Making headway in a turbulent year

December 29, 2008
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The country joined Michigan in 2008 in experiencing the impact of an economic recession that has likely gripped this state since the early stages of the decade. West Michigan fought to remain its typical resilient self.

The area had plenty more encounters with market gremlins, whether it was the turmoil in the financial community, the continuing shakeout in manufacturing or the plunge in commercial real estate activity, but the ’08 that wasn’t so great brought its share of optimism.

Some significant building projects continued to move forward. A microcosm of what it takes these days to pull off a project was typified in one prominent example. It was the most difficult financing deal that real estate developer Sam Cummings has ever put together, coming on the heels of the dozens of projects he has done locally since his first one in 1990 when he bought a single-story building at 517 Ottawa Ave. NW. But after nearly three years of looking for the right project that would provide a return and would impress commercial lenders, the preliminary site work for the (3)new Gallery on Fulton got under way started on the southwest corner of Fulton Street and Division Avenue.

In about 18 months, the development will be the new home of the Urban Institute for Contemporary Arts, as well as 56 apartments, retail space along South Division and a parking ramp with 262 spaces. Total cost of the project is expected to come in at around $34 million. But the scope of the project changed to meet market realities.

“Times have changed in terms of getting projects like that to be financed with the, call it, ‘competitive landscape’ in condominiums in West Michigan — and I’m not just citing downtown — and the relative difficulty of a project like that to get financed. That quickly faded, so to speak,” he said.

The economic tolls mounted in other areas throughout the year. When adding the significant increases in fuel prices to the dominoes tumbling from the mortgage and housing credit crisis to Michigan's slow evolution of manufacturing, an oppressive business tax and inept legislature, "the perfect storm" appeared more like a tsunami in ‘08.

This year followed a rough ’07 for bank stock prices and bank operating fundamentals. Credit quality problems dragged down earnings for nearly half of all U.S. banks. Rising levels of troubled loans in all major loan categories in the third quarter of ’07 — most notably residential mortgages — led to a steep increase in expenses to cover bad loans, according to the Federal Deposit Insurance Corp.’s Quarterly Banking Profile.

Although 10 large financial institutions actually accounted for half the decline in industry earnings in 2007’s third quarter, banks in the $1 billion to $10 billion asset range saw their charge-off/loan ratios jump from 19 basis points to 35 basis points, and their return on assets drop from 1.30 percent to 1.08 percent, according to Stifel Nicolaus bank analysts Ben Crabtree, CFA, and Stephen Geyen, CFA. They suggested early in 2008 that in terms of operating fundamentals, it’s very likely the decline isn’t over yet.  Crabtree told the Business Journal that the worst of it will likely be sometime in the first half of the year, but he had no way of knowing how long it will linger.

“… Credit losses seem headed higher, and it is quite possible that the weakness in the residential real estate sector may spread to consumer spending and the broader economy,” he and Geyen noted in Stifel Nicolaus’s Midwest Bank Monthly.

While much of the country was blaming the sub-prime mortgage fiasco for the rash of home foreclosures in the nation, another perpetrator was being held responsible for the problem here.

"The conventional wisdom for states like Michigan and Ohio is, it's an economic problem," said Shelby Chartkoff, lead researcher for a Kent County foreclosure study done by the Community Research Institute at Grand Valley State University.

"It's a systemic issue. A lot of people are dealing with job losses. It will take time to turn this around," said Chartkoff.

Chartkoff and CRI Executive Director Gustavo Rotondaro presented the findings of the study, which tracked foreclosures in the county from 2004 through last year, to the county's Finance Committee. The county funds most of its general operations with revenue from property taxes and County Equalization. Director Matt Wolford told the committee the large spike in foreclosures shouldn't affect county revenue in the short term.

Chartkoff said the foreclosure rate in the county rose by 175 percent from 2004 to 2007, going from 1,133 to 3,116. In just the past two years, she noted that 5,463 foreclosing actions were taken in Kent — a figure that equals 3 percent of all the 179,586 homes in the county.

Mortgage rates dropped 50 basis points the day after the U.S. Treasury announced in September it was bailing out behemoth mortgage financiers Fannie Mae and Freddie Mac, and that was the desired effect the federal government was looking for. Time will tell whether the move will actually resuscitate the hobbled housing market.

When Treasury placed Fannie and Freddie into a government conservatorship controlled by the Federal Housing Finance Agency on Sept. 7, it effectively shifted to U.S. taxpayers the liability for losses that might arise from the more than $5 trillion in mortgages the two mortgage giants collectively held — roughly half of the nation’s mortgage debt.

The action was meant to protect Fannie Mae and Freddie Mac from foreclosure loss, as well as give them the means to be more flexible to write and process more loans. According to plans, Treasury is temporarily increasing its credit line to both Fannie and Freddie and they, in turn, help shore up the beaten down housing market by buying or insuring more and more mortgages between now and the end of 2009. Then, in 2010, they’ll start decreasing their portfolios at a rate of 10 percent per year.

