Housing still being built downtown
Although the brakes have been applied to residential construction in downtown since the housing market crashed nationally in 2007, activity hasn’t exactly come to a screeching halt.
In fact, if everything goes as planned, there could be as many as 158 additional new and renovated housing units downtown by this time next year. They would join the 1,100 or so that were built in the district from the heyday construction years of 2001 through 2007.
The first new units are coming from Locus Development, which is putting its finishing touches on Thirty-Eight, a mixed-use project at Commerce and Weston SW that will add 35 apartments and eight condominiums to the sector’s residential market when it’s completed this spring.
Meanwhile, Dwelling Place of Grand Rapids Inc. has its sights set on renovating 14 apartments in Goodrich Apartments at the corner of Goodrich and Division in the Heartside Business District.
And Brookstone Capital LLC is back for a third kick at the downtown residential can, as it intends to renovate three structures there. The Midland-based investment firm, led by CEO Karl Chew, has proposed to historically restore the buildings at 209 and 217 S. Division and at 17 Williams St. SW.
At first, the company planned to carve out 42 one- and two-bedroom apartments in the structures. But Operations Manager Kristine Hibbard told the Business Journal that further looks at the project revealed there was room for three more units, bringing the total number of apartments to 45.
“After several architectural reviews, it appears there will be a total of 45 units,” wrote Hibbard in an e-mail, adding that Gary Breen, of Concept Design Studio in Norton Shores, is the project’s lead architect.
The ground floors of each building will contain live-work units.
Chew said Brookstone will put $11 million into the renovation work, an investment that includes private equity. But because the apartments will qualify as affordable housing and will do so without a rent subsidy, and because the restorations will be done according to historical standards, the firm is looking at a number of sources for financing.
“The proposed historic rehabilitation of the three buildings will require multilayer financing consisting of federal and state historic tax credits, Michigan brownfield tax credits, low-income housing tax credits and private debt — all important components to make the project financially feasible,” said Hibbard.
Brookstone has applied to the Michigan State Housing Development Authority for the low-income housing tax credits, and the agency is close to announcing the year’s first round of awards. The state agency also makes awards in the fall.
The Downtown Development Authority and the City Commission have already granted Brookstone a PILOT: a Payment In Lieu Of Taxes. That means the renovated properties will come off the tax roll for 18 years. Instead of paying property taxes, Brookstone will pay the city 4 percent of its total rental income.
The PILOT is contingent on the project being approved for tax credits, and Brookstone has applied for $8.3 million worth.
“It’s maintaining the affordability of those units for a period of time,” said Connie Bohatch, managing director of the city’s community services department.
According to Kent County records, the 2009 State Equalized Value for 209 S. Division is $205,500; $149,000 for 217 S. Division; and $132,500 for 17 Williams St. The Division Avenue buildings are both vacant and a century old. Thirty apartments are planned for those two structures. The building on Williams is also vacant and will be home to 15 units. Monthly rents will range from $480 to $687, based on a renter’s income, and include utility allowances.
All the buildings are in the Heartside Business District and close to Brookstone’s two previously completed downtown housing projects. Brookstone opened the Metropolitan Park Apartment at 350 Ionia Ave. SW in 2006 and finished work on 101 S. Division last fall. Those two projects added 44 apartments to the downtown market.
The firm’s Division Avenue renovation — which won a development-of-the-year award from the University of Michigan and the Urban Land Institute last fall — served as a catalyst for Brookstone’s latest project.
“The successful redevelopment of the 101 S. Division building and its acceptance in the Heartside community inspired our firm to continue the revitalization along the South Division corridor,” said Hibbard.
“The proposed project fits well, as the city of Grand Rapids recently realigned Cherry Street SW and added a pocket park, and the renovation of these buildings would enhance the 200 S. Division and Cherry Street intersection as a main focal entry point into Saint Mary’s Health Care campus.”