Third Coast Development plans $30M hotel and office building in Grand Rapids
Back in 2008, Dave Levitt and Brad Rosely of Third Coast Development Partners were close to adding a five story, 149-room Hyatt Place Hotel to their premier 16 acre, mixed-use development, Mid Towne Village, at Michigan Street and Paris Avenue NE in Grand Rapids.
Then just a few months after they made that announcement, the financial market went into freefall following the subprime mortgage crisis, and financing for hotels immediately became rarer than the Chicago Cubs’ chances of winning a World Series.
But on Thursday, Rosely told the city’s Brownfield Redevelopment Authority that he and Levitt will be filling one of the two vacant lots on the property with a 94,000 square foot, 149-room hotel.
He said he couldn’t reveal the identity of the hotel operator, but he did say the hotel has an estimated investment of $24.2 million, and it will sit on a 200 car parking deck.
“The hotel should help the restaurants on Michigan Street,” Rosely said.
$5.8M office building
Rosely didn’t stop there, though. He also told the authority that a 30,000 square foot office building is likely to go up on the last vacant lot on the development and that structure will have underground parking for 30 cars.
The office building represents an investment of roughly $5.8 million, bringing the total investment for both to $30 million.
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Parking and Brownfield redevelopment financing
The parking for both projects are key to filling the lots and the development as a whole, because the hotel deck and the below ground office parking are eligible for brownfield consideration.
Kara Wood, the authority’s executive director, said state law allows that designation for privately funded decks and underground ramps as long as the structures are part of a project. Surface lots don’t qualify.
In addition, Third Coast was awarded a brownfield designation back in 2004 when the development was first made public, because the site was categorized as being blighted. Eight years ago, the partners had $3.4 million of eligible costs approved for the project.
Now they’re seeking an amendment to their initial brownfield and asking the authority to approve $7.5 million as an eligible cost this time around. Most of that figure comes from the $6.5 million it will cost to build the hotel deck and the office’s underground parking. Both those lots currently serve as parking for the other developments in the village, such as the Women’s Health Center and the Park Row Condominiums.
“If we can get this, we can put an entire bow around this project,” Rosely said.
Work on the hotel is set to begin this summer and take two years to complete. Construction on the office building will start in 2015 and be finished in 2016.
The construction work is expected to create 250 jobs, with the hotel and office building employing another 120.
The projects will generate $765,500 in new tax revenue for the city and the state.
Rosely said in 2004 he and Levitt promised the city that $30 million would be invested in Mid Towne Village. But he said the actual investment has reached $37 million. With the new hotel and office structure added, the total amount invested in the site would get close to $70 million, or more than double what they originally proposed.
Third Coast had to buy 43 lots in an aging residential neighborhood for the village’s site. Today, the village’s taxable value is $13.1 million.
Members of the authority approved the revision to the brownfield, and Third Coast’s request now goes to the City Commission for a public hearing.
Third Coast elsewhere
Rosely also expressed gratitude to members of the authority, city commissioners and the state for their support of Third Coast’s current project.
They’re almost done with renovating the former Miller Zeilstra Lumber Co. building, at 833 Michigan St. NE, and a two-story structure, at 411 Houseman NE, for office and commercial space. Rosely said two physician groups are moving in, and they’ll be holding a ribbon-cutting ceremony for the project in mid May.
“There are a couple of other projects percolating because of this,” Rosely said.