Government and Real Estate

City and CWD agree on property option

Agreement is for up to three years and could cost developer $55,000.

January 25, 2013
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Grand Rapids city commissioners unanimously agreed last week to enter into a property-option contract with CWD Real Estate Investment. The commercial development firm is interested in building on a city-owned site at the northeast corner of Fulton Street and Ionia Avenue NW, across Fulton from the Van Andel Arena.

The triangular piece of property is situated near the Ottawa Fulton parking ramp. The city’s Parking Services Department currently uses the site, which is about 20,000 square feet, for metered parking.

“The property was listed on the MLS for 60 days so it would be made available to the public,” said Kara Wood, city economic development director.

CWD was the only firm to respond. The agreement gives the company up to three years to decide whether to develop the location. The option will cost CWD $15,000 for the first year and $20,000 each for the second and third years. Those dollars will be applied to the purchase price if the firm goes ahead with a project for the site. The price will be determined by an independent appraisal of the property.

The agreement requires CWD to build at least 75,000 square feet of space and invest a minimum of $15 million into a project. The firm has proposed an eight-story building with 127,500 square feet for Class A office space and retail use on the ground floor.

Whether CWD will go ahead with a project will depend on the company finding enough tenants to fill a majority of that space. If the firm doesn’t go ahead with a project, then the city gets to keep the option payment(s).

“This is just the option agreement, not the development agreement,” said Wood.

The development contract will require CWD to give the city $200,000 as a guarantee, to be held in escrow, unless the firm can present proof that it has secured the necessary financing to go ahead with its project.

“They also have to provide committed financing for the project,” said Wood.

If CWD finds the tenants to go ahead with the project, it will have three years to complete it.

The city’s Economic Development Project Team and the Parking Commission also approved the option contract. The city’s parking department announced in 2011 that it would seek bids for the site.

Sam Cummings, Dan DeVos and Scott Wierda are partners in CWD, which is currently renovating the Trade Center Building at 50 Louis St. NW.

Commissioners also appointed Kenneth Meines and Raymond Van Grouw as special directors to the city’s Economic Development Corp. board last week. They will represent Cornerstone University on the panel because the EDC will issue $5.4 million in bonds on behalf of the school. Cornerstone nominated the pair for the posts, as both are familiar with the school and the project.

Cornerstone is building a new residence hall that will house up to 92 undergraduate students. The hall will be built behind the center field wall of its new baseball stadium. Wood said the appointments are a statutory requirement. Mayor George Heartwell added the appointments give Cornerstone a voice on the board, but not a majority one.

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