DDA comes to the rescue

September 13, 2010
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Members of the Downtown Development Authority agreed last week to “go the extra mile” and help 68 Commerce LLC turn a vacant building into a potentially thriving business.

The development firm, headed by HopCat founder Mark Sellers, wants to renovate a currently unusable structure at 63 Commerce Ave. SW into a restaurant and entertainment venue and is willing to invest up to $1 million in the project. A few months ago, the DDA awarded the firm a $50,000 building reuse grant; that money will go toward making improvements to the structure’s façade and making the business fully accessible, along with other items like a fire-suppression system.

The developer also plans to apply for state business tax credits and tax-increment financing through the brownfield program. The Grand Rapids Brownfield Redevelopment Authority recently approved the application. But since the building is located inside the DDA’s boundary, the TIF dollars go to that board instead of to the GRBRA — which normally reimburses those dollars to a developer if a building isn’t in the downtown district.

The developer’s attorney, John Byl of Warner Norcross, said the state told him that it wasn’t likely to ratify the brownfield application because the Michigan Economic Growth Authority didn’t think the project was receiving enough local financial support without the TIF funding to qualify for the state tax credits — despite the DDA’s earlier grant.

“I would say this was somewhat of a surprise,” said Byl of the state’s reaction. “There is no mandatory match.”

So 68 Commerce LLC asked the DDA for TIF funding totaling $27,000 through another one of the board’s programs — the Development Support Policy — and members unanimously agreed to make that award. Byl said those dollars would satisfy the state and likely get the project’s brownfield application approved.

“It’s a reimbursement from revenue,” said DDA Chairwoman Kayem Dunn.

But to be able to make the reimbursement, the DDA had to waive the $5 million minimum investment requirement for a project applying for funding through the policy and members unanimously agreed to do that, too. The board adopted the policy to mostly assist new construction in its district and not as a standard funding mechanism for a renovation project.

“The $5 million was mainly for supporting major new projects and not for reusing a building,” said Jay Fowler, DDA executive director. “It’s not that the state is proving less support. It’s just that they want more local skin in the game.”

Fowler also said a development agreement would be drawn up between the board and the development firm.

The building qualifies for brownfield status because it is filled with black mold that has to be removed before work can begin. Lott3 Metz Architecture is designing the renovation, and Greg Metz, a principal in the firm, said some interior demolition has to be done.

The business will be known as The Pyramid Scheme. The work will renovate 6,700 square feet of space into a restaurant, a bar and a music spot. Thirty new jobs are expected to be created from the project.

City commissioners held a public hearing in August on the brownfield request.

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