“Treasury has not nationalized Fannie Mae and Freddie Mac, but what they have done is create a process where they may, over time, invest as much as $100 billion into each of those two agencies, so that is really the limit of the tax payer obligation under the worse-case scenario,” explained Dana Johnson, chief economist for Comerica Bank. “It’s definitely the case that some taxpayer money is being put at risk, but the far bigger risk would have been to let the housing market dry up.”

Market turmoil spreads anxiety

In mid-September there was another in a series of rollercoaster rides for investors and another period of nervous uncertainty. The Dow Jones industrial average plummeted more than 500 points on the news that investment bank Lehman Brothers had filed for bankruptcy. Originally, neither the government nor private investors stepped in to help Lehman Brothers, and to some that was a signal that the Fed had drawn a line in the sand to let players in the financial market know the government wasn't going to bail out everybody that got into trouble. But days later, British bank Barclays announced it would buy Lehman Brothers' North American investment banking and capital markets operations.

Too, the American International Group, the world's largest insurer, began badgering the Federal Reserve for help in the form of a bridge loan because it was on the precipice of failure due to the collapse of the subprime mortgage market. The following day, the Fed agreed to give AIG a two-year, $85 billion emergency loan.

So how does a traditionally aggressive local businessman with proud community ties move forward during such scary economic times? Just ask Robert Israels. He had been interested in the Klingman Furniture Co. for more than 30 years. Now he owns it. And he has rebuiltit. The CEO and president of Israels Designs for Living said he was first attracted to the seller of fine furniture when he became a retailer in 1976. At that time, Klingman’s had been in business for roughly 85 years. The firm had its share of ups-and-downs over those years, and even rebounded from a close bout with bankruptcy in the late 1930s to develop a strong reputation as a seller of high-quality home furnishings.

When Israels was looking last winter for a site for his new Klingman's furniture showroom, he hired a consulting firm to do a $100,000-plus study of the Grand Rapids area. That report supported his idea to acquire the former Rogers Department Store building on 28th Street and renovate it. The report also noted “the extreme need for high-quality senior housing — independent living — in Wyoming.”  Israels and his son, David, began work on plans for designing and building a nonprofit senior housing complex that could possibly cost up to $85 million, with funding hopefully provided by a federal HUD 202 grant.

Bob Israels wasn’t content with that project. The state agreed to extend the Renaissance Zone for the Aslan Building at 600 Seventh St. NW, and owner Israels is leasing the new space at less than the going market rate. Israels originally planned to install residential units on the building’s second and third floors. But when commercial firms began inquiring about that space, he began leaning toward creating some commercial space.

Early in 2008, front page business news included a transaction that may very well be the largest industrial property sale ever recorded in the metro area in regard to the number of buildings that changed hands in the deal. First Companies Inc. of Grand Rapids sold 16 buildings with 479,057 square feet of space to CORE Reality Holdings Inc., a real estate investment firm based in Newport Beach, Calif. Most of the space is leased and occupied.

Troubling economic forces dampened many — but not all — local nonprofit endeavors reliant on community support. Donations from the Meijer Foundation and other local philanthropists, plus the purchase of a key piece of real estate in the middle of Millennium Park by the county, have triggered a nearly $9 million, three-year project to construct trails and public amenities in the park starting this past spring.

Peter Secchia, chairman of the Secchia Millennium Commission, said the Fred Meijer Millennium Trail network will total 20 miles of developed trails inside the 1,500-acre park and will include bridges, raised boardwalks, a pedestrian-bicycle tunnel under a road, and two trailheads with restrooms, parking and picnic shelters. The project is being funded primarily through private contributions, a "lead gift" from the Meijer Foundation, and others from the Richard and Helen DeVos Foundation, Harvey and Annie Gainey, Dick and Sandy Hansen, Sidney J. Jansma Jr., plus Sandco Inc. and Maynard Avenue Transfer, a consortium of business entities owned by the Leonard Maas family. Kent County also provided $1.1 million, approved by the county commission, for acquisition of land owned by the Maas family. Securing the Maas acreage was a "critical component in making this project a reality," according to a news release from the county, because the 114-acre parcel extends about two-thirds of the way across the middle of Millennium Park.

Secchia said 93 percent of the land planned for Millennium Park has been acquired or is under contract. Millennium Park is being developed by the Secchia Millennium Commission and Kent County. The latest $9 million expenditure will make a total of about $32 million invested so far.

Designs on local talent

Design West Michigan launched some key initiatives intended to make design more of a driving force in the West Michigan economy.

Spokesman John Berry said the group met early in the year to develop plans for a “Design Thinking Institute” and “Design Swat Teams” to help West Michigan businesses or organizations in critical situations where design can play a pivotal role. DWM descended from the design council organized about a year ago by the Zeeland economic development organization Lakeshore Advantage as one of the 12 Workforce Innovation in Regional Economic Development grant projects. Berry, a senior consultant with industrial design firm Greystone Global, said the Design Thinking Institute is like a four-year college but rather like a “two-day experience” that would amount to “design for non-designers” by providing managers, local business people and others with “exposure to design thinking,” which is “quite

Avalon Laboratories Inc., a member of the West Michigan Science and Technology Initiative, received this year an infusion of $66 million to accelerate its growth. The $66 million investment was made by  American Capital Strategies Ltd. of Maryland, the nation's  largest publicly traded private equity fund and one of the largest publicly traded alternative asset managers. The company has a portfolio of life sciences and medical technology companies and typically invests from $5 million to $800 million per North American company. The investment in Avalon was based on the work Avalon has done over the past four years in Grand Rapids and its "excellent track record" in the medical device industry, according to American Capital Strategies.

