City moves North Monroe project ahead
After years of trying to secure public parking for the business district and his construction project, developer Jack Buchanan may finally get what he has doggedly asked the city for.
City commissioners agreed last week to enter into a tentative agreement with Irish Twins Group III, a development firm that has Buchanan as its managing member, to buy a portion of an Ionia Avenue parcel in the Monroe North Business District and build a parking lot on it. A number of “performance targets,” though, have to be met before the contract can be finalized.
“I think we’re being very prudent in investing in that project,” said Mayor George Heartwell. “It’s fair to say that we’re not making the investment upfront.”
The agreement requires Parking Services to buy 48,000 square feet at 801 Ionia Ave. NW for $1.6 million, the recently appraised value of the property. Then the department will build and operate a public lot with 139 spaces there and add 40 on-street, metered spaces on Ionia. The spaces are estimated to cost $1.2 million, and would bring Parking Services’ total investment in the project to $2.8 million.
“Over a 30-year timeline, it’s profitable. But early on there are cumulative losses that Parking Services would absorb,” said Pam Ritsema, the department’s director.
The agreement requires the Irish Twins Group to invest $5 million into the project and develop a minimum of 29,000 square feet of space on the site of the old Imperial Metals factory. Buchanan said there is nearly 40,000 square feet to work with across two two-story buildings, and Irish Twins plans to renovate for office space. According to the contract, the finished project must have a taxable value of $2.9 million.
“We don’t have anybody signed. We have a number of prospects and two are in the suburbs,” said Buchanan. “North Monroe has needed parking for a very long time and they need to see parking before they commit.”
The city intends to issue bonds to pay for much of its portion of the project: up to $3 million for up to 30 years at an interest rate of less than 7 percent.
“The payback for the debt would come from (parking) proceeds and the tax-increment tax,” said Jana Wallace, debt and authority finance officer for the city.
Ritsema said the city would get $1.1 million in brownfield tax credits from the project, $280,000 from the Monroe North Tax-Increment Financing Authority, and $500,000 from the developers ($50,000 a year for 10 years) for a total of $1.88 million — more than enough to cover the property purchase. Ritsema said her department needs those dollars because there won’t be much nighttime parking revenue coming from the lot.
“It’ll probably take about 10 years for us to break even (at the lot),” she said. “We will need to be a patient investor to get our investment back.”
The deal won’t close until all the performance targets contained in the term sheet are met. For its part, the Irish Twins Group must: have its project approved by commissioners; be current on all taxes, water and sewer charges; survey the property; prove its financing is in place; provide a contract with a contractor; have title insurance; pay for the utility easement; and present at least one letter of credit for $115,000, among others.
“This is typical of our development agreements. If they are able to meet all of their obligations, I expect that we will be able to begin construction in the spring,” said Ritsema.
“If we don’t get financing at an appropriate level, we can pull the plug,” said Deputy City Manager Eric DeLong of a clause in the agreement.
But 1st Ward Commissioner Walt Gutowski thought it was a bad idea for the city to enter into the agreement because he felt the property’s price, appraised in April at $32.80 a square foot, was too high.
“I think the acquisition price is way out of bounds,” he said. “And I can’t support it for that reason.”