Brookstone Capital unveils another downtown project
DDA awards developer a PILOT for mixed-income residential development.
A few weeks ago, Brookstone Capital began construction on a new $15 million, seven-story residential and retail project on a vacant downtown lot at 240 Ionia Ave. SE, across from Heartside Park.
Last week, the Midland-based developer announced a new $40 million, 14-story residential and retail project it proposes to build on a vacant downtown lot at 20 E. Fulton, across from Monument Square Park.
“It’s a very impressive and beautiful project. The developer has a wonderful track record of developing projects in the city,” said Kristopher Larson, executive director of the Grand Rapids Downtown Development Authority.
Brookstone Capital Principal Karl Chew revealed his latest project at last week’s DDA meeting and the board responded by granting the firm a Payment in Lieu of Property Taxes, or PILOT, for the 108 units he proposes to build. Half of the apartments will be market-rate and half will be affordable housing, which makes the development a highly valued mixed-income project.
“It’s one of the reasons that we’re very supportive of this project,” said Larson.
A PILOT will allow Brookstone Capital to pay 4 percent of its annual rental income to the city instead of property taxes on the units. The city commission has to approve the request, and if commissioners do that, the PILOT would last 40 years.
Although Chew did not ask the DDA for direct financial support, he said he is asking the Michigan Housing Development Authority for Low-Income Housing Tax Credits and the Michigan Economic Development Corp. for brownfield tax credits to help finance the project.
City Economic Development Director Kara Wood said the property was awarded a brownfield designation when the Meridian Building Co. LLC proposed a $26 million, 10-story mixed-use project for the site on the southwest corner of East Fulton Street and Sheldon Avenue in 2009. That project had 100 apartments, 10,000 square feet of retail space and a 286-space parking deck. But it never materialized because lending dried up after the financial market crashed in 2008.
Wood also said a work plan is in place for the site and an old MBT tax credit could be preserved for the Brookstone Capitol project if it goes forward. She told members of the city’s Brownfield Redevelopment Authority last week that they could expect to receive an application for the brownfield at their August meeting.
“It’s really a fantastic site, and we’re pleased and excited about this opportunity,” said Chew. The property is just a block east of Division Avenue and Monroe Center.
In addition to the housing units, Brookstone Capital also proposes 9,000 square feet of retail space and 114 on-site parking spaces.
“We’re hoping to attract a national retailer there,” said Chew.
The PILOT will not apply to the project’s commercial square footage.
City Planning Director Suzanne Schulz said the project doesn’t need to go before the Planning Commission because it meets ordinance requirements. Instead, her staff will review the proposal.
Chew added that his firm would seek an Enterprise Green Communities Certification for the project.
Progressive AE, a Grand Rapids firm, designed the building.
Larson said he has spoken with MSHDA representatives, who told him that there is a high demand for downtown apartments.
“They cited the vacancy rate at 0.2 percent,” he said. “So there is a demand for housing here.”