Commissioners allocate 4 million in RZF bonds
Grand Rapids city commissioners awarded $4 million of the city’s Recovery Zone Facility Bond allotment last week to a northwest Ohio firm that plans to put up a single-story office building on the northeast side of town at Celebration Village.
Grand Rapids GSA Properties Ltd. will build a 24,800-square-foot office structure at 3045 Knapp St. NE and will lease all the space to the U.S. General Services Administration, which has agreed to lease the building for 10 years with an option for an additional 10 years.
The project has been pegged at $6 million, a figure that includes the $1.6 million GR GSA Properties reportedly paid for the 3.8-acre parcel the structure will sit on. The construction is expected to take about nine months. The project will be LEED certified. About 80 will be employed at the site once construction is completed, and up to 20 new permanent jobs could be added later.
GR GSA Properties will sell the bonds for $4 million to Wolff Bros. Supply Inc., a wholesale distributor of plumbing, HVAC, electrical and other related items. Wolff Bros., with 10 locations in Ohio and corporate headquarters in Medina, will receive a fixed-rate return of 6.25 percent for the term’s duration, which is 10 years. There also will be a balloon payment at the end of the term.
The RZF bonds are tax-exempt securities that Congress created exclusively for the private sector through the American Recovery and Reinvestment Act of 2009. The bonds must be sold by the end of this year, unless Congress extends the time period.
GR GSA Properties will finance the project’s remaining $2 million.
John Hoty is the managing member of GR GSA Properties. The Hoty family owns Hoty Enterprises in Sandusky, Ohio, a real estate firm that owns, manages, brokers and develops commercial and residential properties in northwest Ohio.
The federal government allotted the city $25 million in RZF bonds last year. So far the city commission has allocated $16.5 million of that total, with $12.5 million going to the Christman Capital Investment Group for renovation of the former federal building at 148 Ionia Ave. NW, and $4 million going to GR GSA Properties. The city does not pledge its full faith and credit for these bonds.
Commissioners were reluctant at first to assign the bond allocation to GR GSA Properties because the Social Security office will reportedly move from its current central location at 50 College Ave. SE to the new building on the city’s far northeast end. Commissioners were concerned that some of the city’s elderly and poorer residents would have difficulty in getting to the new site, but City Economic Development Director Kara Wood said the building will be on The Rapid’s bus route.