Construction, Economic Development, and Real Estate

Affordable housing coming to downtown

July 26, 2013
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Two hundred and forty-seven new apartments targeted for downtown came before Grand Rapids city commissioners from three developers in one fairly short meeting last week because 183 of them will be built as “affordable” — meaning construction will be partly financed by low-income housing tax credits.

“It’s great to see more housing,” said Commissioner Dave Shaffer.

Brookstone Capital will build 143 of the apartments, Inner City Christian Federation will put up 22, and LC Consultants LLC has plans for 83.

The three asked commissioners last week for a PILOT — a payment-in-lieu of taxes — and the elected officials granted the requests. The developers will pay the city 4 percent of its annual rental rate as a service fee instead of property taxes once the projects are up and running.

All of the projects will seek LEED certification.

LC Consultants of Ann Arbor plans to convert the former Klingman’s Furniture warehouse at 60 Wealthy St. SW into 83 affordable apartments at a cost of $32 million. The project will deliver 56 one-bedroom units and 27 with two bedrooms. The units will range from 720 to 900 square feet and rents will be from $447 to $805 per month.

The building, at the corner of Wealthy and Ionia, will also have 15,000 square feet of commercial space, 78 on-site parking spaces and a community room.

LC Consultants is counting on receiving $27 million in low-income housing tax credits from the Michigan State Housing Development Authority for the bulk of its financing, plus nearly $5 million in state historic tax credits. Roughly another $600,000 will come from deferred developer fees.

“They did Baker Lofts recently,” said Connie Bohatch, the city’s managing director of community services, of the developer. The PILOT will last for 45 years.

ICCF wants to build 22 apartments at 435 LaGrave Ave. SW, near Division and Wealthy streets, at a cost of nearly $5 million. A dozen of those units will be rented as affordable, with the remaining 10 going at market rate. The four-story building will have 28,000 square feet and 3,000 square feet will be for commercial space.

Seven of the affordable units will have one bedroom, three will have two bedrooms and two will have three bedrooms. The apartments will range from 745 to 1,220 square feet; rents will run from $225 to $675 a month. The market-rate units will feature three single bedrooms, six one-bedroom lofts and one two-bedroom. The square footage will range from 725 to 998; rents will be from $945 to $1,145 per month.

ICCF plans to finance it with nearly $2 million from a sale of low-income housing tax credits, $1.4 million in private funds, $625,000 from MSHDA and $618,000 in state revitalization monies. ICCF will defer $237,000 of its developer fees. The PILOT will last for 20 years.

Brookstone Capital of Midland is building 108 new apartments at 20 E. Fulton St., between Division and Sheldon avenues. Half of the units in the $40 million project will be affordable and the development firm plans to use $22 million in low-income housing credits to finance that portion of the project. Another $2 million in brownfield tax credits is going into the pot, as is a $1.9 million loan from HUD.

The remaining 54 units in the 14-story structure will be market rate and the PILOT will not be in effect for those.

Brookstone Capital is also planning to build 34 apartments at 345 State St. SE, which is really two vacant buildings at the corner of State and Prospect Avenue in the Heritage Hill district. All will be affordable units and 28 will have two bedrooms.

The six one-bedroom units will be 670 square feet. Rents will run from $336 to $671 a month and include allowances for utilities. The two-bedrooms will be 850 square feet with rents ranging from $403 to $805 and also will have a utility allowance.

“The original design of the project was to have 42 units,” said Bohatch. But after meeting with nearby residents, Brookstone Capital Principal Karl Chew reduced the total to 34. “We will be managing the properties ourselves, as we have in the Heartside area,” said Chew.

Brookstone Capital estimated the project’s cost at $11.5 million. The financing plan includes $9.1 million from a sale of low-income housing tax credits, brownfield tax credits totaling $325,700 and a HUD loan for $1.65 million. The development firm is putting $352,278 of its own cash into the work.

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