New retail-based projects were shoved to the back burner on a frequent basis in 2008. The proposed Orchard Park development, which hinged on a Cabela's sporting goods store, has been delayed by the developer for at least a year.

Dennis Highby put the temporary brakes on the project. Cabela's president and CEO, announced in January that "fourth quarter results did not meet our expectations," and that part of the company strategy now "involves an ongoing review of our previously planned store openings." The company would "pare our store openings in 2008 to just two of the previously planned retail stores," he added. Walker Orchard Land Partners had been planning on Cabela's building a store here in 2009.

Zachary J. Bossenbroek, a spokesman for Walker Orchard Land Partners, said that a Cabela's "delay until 2010 works out a lot better" for getting the public infrastructure completed in time at the 300-acre, $200 million proposed development site. He added that the retailer has indicated to the developer that "they want to be in West Michigan and are firmly committed to our site."

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Cascade Engineering’s Michael Ford and Jessica Lehti display a blade mechanism for use in wind turbine production.

Getting Wind Of Growth

Cascade Engineering believes it knows which way the wind is blowing — toward a growing market for products that help conserve energy or generate it from sustainable, clean sources such as wind and solar.

This year the plastic products manufacturing company began production of blades and rotors for the Swift Rooftop Wind Energy System, which has been produced in Scotland for almost five years. Other components of the Swift electrical generator turbine will be shipped to Cascade Engineering, which is assembling the complete turbine and serve as exclusive distributor of it throughout the U.S. and Canada. The first Swifts built by Renewable Devices in Scotland were sold in 2003. Cascade Engineering is well-known for plastic parts produced for the automotive industry, plus other plastic products for industry and consumers, including waste containers, medical devices and water purification filters used in developing countries.

Convention and Visitors Bureau President Steve Wilson made the 115-mile, eastward journey back to his hometown, Flint, moving into the executive director’s chair at the Ruth Mott Foundation. In 1993, Wilson took the reverse route when he came here to run the local CVB. Back then, the bureau had an annual budget of $400,000 and a staff of seven. That budget today is $4.2 million, a tenfold increase, and the bureau has 25 staffers who regularly tout the benefits of holding business meetings at DeVos Place and taking vacations along Michigan’s West Coast. In August, the CVB hired Douglas Small as its new president. Small, with 26 years of experience in the hospitality industry, comes to Grand Rapids from Denver where he is senior vice president of that city's Metro Convention and Visitors Bureau.

It was clear early in the year the new Michigan Business Tax was going to have a negative impact on the value of commercial real estate. That’s according to the Commercial Alliance of Realtors of West Michigan, which was seeking changes in the new law that replaced the old Single Business Tax last December. Stuart J. Kingma, president of CAR, was authorized by the board "to work as part of a task force with our state legislators in Lansing to not only make them aware of the magnitude of these consequences, but also to put into motion some possible solutions to this problem." Kingma said CAR joined forces with members of the Michigan Association of Realtors based in Lansing, and the Commercial Board of Realtors representing the Detroit area plus other out-state regions.

In 2008, the proposed development that could serve as the poster child for what defines a mixed-use project, was announced. It has the potential to be a 20-story building with the most “uses” under a single downtown roof since The BOB opened a dozen years ago at 20 Monroe Ave. NW. Not surprisingly, the new development is actually an expansion of The BOB. The Gilmore Collection, which owns The BOB and many other thriving restaurants in West Michigan, is part of the 20 Monroe Building Co. LP that is driving a development that would go up to the immediate north and east of The BOB on a city-owned parking lot that reaches east from Monroe to Ottawa Avenue. “It will be a tremendous thing for the city,” said Gregory Gilmore, Gilmore Collection CEO, after he and the city’s Parking Commission agreed to extend a purchase option for the property.

Gilmore said the project would have a 35,000-square-foot footprint and would feature a below-ground theater “similar to a House of Blues concept” that would accommodate 1,500 customers. He called the theater a “flex space,” as it would host a number of events besides concerts — such as plays, movies, and even wedding receptions and anniversary parties.

Bus rapid transit draws intrigue

It also became clear developers and investors were taking a renewed interest in Division Avenue as they learned more about the bus rapid transit project that the Federal Transit Administration has authorized The Rapid to develop along Division’s nine-mile corridor. The BRT line will run along Division Avenue from 60th Street north to Wealthy Street, through downtown to Michigan Street and then to Central Station, linking hospitals in and around downtown, research facilities on Michigan Street hill, five college campuses, and downtown venues such as DeVos Place and Van Andel Arena. The corridor runs through Grand Rapids, Wyoming and Kentwood. All in all, the BRT route will be just under 10 miles, with 19 station stops and 10-minute service frequency during peak hours. The BRT won’t be just another bus route, according to Peter Varga CEO of The Rapid: It will be light rail service on tires.

