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County allocates RZF project bonds
Kent County commissioners allocated $41 million in private sector American Recovery and Reinvestment Act bonds last week for two renovation projects, an allocation that comes from the $54.8 million in Recovery Zone Facility bonds that Congress allotted the county in early 2009.
“These bonds will not be issued by the county or backed by the county’s full faith and credit,” said Daryl Delabbio, county administrator and controller.
The county allocated $28.5 million to Avastar Park Studios for the acquisition and redevelopment of the south portion of the former Lear Plant at 2150 Alpine Ave. NW in Walker. APS reported the purchase price as $7.3 million, or $25 a square foot, and closing still has to take place. The firm is buying the structure from Alpinist Endeavors LLC, headed by local developer Jack Buchanan.
APS is a partnership between SHM Partners, a real estate, development, and management firm in Los Angeles, and Fifty-Fifty Entertainment, an entertainment conglomerate in the motion picture and music industries that has offices in Palm Springs, Calif., and Hollywood Florida. Thirty-five companies make up Fifty-Fifty Entertainment.
APS plans to turn the plant into a film and music studio complex by renovating nearly 300,000 square feet of existing space. APS may also build a 57,000-square-foot, two-story addition to the plant. The firm’s target market is motion pictures, television and commercial work. Fifty-Fifty Entertainment plans to locate its corporate headquarters in the building, and the firm is expected to create 40 new fulltime jobs at the site.
APS estimated the cost for the construction work at ranging from $23 million to $28 million, a figure that doesn’t include the purchase price. The firm expects to do the renovation in a series of stages that it said would take from five to nine years to complete. The site is in Walker’s nearly tax-free Renaissance Zone, which has nine years remaining on its state- and-local-tax exempt status.
APS has enlisted Fifth Third Securities to market the RZF bonds, which are tax exempt and are designed for use by the private sector. The company plans to apply to the Michigan Film Office for infrastructure tax credits.
“There is no cost or obligation for Walker or the county (for the bonds),” said Rick Chapla, vice president and redevelopment specialist with the Right Place Inc., which handles the RZF bonds for the county.
The site APS has proposed to buy is the same property that Hanger42 Studios tried to acquire earlier this year until the company allegedly ran into a major problem with its application to the film office for tax credits. Hanger42 Studios applied for an infrastructure tax credit worth 25 percent, but based its request on a purchase price of $40 million when the property was reportedly listed for less than $10 million.
Michigan Attorney General Mike Cox charged Hanger42 Studios executive Joseph Peters in August with a felony for making false pretenses in the firm’s tax credit application for $10 million. The case is still ongoing. The charge was filed in 61st District Court and it carries a maximum penalty of five years in prison.
County commissioners also reallocated $12.5 million in RZF bonds to the Christman Capital Investment Group LLC, which will renovate the former Federal Building at 148 Ionia Ave. NW in downtown Grand Rapids into classrooms and office space for Ferris State University and Kendall College of Art & Design.
The county initially made the allocation in March, but a recent state law required commissioners to reallocate the bonds before a state-imposed deadline of Oct. 8. Public Act 153 of 2010 required the county to describe the project in a resolution and allocate the bonds, for the second time this year, to the Grand Rapids Economic Development Corp.
If commissioners hadn’t taken that action last week, then the county would have lost its RZF allotment to Lansing. “Those are the only two projects on the books,” said Delabbio.
City commissioners also allocated $12.5 million to the project being done by Christman, an amount that was half of the city’s total RFZ allotment. Robert W. Baird & Co. is marketing the bonds for Christman. The city will reallocate those bonds and another set of ARRA securities worth $4 million on Tuesday to comply with the state deadline.