- change ups
Urban Market project is changing
Grand Action Committee Co-Chairman Dick DeVos told the Grand Rapids Downtown Development Authority last week that the Urban Market project the two groups are working on continues the city’s “great tradition of public-private partnerships.”
DeVos said the public response to the market, which is planned for 3.5 acres owned by the DDA on Ionia Avenue near Wealthy Street SW, has been incredible, and has probably exceeded reactions to other projects of which Grand Action has been an integral part. But DeVos added that the original plan to use the site’s existing buildings had to be scrapped when further inspections found those structures weren’t sound enough to be renovated.
“The project will be all new construction,” he said.
That isn’t the only change for the market, which made its debut as a project early last year. Initially, the DDA was going to sell the property to Grand Rapids Urban Market Holdings LLC, a for-profit entity created for the development. But now the DDA will hold onto the site and lease it to GRUMH for 99 years. In return, the limited liability corporation will drop its original request for development support from the downtown board for the market.
If the market isn’t successful, the DDA will be left with the site.
“This draws us closer in on the risk,” said DDA Vice Chairman Brian Harris. Harris pointed out that the DDA bought the land for $2 million in 2008, has allocated $100,000 for the project’s pre-development work, and will invest about $2 million more into the project.
“Mine is not an objection,” he said. “I just want to understand the risk here.”
DDA Counsel Dick Wendt said the board would receive details on how the lease transaction will be handled at its September meeting.
DDA Executive Director Jay Fowler said Grand Action has put together the financing for the project that includes grants, tax credits and private contributions. Fowler also said tax-increment revenue from the project would be used to pay for improvements to adjacent streets and to reimburse GRUMH for development upgrades it makes to the site.
Fowler also said major improvements would be made to Ionia Avenue and to Logan and McConnell streets, including utilities, lighting and streetscape work. Those upgrades are expected to be paid for by a $2.35 million bond to be issued by the Grand Rapids Brownfield Redevelopment Authority, which meets this week to discuss the matter. The DDA, however, would be responsible for any shortfall to bondholders if the brownfield tax credits can’t cover the debt-service payments.
Wendt said the brownfield credits can be captured for 30 years, while the bond’s term is expected to be for 20 years. He also said the GRBRA needs assurances that the project’s funding is in place.
“We’re still working out the numbers and the memorandum for agreement,” Wendt told the board. “We plan to have that for you in September.”
Fowler estimated the cost of the improvements at $4.7 million, with the DDA likely to pick up about $2.3 million of that tab. Additional funding is expected to come from the city’s water fund, about $1.4 million, and $972,000 from the sewer fund. The entire project has been estimated at $27 million.
Building demolition is expected to begin this fall, and the market is scheduled to open by May 2013. A general design has been done by Hugh Boyd, Design Plus, and Fishbeck, Thompson, Carr & Huber.
“This is a very creative approach to financing this project,” said Mayor George Heartwell, also a DDA member. “Our risk is substantially reduced.”