Two West Fulton Gets Project Loan
GRAND RAPIDS — The Business Journal has learned that Two West Fulton LLC will meet the city’s closing deadline to purchase half of a city-owned parcel on the southwest corner of Fulton Street and Division Avenue for The Gallery on Fulton project.
Two West Fulton is a partnership between RSC Associates of Chicago and Second Story Properties of Grand Rapids.
Second Story Properties President Sam Cummings told the Business Journal that the firm received the financing they needed earlier today to build the $34 million development that consists of a new home for the Urban Institute of Contemporary Arts, 66 rental apartments and ground-floor retail space along Division Avenue.
The city set the end of this month for closing, after granting the project three deadline extensions. Cumming said Two West Fulton would close the deal on either Friday or next Monday, with May 31 falling on a Saturday.
The development firm will pay $974,000 for about half of the former City Centre parking ramp site. Two West Fulton will give the city $120,000 as a down payment on the property and borrow $854,400 at 4.5 percent interest from the Downtown Development Authority to complete the purchase. Two West Fulton will begin making interest payments next year and start making principal and interest payments in 2015. Loan payments will run through 2024.
The DDA will also reimburse Two West Fulton up to $724,500 for street and utility improvements at the site and to give the building barrier-free access.
The state granted Two West Fulton a $1 million state business tax credit in 2005 when the project was estimated to cost $20 million. With a $34 million price tag today, the firm is asking the state for an additional tax credit of $2.3 million.
Parking Services, which owns the property, will build a 262-space ramp on slightly more than half of the 37,000-square-foot parcel for $9.4 million.
Now that the firm has its financing, Cummings said UICA can proceed with its $6.5 million capital campaign. UICA intends to buy its space in The Gallery and the agency’s Executive Director Jeffrey Meeuwsen said about $3 million had been raised in February.
Cummings said the financing limbo Two West Fulton found itself in, due to the recent credit crunch that emerged from the residential mortgage crisis, slowed the UICA fundraising effort. UICA will own 32,000 square feet in The Gallery.
Two West Fulton plans to begin construction this summer and the work is expected to take 18 months to complete.