DDA backs Brookstone Capital project
Brookstone Capital will begin construction on three new downtown apartment complexes in less than two months. The work will mark the third major residential project by the Midland-based developer and property manager in the Heartside district over the past few years.
“The project has been awarded low-income housing tax credits by the Michigan State Housing Development Authority,” said Karl Chew, principal of Brookstone Capital. “We hope to start construction in 45 days. We will be using a lot of bold colors.”
Chew said his firm is investing $36 million into the six-story buildings that will go up on vacant parcels at 205 S. Division Ave., 26 Cherry St. SW and 240 Ionia Ave. SW. The Division and Cherry sites are around the corner from each other, only separated by an alley. The Ionia address is across the street from Heartside Park.
Chew said the trio of buildings will offer 131 apartments. Eighty percent will be rent restricted and not subsidized, meaning household income levels determine who can rent a unit. For a single person, the maximum is $26,500 annually. The remaining 20 percent will be market-rate apartments. The buildings will offer commercial space on the ground floors.
“All of our properties are self-contained,” said Chew. “The projects that we have in place have waiting lists. We don’t feel we’ll have a problem finding tenants.”
The Grand Rapids Downtown Development Authority gave the project a boost last week by approving a Payment-in-Lieu-of-Taxes, or PILOT, agreement for Brookstone Capital. Instead of paying property taxes, the firm will pay the city 4 percent of its total rent revenue from the Division and Cherry complexes for 40 years. The same deal for the Ionia structure lasts for 35 years.
The board’s action, which limits the DDA’s ability to capture revenue from the projects, matched what city commissioners did earlier this year.
“I think we’re being asked, after the fact, to approve this,” said DDA Vice Chairwoman Kayem Dunn.
City commissioners and the Michigan Economic Growth Authority granted Brookstone a brownfield designation for the project in December, possibly the last one given under the now-defunct Michigan Business Tax. The company was approved then for $2.1 million in tax credits.
Last year, Brookstone renovated three buildings into two separate apartment houses. The vacant structures at 209 and 217 S. Division Ave. became the Division Park Avenue Apartments, which has 30 rental units and six work-live apartments. The firm also converted an old warehouse at 17 Williams St. SW into Serrano Lofts, which has 15 units. The DDA also gave Brookstone a PILOT for those buildings, which is a somewhat normal procedure when a project offers affordable housing.
Nearly two years ago, the University of Michigan and Urban Land Institute honored Brookstone Capital with its coveted redevelopment award for the firm’s historic restoration of 101 S. Division Ave., a residential building known as the Division Lofts Apartments.