Pockets of the manufacturing sector continued to show growth. The first year of new ownership of Oliver Products Co. was encouraging for the 118-year-old West Side manufacturing business. Oliver Products, which had been a family-owned business until it was acquired by Milwaukee private equity group Mason Wells in May 2007, enjoyed a 10 percent increase in sales in the first quarter of this year, compared to a year ago. "We've had a good start to the new year," said President and CEO Jerry Bennish, who joined the company in September 2007.

Oliver Products provides medical packaging machinery and materials for Class II and III medical device OEMs, meal packaging products for foodservice markets, and niche food processing equipment with aftermarket support services. The company had sales last year of approximately $85 million and has about 265 employees in the U.S. and Europe: 235 of them are at the 162,000-square-foot plant at Sixth Street and Broadway Avenue on the northwest side of Grand Rapids.

The Medical Mile makeover continued in earnest in 2008. In mid-April, the Michigan State University groundbreaking for the Secchia Center medical education building took place featuring the crane-raising of the construction flag and words of encouragement from a group that included John Canepa, Peter F. Secchia, Lou Anna K. Simon, Joan Secchia, Donald Maine, Kim Wilcox and Richard C. Breon. Other guests assembled for a reception at Devos Hall. 50 Michigan State University College of Human Medicine students who will begin their second year of medical school in Grand Rapids this fall visited here earlier this month for a "vendor fair" put on by MSU.

As development continued to creep north into Wyoming from the M-6 interchanges at Byron Center and Wilson avenues, Byron Township was poised at mid-year to shepherd growth south of the highway. The Byron Township Board moved on a zoning ordinance change that will allow for mixed-use developments at the interchanges, as called for in the master land-use plan OK'd a few months earlier, said township planner Larry Nix of Williams & Works In addition, the township and the city put the finishing touches on a common outlook for handling the extension of utilities.

"(A highway interchange) comes with ramifications," Nix added. "For example, at 68th Street and 131, there are a whole series of businesses in a short stretch with lots of curb cuts. That creates traffic problems" with frequent turns in a busy area, he said.

Developers at the M-6 interchanges can probably expect attempts to better control curb cuts and traffic flow with the planned unit development approach.

"The relocation of Metro Health spurred lots of that growth and development, which helped spur Saint Mary's (Health Care) to be located in Byron Township," Nix added. "The planners in the township viewed that as being a good catalyst for other, related types of facilities, similar to the Metro Health facility. There are some very large tracts of land along M-6 and Byron Center and Wilson avenues that are conducive to development."

A Spartan effort

The acquisition of the Felpausch grocery chain helped Spartan Stores Inc. produce a strong fourth quarter to finish fiscal 2008 with a 36.4 percent increase in net earnings, the company said in May. For fiscal 2009, Spartan Chairman and CEO Craig C. Sturken said the company will continue its capital investment program, expecting to spend $60 million to $65 million mostly to upgrade Felpausch stores. “While the majority of these investments will be directed toward our Felpausch retail stores in order to bring them up to their performance potential, we will also invest in key Family Fare, D&W Fresh Markets and Glen’s Markets where we believe favorable market growth opportunities exist,” Sturken said.

The company has spent $85 million over two years on capital improvements, which he said have been a major spur for sales growth in spite of the limping economy.

A May ruling featuring a record assessment against Meijer Inc. for campaign finance law violations was unlikely to be the last reverberation from the privately held retail company’s missteps in trying to build a store in northern Michigan. The state Attorney General’s office said it would not pursue a criminal probe, but investigations into possible criminal violations by individuals are continuing in Grand Traverse County. A state Senate committee was expected to review proposed campaign finance legislation, and a public relations firm risked facing an ethics review by a professional organization.

The Secretary of State issued fines and penalties of $190,138 to Walker-based Meijer for skirting the campaign finance law in attempts to influence a 2005 zoning referendum and a 2007 recall election in Grand Traverse County’s Acme Township, where the company wanted to build a store. Secretary of State Terri Lynn Land said it was the largest amount the state has ever assessed for campaign finance violations.

The conciliation agreement included fines of $1,000 each for 11 payments to public relations firm Seyferth Spaulding Tennyson Inc. and nine payments to law firm Dickinson Wright. Neither firm is currently working for Meijer, company spokesman Frank Guglielmi said. Meijer took full responsibility for the campaign finance law violations and said it would institute closer control of companies it hires.

T. Michael Jackson, a public relations practitioner in Traverse City, said he requested that the national ethics committee of the Public Relations Society of America review SST’s participation in election activities.

Jackson, who has served on PRSA state and national ethics committees, said the organization’s code of ethics calls for disclosure of information. “In building trust with the public, a public relations firm should reveal all information needed for responsible decision-making, to be honest and accurate in all communications,” Jackson said. “One could question whether they were.”

In May, presidential candidate Barack Obama made a visit to jam-packed Van Andel Arena, an appearance that featured a cameo spot by John Edwards (remember him?). John (4) McCain also frequented West Michigan with campaign stops that included V.P. choice Sarah Palin.

