Construction, Economic Development, and Government

Two developers receive zoning changes from city

Retail project and two apartment houses are given clearance to go forward.

October 25, 2013
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Two developers receive zoning changes from city
City officials waived a requirement for ground-floor retail in the proposed Eastown Flats residential development. Courtesy Integrated Architecture

Two notable development firms received zoning changes from the Grand Rapids City Commission and a longtime provider of affordable housing had its payment-in-lieu-of-taxes agreement revised last week.

The zoning change commissioners gave CWD Real Estate Investment will allow the firm to build a 12,000-square-foot retail center on two parcels at the corner of Breton Avenue and Burton Street SE, which is across Burton from Breton Village Mall.

One of the lots contains an office building that CWD will raze, while the other is primarily vacant and was used for parking for the office structure. Both parcels give the firm about 51,000 square feet to build on.

The zoning change was necessary because the previous one favored office and service uses on the sites rather than retail. CWD, a partnership between Sam Cummings, Scott Wierda and Dan DeVos, told the city it has a tenant interested in locating to the site.

The other zoning change went to Orion Construction and means the firm will be able to put up two three-story apartment buildings in the Eastown Business District. One with 20 units will go up at 1400 Wealthy St. SE; the other will have 16 apartments and will be across the street at 1415 Wealthy St. SE.

The buildings will be known as Eastown Flats. The 36 units will be a mixture of studios and one- and two-bedroom apartments. All will be market rate and construction will follow green building guidelines. The change was needed because the previous designation called for retail space on the ground floors, but Orion Construction preferred Eastown Flats to be strictly residential in order to make the investment worthwhile.

“We’ve done our homework and economically it’s not viable to have retail on the first floor. The project won’t work. These are not real big buildings,” said John Wheeler, director of business development for Orion Construction.

Each building will have from 3,500 to 4,000 square feet on each of the three floors. A closed car wash is on one of the lots, while the other property is a parking lot.

City Planning Director Suzanne Schulz felt the change would work because the parcels are situated at the end of the business district, which requires mixed-use developments, and the beginning of a residential neighborhood.

Commissioners also revised PILOT agreements last week for an organization affiliated with Dwelling Place of Grand Rapids, a longtime provider of affordable housing downtown.

The commission first approved 15-year payment-in-lieu-of-taxes arraignments for the Chaffee Apartments at 138 S. Division Ave. and the Lenox Apartments at 349 S .Division Ave. in 1997. Both contracts expired last year for the two affordable housing complexes.

The Chaffee has eight one-bedroom apartments, while the Lenox has six one-bedroom and eight two-bedroom units. Both buildings also have ground-floor commercial space and both opened in 1998.

The buildings began to experience financial difficulties once the PILOT expired because the units are rent restricted, and concern arose over a potential mortgage default for the buildings as both went on the city’s tax roll last year.

“All apartment units are rent restricted to households under 60 percent of the area median income. The restrictions continue for an additional 15 years, subject to an extended agreement through the Low Income Housing Tax Credit program,” reported Connie Bohatch, managing director of the city’s community services.

Commissioners agreed to start a new PILOT agreement for the Chaffee and Lenox buildings that will last for up to 25 years. Instead of receiving property-tax payments from both, the city will receive 4 percent of the total rental income from the buildings’ affordable housing units in each year of the PILOT’s duration.

The Chaffee will pay an estimated $1,194 for its eight apartments, while the Lenox will pay $2,079 a year for its 14 units. The two commercial spaces in the Chaffee and the three in the Lenox will remain on the tax rolls, as those units aren’t eligible for the PILOT program.

In other nonprofit housing news, the New Development Corp. and the ICCF Nonprofit Housing Corp. have approached the city for property-tax exemptions on five addresses. Four on the city’s northeast side belong to New Development and ICCF has one at 417 Elliot St. SE. Commissioners will hold a public hearing on the requests Nov. 16.

“We estimate it’s an $1,800 loss in property tax,” said Bohatch. “It doesn’t seem like a lot, but to a nonprofit developer it’s a boost.”

Should commissioners grant the exemptions, the non-taxable status would last for two years or until the property is rehabbed and sold, which could be sooner. Bohatch estimated the city would gain about $12,000 a year in new property-tax revenue once all five are back on the tax roll.

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