Two West $854,000 and the developer is responsible for making a $95,000 down payment on the property. That is the amount Two West gave the city for its most recent extension.
“We have their check at this time,” said DeLong.
Commissioners awarded Two West six-month extensions on the closing date in January and July of 2007 and two-month extensions in January and April of this year. Including the $95,000 the firm just handed over to the city, Two West has placed a nonrefundable deposit of $120,000 with the city for the property.
Jendrasiak asked DeLong why the financing partner was no longer with the project, and all DeLong told him was that it had nothing to do with the project. Jendrasiak then asked him who dropped out, and DeLong said that lender’s identity was irrelevant now.
Second Ward Commissioner David LaGrand suggested that the city give Two West its $95,000 back. “I don’t feel the need to receive the money because I’m certain the project will go forward,” he said.
LaGrand said he felt too many people are overreacting to the current credit crunch that is affecting businesses and homeowners in various parts of the country.
“There is a tendency for overreaction,” he said. “I think it is important for the city not to be a part of that overreaction.”