A fair share of political intrigue was in the air when Betsy DeVos introduced her brother, Erick Prince, head of the federal contracting firm Blackwater, to a sold-out Economic Club of Grand Rapids in mid-year, she drew chuckles from the supportive audience when she mentioned her brother chose service as a Navy Seal after considering an appointment to the Air Force academy by none other than now Democratic nemesis Sen. Carl Levin.

Screening the green

The West Michigan Tourist Association opened the West Michigan Film Office in June. The office will work to bring the filming and production of feature films to communities throughout West Michigan. The announcement was made from the set of the film “Tug,” which was being shot by Hopwood DePree at his TicTock Studios in Holland. At least three other films were set to be shot in West Michigan pending approval of the state incentives. The West Michigan Film Office is led by Rick Hert, executive director of the tourist association.

The WMFO works closely with the Michigan Film Office, which is based in Lansing, identifying film leads that would work well in a West Michigan setting. Lockwood said the Michigan film incentives legislation, which took effect in April 2008, had already brought in more than $200 million in film revenue to Michigan.

At the state level, there is no plan to meet ongoing criticisms by limiting the amount of money the Michigan treasury will pay out in incentives to grow a motion picture industry in Michigan, according to a spokesperson for Gov. Jennifer Granholm.

It was announced in June that the western half of the state was planning to get some face time with Lansing. The Grand Rapids Area Chamber of Commerce went on to hold a two-day Regional Policy Conference for hundreds of business, civic and government leaders in downtown Grand Rapids on Sept. 18 and 19. The inaugural conference at the JW Marriott and DeVos Place was for business and community leaders from throughout western Michigan.

The Grand Rapids chamber brought together a business community representing the entire West Michigan region, plus policymakers and business leaders from across the state and out of state, to determine the most pressing issues facing this changed economy.

Change was the operative word. The extreme frustration with the state legislature by those attending the Policy Conference was apparent from the genesis of its planning — and was certainly represented throughout the two days of conference discussions. It boiled up to become the only point during a session on governance.

West Michigan’s Big Three furniture makers, for the first time, sat together on the stage and pinpointed policy issues that impede or debilitate their success. Leaders from Haworth, Herman Miller and Steelcase, which together manufacture 40 to 50 percent of all office furniture worldwide, took the time to plan and execute the presentation.

The panel members who opened the session on governance were equally precise, and represented the Center for Michigan “think and do tank” and the Mackinac Center, along with the leader of the historic unification of the governments of Louisville and Jefferson County, has led government mergers in a number of states.

Center for Michigan founder Phil Power told the group: “If we keep doing what we’ve always done, we will fail. We need accountability and bipartisan leadership in the (Michigan) legislature. Our legislature needs to be effective and efficient.”

Conference planner and former Perrigo chief Michael Jandernoa led the group to identify the five most important issues: remove barriers and create rewards for local governments to consolidate services; repeal or modify state term limits; elect honest, visionary leaders; set the benchmark for public pay and benefits; eliminate the Michigan Business Tax and cut state spending.

Call center job-provider

Priceline.com, the worldwide online travel company that uses "Star Trek" actor William Shatner in its advertising has leased almost 46,000 square feet of space in the former Siemens Dematic facility on Eastern Avenue for a call center and initially bagan the process of hiring 50 to 100 new employees from the local area.

The Michigan Economic Growth Authority, in collaboration with the city of Wyoming and The Right Place Inc., announced in June that about $5 million in state and local tax credits and abatements had been offered to Priceline.com as an incentive to select the Wyoming location. At the time, the Michigan Economic Development Corp. estimated that the new call center for the company's Booking.com division would create 424 jobs over the next five years.

"We literally have already started hiring," said Bob Mylod, chief financial officer of Priceline.com, which is headquartered in Norwalk, Conn. While the company sought to hire 50 to 100 people to start, he said, "We've rented quite a large amount of square footage … we could have hundreds of people in that center over the next year or two."

Priceline was granted a Michigan tax credit valued at $3.9 million over seven years, and the city of Wyoming agreed to a seven-year tax abatement worth $1.1 million. In addition, the MEDC offered up to $200,000 in job training assistance through the Economic Development Job Training program.

Mylod said the available employee base in the Grand Rapids area should "fit particularly well with what we are trying to do" with the new call center for hotel bookings, which will serve many offshore customers. He noted that a significant part of the population here can speak more than one language, including Asian languages.

The former Siemens Dematic facility at 4147 and 4247 Eastern Ave., now owned by Franklin Partners of Chicago, had been vacant since July 2006.

Spectrum Health cut ribbons for the Lemmen-Holton Cancer Pavilion, which opened June 30, another achievement in Spectrum Health’s 21st century facilities investment. Spectrum Health treats about two-thirds of the approximately 3,000 new cancer patients diagnosed in Kent County annually.

