Old building gets a new start
Work is getting ready to start on one of downtown’s oldest buildings, which has been vacant for decades.
The Downtown Development Authority recently agreed to give the structure’s owner, Brookstone Capital LLC, a $50,000 building reuse grant that can be used to create barrier-free access, buy a fire-suppression system and prepare the ground floor for commercial use in the Watson & Heald building, a 124-year-old structure at 101 S. Division Ave. in the Heartside Business District.
“This grant really helps make this a workable project,” said DDA Executive Director Jay Fowler
Brookstone Capital, a Midland firm doing business as 101 S. Division Lofts for the project, is spending $4.5 million to revive the building at the southwest corner of Oakes Street and South Division Avenue. Clean-up has started and Fryling Construction will direct the historic rehab. The plan is to build commercial space on the ground floor and 20 subsidized rental apartments on the two upper levels.
“This is a very challenging building to develop,” said Mayor George Heartwell.
Brookstone Capital will use Low-Income Housing Tax Credits from the Michigan State Housing Development Authority to construct the apartments as a not-for-profit entity. The city agreed to grant the developer a payment-in-lieu of taxes, or PILOT, for the residential floors of the building. The 15-year agreement lets the developer pay the city 4 percent of the annual rental income instead of having the living spaces on the property-tax roll.
The company will develop the ground floor as a for-profit firm and the commercial space will be taxed.
Fryling Construction Project Manager Aaron Jonker said the building’s open courtyard will be renovated. The project also includes below-grade parking.
“We intend to re-use any salvageable materials during construction; this will create challenges and opportunities for the building as we move along,” he said.
“It fits with the theme of the project, as we are seeking LEED certification, which is the nationally recognized symbol demonstrating that a building is environmentally responsible, profitable and a healthy place to live,” added Jonker.
Brookstone Capital Principal Karl Chew said his firm would also seek historic tax credits for the project.
The Watson & Heald has had multiple owners over the last several decades. In the late 1990s, the city took possession of the building and brought it up to structural code. Then the city unsuccessfully tried to sell the building at a series of auctions.
Bantam Capital Investments LLC bought the building from the city four years ago and sold it to Brookstone Capital last year. Brookstone also used housing tax credits to develop the Metropolitan Park Apartments, a 24-unit complex at 350 Ionia Ave. SW.