- change ups
Knapp’s Crossing has first bankruptcy hearing next week
But troubled retail development could still become a viable shopping center.
Evergreen Properties Principal Steve Benner first revealed his idea to the Business Journal for a lifestyle retail center on East Beltline at Knapp Street in late September 2004.
“Lifestyle centers are new to Grand Rapids. It’s a very upscale style of retail development, something you can’t put 10 or 15 of in Grand Rapids,” he said then.
But it took Benner five years to break ground on the 450,000-square-foot development, which he called the Village at Knapp’s Crossing. The estimated $60 million project reached into the city of Grand Rapids and Grand Rapids Township.
In fall 2009, Spartan Stores announced it would become the first tenant. The local grocer bought a site in the development, a former orchard, and opened a new D&W Fresh Market at 2000 East Beltline Ave. NE the following year to become the center’s anchor business.
In between those two events, however, the project crawled along at a snail’s pace.
Benner had difficulty getting zoning approval from the city in 2004 and again in 2006, which brought the development to a temporary halt. Then loans for commercial projects all but disappeared in 2008 following the shenanigans Wall Street pulled on the nation and its economy.
Even after Spartan Stores came aboard, a stormwater runoff and drainage problem on a portion of the development in 2010 nearly cost Benner his second major tenant, P.F. Chang’s China Bistro.
More recently, Benner tried to find an investor. He valued the development at more than $50 million and offered a half-ownership stake for $26 million, adding he had commitments from new tenants.
“We are looking for a 50-percent joint venture partner to share in the rewards of the development,” he wrote in an online listing.
On July 30, however, the Village at Knapp’s Crossing LLC filed documents for Chapter 11 Bankruptcy protection with the U.S. Bankruptcy Court for the Western District of Michigan. Benner is the LLC’s managing partner and sole member listed.
Court documents show the LLC has liabilities of $4.9 million and assets of nearly $217.5 million.
As for the liabilities, three lenders hold secured claims totaling $4.77 million. The International Bank of Chicago has the largest one at $4.1 million. Comerica Bank of Detroit has a claim of $468,242, and First Community Bank of Harbor Springs has one for $167,113.
Eleven creditors hold unsecured priority and non-priority claims of $127,047. The city of Grand Rapids has the largest at $70,519 for installing a water main for the property. Kent County has two property tax claims that total $12,937. The rest are for bond fees, attorney fees, soil testing and equipment leases. Other unsecured creditors are listed, but the amounts of their claims aren’t.
The LLC lists real property assets of $15.1 million based on the value of eight parcels that makeup the center’s site. The firm’s personal property assets total almost $202.4 million. Of that, about $198 million is money owed by three individuals and three firms that likely came from a court judgment. The rest are unpaid rents and charges to tenants, owed property options, and a bank account of $14,461 with the International Bank of Chicago.
Benner is listed as the sole debtor and is scheduled to meet with creditors at a 341 meeting Sept. 4. A preliminary hearing is set for Sept. 12, with a final hearing scheduled for Sept. 26.
Tishkoff & Associates, an Ann Arbor law firm, is representing the LLC.
Retail expert Bill Bussey said the development hasn’t fulfilled its promise because the economy turned sour after the financial market nosedived five years ago, which was a crucial time for Benner.
“When he finally got his approvals, it was the time when the economy was starting to look kind of funny. It’s a fact that people, at that time, were starting to pull back and saying, ‘Maybe we’ll wait and see what the economy does,’” said Bussey, managing member of Retail and Restaurant Site Advisors in Ada.
Given more time, Bussey felt the Village still has the potential to be a good development.
“The demographics are strong in terms of its accessibility to Cascade, Ada and East Grand Rapids. You have a shopper base surrounding that site and you have extremely easy access on the East Beltline. And you have a lack of space available at 28th (Street) and the Beltline,” he said.
“It’s likely that we will see a development in the future with more higher-end retailers deciding to develop there because of a lack of other alternatives and the demographics of the area.”