The entertainment cost-cutting scenario wasn’t in play in the 2008 season for the Grand Rapids Rampage, as the Arena Football League franchise had nearly 10 percent more paying customers for the team’s regular home season than last year — and last year’s attendance was up by just under 10 percent from the previous season. Home attendance averaged 7,189 this past season, up from last season’s average of 6,549, despite a slight dip in season-ticket sales. The team’s outlook had been further boosted by a good early showing in the post-season AFL playoffs..

Rampage General Manager Scott Woodruff said the home attendance increase came from a striking rise in group-ticket sales, which were up by more than 2,000 from the 2007 season, and from walk-up sales for single-game tickets, which were up almost as much as group sales.

But the Rampage’s efforts were not enough to keep it from being sidelined with the rest of the AFL heading into the 2009 season. The cancellation of the upcoming campaign was made in an effort to preserve the long-term viability of the league, but brought with it a good share of skepticism regarding the future of the sport in Grand Rapids, the league’s smallest market.

Perrigo keeps expanding

Perrigo Co. continued to be a shining star on the West Michigan economic landscape, announcing a $25 million expansion of its manufacturing and production facilities at its headquarters in Allegan. “This is a planned expansion we’ve been planning for a quite a while,” said Arthur Shannon, vice president of investor relations and communications.

In July Perrigo announced its intention to invest $10.5 million to expand its training, development and office facilities in Allegan. The company said that expansion will add some 400 jobs over the next five years and will set the stage for its future growth. That project received state tax credits valued at $8.4 million over the next 12 years.

“Perrigo’s plans are one more step in reshaping Michigan’s economy and West Michigan’s leadership position in the health and science industries,” said Perrigo’s president, chairman and CEO Joseph C. Papa.

The expansion was supported by state tax credits valued at $8.4 million over the next 12 years. In addition to the state incentive, the city of Allegan approved real and personal property tax abatements with an estimated value of $1.4 million

In light of declining passenger totals, the Kent County Aeronautics Board approved amendments this year to Gerald R. Ford International Airport’s 2009 capital budget, as well as its five-year capital improvement plan that would defer or delay some already-approved capital projects. The revised 2009 capital budget totals $7.84 million, and the revised capital improvement plan totals $13.7 million.

Airport officials once again participated in the annual JumpStart Air Service Development Program to meet with various airline representatives. 

Airport Spokesman Bruce Schedlbauer said Ford International asked to meet with nine airlines, of which four declined and five agreed. Low-cost carriers Air Tran, Frontier and Southwest were among those that airport officials sat down with. Airline and airport representatives were given 20 minutes to discuss passenger air service issues and opportunities of mutual interest. It’s something akin to “speed dating.”

Ford International eventually secured a low-cost carrier to serve the region: Las Vegas-based Allegiant Air is moving its flight operations from the Lansing Capital City Airport to Ford International and will begin offering nonstop flights to Orlando and Tampa Bay on Feb. 3 and Feb. 4, respectively.

There aren’t any projects on the local horizon of the magnitude the River House has been as it was complete this year. The Robert Grooters Development Co., owner of the $90 million structure, said the 207 condos in the largest residential structure in Michigan were rapidly filling up.

Casinos — all bets are off

A spokesperson for the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, which has been planning its Gun Lake Casino here since 2001, predicted the long court battle with a local anti-casino group would be coming to a close, in the tribe's favor. But legal appeals continue to extend the process heading into year-end.

Meanwhile, yet another tribal casino was announced in West Michigan, in the Muskegon area, and another new tribal casino was nearing its opening in Battle Creek. At the same time, the casino industry was showing signs of a slowdown due to the ailing economy.

In mid-year Magna Entertainment Corp. of Aurora, Ontario, announced the sale of Great Lakes Downs in Fruitport, near Muskegon, to the Little River Band of Ottawa Indians for $5 million. Magna had closed the 85-acre Great Lakes Downs racetrack last November. The Little River Band already operates a casino in Manistee.Both the Gun Lake Casino and a Fruitport casino would be less than 25 miles from Grand Rapids.

 Convention and Arena Authority Chairman Steven Heacock wants an outdoor amphitheater to be a “landmark structure” for musicians and music fans and a “postcard venue” for visitors and residents, if the proposed $30 million facility gets built.

The building plan has covered seating for up to 6,000 and room for up to 7,000 more on the venue’s spacious lawn, along with parking and possibly some VIP suites. The blueprint, which hasn’t been finalized, shows a ticket booth; concession stands; a brick plaza that could hold separate events, like ethnic festivals, of its own; a staging building; a main stage; and an auxiliary stage. Everything would be built to meet LEED standards.

All that is needed to set a starting date for an estimated 18 months worth of construction is the facility’s final design and $30 million — not exactly a trivial matter. But one big hurdle has already been cleared: the amphitheater’s location.

Millennium Park is the chosen location. It sits on 1,500 acres in northwest Kent County and is owned by the county. A $50,000 site study commissioned by the CAA, paid for by SMG, and conducted by Progressive AE and FTL Design Engineering Studio revealed that a northeast corner of the park was best suited for the “postcard venue.”

Ripples from the May 29 AeroMed accident atop Spectrum Health Butterworth Hospital continued to reach across West Michigan. AeroMed Medical Director Dr. Ralph Rogers announced the rebuilding of helistops on Butterworth’s roof. Rogers told the Business Journal that landing spots across West Michigan were reviewed following the crash. One result is that patients being air-lifted out of Ludington’s Memorial Medical Center now face an ambulance ride first.

The University of Michigan and Urban Land Institute Real Estate Forum was held Oct. 15-16.

“West Side Story: Grand Rapids, Grand Vision, Grand Region” was the theme of the conference held in West Michigan for the first time.

The conference had been held for 22 years in the Detroit region. Planners say they took a chance in suggesting it move to Grand Rapids for the first time in its history, but the overwhelming response to the suggestion was not only positive but one of excitement.

GM shakeout hits home

Even as the General Motors stamping plant in Wyoming — apparently the last GM plant in West Michigan — winds down its final year of production, a vacant auto plant in Coopersville that was once part of GM was being eyed by potential buyers.

Employees at the GM plant on 36th Street in Wyoming, which began producing panels, fenders and other sheet metal parts in 1936, were advised by the company that the facility will be closed by the end of next year.

A GM spokesperson said lower demand for large pickups and SUVs, coupled with the distance between the Wyoming plant and GM plants it supplies, led to the "difficult decision" to phase out production there over the next year.

Chris Lee, a GM spokesperson in Warren, said approximately 1,340 UAW employees and about 180 salaried employees will eventually be affected.

Wyoming city officials were as surprised as the workers when a GM executive appeared at the 36th street plant and announced it would be closing in 2009.

"GM was our highest taxpayer, so we'll see a hit to our tax base that is significant. We figure the loss is about a million dollars in tax revenue to the city," said Wyoming City Manager Curtis Holt. He estimated that would be roughly about 7 or 8 percent of its total revenue.

Locus Development LLC signed its first office tenant for its mixed-use, two-building development Thirty-Eight, named for its address on Commerce Avenue SW in the Heartside Business District.

Locus Development partners John Green and Andy Winkel said Adtegrity.com will move its entire operations and 26 employees from Cascade Township to 15,000 square feet on the second and third floors of the development’s office building.

When Thirty-Eight is completed by the end of next year, the development will offer 68,000 square feet of office, residential and retail space across the two liner buildings and will be LEED certified. A city-owned seven-story, 360-space parking ramp is also part of the project. The office space will be in the building on Weston Street, while the residences will be located in the building on Commerce Avenue.

Spectrum Health officials, community leaders, physicians, staff and volunteers broke ground Aug. 26 on a new patient care facility at Blodgett Hospital. The addition is the centerpiece of a $98 million reinvestment in the hospital.

The 162,000-square-foot, five-story addition will include four patient care floors and one floor dedicated to mechanical equipment. It will house 131 patient rooms plus operating rooms and will be adjacent to the building facing Wealthy Street.

When renovations are completed in 2010, Blodgett Hospital will house 284 private rooms along with many other improvements.

When the mayors of five cities encouraged voters in August to reject a millage request for the Kent County jail, the hullabaloo created was an epic city-county fight. The final compromise for the issue at the heart of the matter, however, certainly makes it seem all the more a tempest in a teapot.

The mayors were at an impasse with the county in regard to county fees charged to cities for jailing city ordinance breakers. The mayors, prior to the millage election, had determined that the county was “double dipping” and should waive any fee. The county was demanding reimbursement for “housing” these rule breakers. The mayors cited continued declines in state revenue sharing and budget holes. But on Oct. 23 the Kent County Board of Commissioners agreed to lower by 25 percent the charge to cities for jailing lawbreakers arrested for violations of city ordinances. The county board would now like to negotiate for some of the amount cities capture through tax-increment financing authorities that would otherwise go toward voter-approved tax levies for the county corrections and the county senior citizen services millage. The TIFAs, such as downtown development authorities, are primarily an issue for the cities of Grand Rapids, Walker and Grandville, three of the county’s most bustling economic centers. The tax capture in 2007 for the three cities combined was $389,247 — money the county insists should be given to the voter approved uses.

Battle Creek in the game

United Solar Ovonic’s plan to build a 265,000-square-foot, 120-megawatt solar production facility in Battle Creek’s Fort Custer Industrial Park is part of a much larger overall growth strategy to rapidly expand capacity to meet the rising demand for solar products all over the world.

The Battle Creek facility will create about 350 new jobs at the company within its first three years of operation, and the company will be looking to fill jobs across a broad spectrum, from front-office support staff to technicians to high-level operations managers, said company officials, who noted the company move its equipment in during the January to March 2009 timeframe.

In what could prove to be another boon to the Battle Creek area, United Solar has an option to build a second $220 million twin solar cell manufacturing facility in Fort Custer that would create another 350 jobs down the road. As the company continues to grow, it will look for manufacturing sites internationally, as well, Trinske said. Presently, about 70 percent of UNI-SOLAR products are installed in Europe.

Meanwhile, Battle Creek Unlimited economic development organization announced a five-pronged plan to leverage current and future investments in food science, technology and education to revitalize and grow Battle Creek’s downtown business district. BCU officials estimated the revitalization plan could require more than $86 million in new investment and are looking into various public and private sources of funding.

The vision includes a new six-story, LEED-certified office building to be financed and constructed by a local developer McCamly Office LLC and leased long-term by Kellogg Co. The estimated $22.5 million project would enable Kellogg to relocate approximately 600 employees from its Porter Street office complex to downtown Battle Creek. The office tower would likely be operational in 2010.  A research center will be established to promote the creation and attraction of new companies and jobs by increasing research, development and commercialization of new technologies in food sciences and food protection.

As part of the plan, the W.K. Kellogg foundation has approved up to $35 million to support various aspects of the redevelopment. Foundation President and CEO Sterling Speirn said the money will be invested as opportunities arise that resonate with the foundation’s mission and vision. Kellogg has a rich legacy of funding food science and healthy living programs, as well as education, Speirn said.

Upscale department store Von Maur announced it will be the anchor store in The Village of Orchard Hills, the lifestyle center being developed at Three Mile Road and East Beltline Avenue NE by Robert B. Aikens & Associates.

Expected to open in 2011, it will be the Davenport, Iowa-based retailer's third Michigan store, joining locations in Ann Arbor and Livonia. Currently it has 23 stores in nine states.

Von Maur Marketing Director Kelli Fjeld confirmed the company's plan to locate in Grand Rapids. Von Maur plans to occupy 120,000 square feet in the 400,000-square-foot development, patterned after a Rochester Hills project by Aikens, of Birmingham. Construction is planned to being in early 2010.

Science, science, science …

(7) Sequenom of San Diego has completed its previously announced acquisition of Grand Rapids-based Center for Molecular Medicine, the certified clinical diagnostics laboratory that Spectrum Health and the Van Andel Research Institute founded two years ago. As part of the acquisition, Sequenom has formalized certain collaborative agreements with Spectrum and the VARI.

The laboratory has been renamed the Sequenom Center for Molecular Medicine. The advanced molecular pathology laboratory offers cutting-edge diagnostics, translational research and clinical trials. Its diagnostic services include robotic DNA and RNA extraction, DNA microarrays, multiplex protein detection, gene expression profiling and others. It combines the clinical resources of Spectrum Health with VARI’s translational research, bioinformatics expertise and the latest in genomics and proteomics technology.

Over the past five years, the West Michigan Science & Technology Initiative has grown into a comprehensive entrepreneurial support system, assisting more than 300 entrepreneurs every year in bringing their new life science and technology products to the market. WMSTI and its supporters came together in November at the JW Marriott Hotel to celebrate those achievements.

In a taped interview, Van Andel Institute Executive Director David Van Andel said WMSTI has pulled together the life science efforts throughout Michigan, particularly West Michigan. It’s one thing to have an idea or to have made a discovery, but it’s quite something else to take that idea or discovery and commercialize it, he said.  

“WMSTI has the unique ability to bring all the different players to the table that are necessary to take a discovery and commercialize it,” Van Andel said. “Without WMSTI, I’m not sure where an entrepreneur would go to find all the resources he needed to find in order to do the things that have to be done.”

Michigan State University’s commitment to putting its own money into a cutting-edge nuclear research facility helped to sway the U.S. Department of Energy to award the project to Michigan State University, a DOE spokeswoman confirmed in early December.

Neither MSU nor the DOE were releasing budget figures for Facility for Rare Isotope Beams in the wake of the announcement that delighted university and business leaders across the state. The project is expected to cost $550 million, but Congress has not yet appropriated the funding, DOE spokeswoman Bethany Shively said.

MSU lobbied heavily to win the Facility for Rare Isotope Beams, a cutting-edge physics laboratory that would replace the National Superconducting Cyclotron Laboratory on the East Lansing campus. The DOE picked MSU over the University of Chicago/Argonne National Laboratory.

Construction is expected to begin in 2013, last for about four years and bring 5,000 jobs to Michigan, according to the Anderson Economic Group, which prepared an economic analysis for MSU’s application. The economic impact for the state would amount to $1 billion. The facility would generate $187 million in state tax revenue over 20 years.

Once the research facility is operational, it is expected to employ 400 people. Currently, MSU employs 300 at the NSCL, 100 of them students, said communications manager Geoff Koch.

Worldwide food giant Nestle sent key executives to Gerber Products — Nestle Nutrition to announce a $75 million investment that will create more than 200 new jobs over the next 10 years, as well as retain 1,100 existing jobs.

The state of Michigan granted Nestle an Agricultural Processing Renaissance Zone status at the Gerber plant that is home to all of Nestle Nutrition's R&D infant and toddler food products worldwide.

Officials indicated at a news conference the benefit of the Agricultural Processing Zone will be worth an estimated $43 million. Companies that commit to certain employment and investment benchmarks in the zones are eligible for the major tax breaks.

The investment will be used for infrastructure upgrades, process improvements and expansion of operations, according to Kurt Schmidt, CEO of Nestle Nutrition North America.

Company officials also indicated Gerber plans to open an $8 million call center in Fremont to market the company's infant and juvenile life insurance products. No indication was given regarding the number of jobs that might be added to the existing call center staff located in Fremont.

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