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Brookstone Capital reimbursement plan is approved
Major mixed-use development takes another step toward reality.
The brownfield reimbursement plan for a promising $40 million downtown development has been approved.
The Grand Rapids Brownfield Redevelopment Authority unanimously agreed recently to ratify a request from Brookstone Capital for its 20 East Fulton project, a mixed-use development that offers residential and commercial uses along with a parking ramp at the corner of Fulton Street and Sheldon Avenue.
Brookstone Capital, which is based in Midland and headed by developer Karl Chew, has proposed to invest $7.5 million to remediate the site, a parking lot contaminated with lead, arsenic and other toxins just a block east of the Division Avenue and Fulton Street intersection.
Much of that investment, almost $6 million of the total spending, will go into upgrading the site’s infrastructure for items like the five-story, 180-space parking ramp, new sidewalks and lighting. The ramp alone will cost about $4.3 million.
The plan, though, will only reimburse Brookstone Capital about $6.3 million of its eligible remediation spending. The reimbursements are scheduled to begin in 2015 with a payment of $76,100 and peak with a $317,000 payment in 2038.
The project involves putting up a 14-story building on the site with up to 108 apartments and ground-floor commercial space, plus the parking ramp. Half the rental units will be market rate, while half will be affordable housing. The total investment will range from $37 million to $40 million, with about $30 million coming from private sources.
The project is expected to create 21 full-time jobs. Four of those will come from the residential portion of the project and 17 from the commercial aspect. Hourly wages are expected to range from $15 to $56.
Brookstone Capital’s application for a $4.6 million Michigan Business Tax Credit was denied by the state in the first application round. The credit, along with the property’s brownfield designation, was awarded to another developer in 2009 who also wanted to build on the site but didn’t go through with the project.
“The developer was not surprised that the credits weren’t awarded,” said Jonathan Klooster of the city’s Economic Development Office.
Brookstone Capital intends to reapply for the tax credits. The second round for approving applications will take place in February.
City commissioners approved the brownfield plan earlier and awarded the project a PILOT for the low-income apartments. The Downtown Development Authority also awarded the project $300,000 in development assistance. Construction is expected to begin late next year and be finished by late 2015 or early 2016.
On another matter, Brownfield Redevelopment Authority counsel Dick Wendt said he has been in contact with a representative of the Inner City Christian Federation regarding its reimbursement for development fees concerning the Tapestry Square project.
In November, the brownfield board awarded ICCF $2,271, while the nonprofit developer submitted reimbursement invoices that totaled $440,343. Board members said they couldn’t reimburse ICCF the full amount because it used funds from a $5.2 million Neighborhood Stabilization Loan the developer got from the city a few years ago to pay for most of the reimbursable activities instead of using its own money. So the brownfield board awarded ICCF the smaller amount, which was paid for by the developer, and set aside the difference between the request and award — $438,072 — to accrue. The board also said ICCF could still collect the reimbursement.
ICCF was notified of the proposed reimbursement five days before the November meeting. No one from ICCF attended the meeting, but an ICCF representative told Wendt prior to the vote that the nonprofit disagreed with the potential action of the board regarding the reimbursement.
However, ICCF told the Business Journal it did use the loan to pay for the work but added that the loan agreement required it to spend that money first and the firm did so to comply with the loan contract.
Wendt told the brownfield board at its last meeting that the ICCF situation is a very complex one that involves two deadlines. “We are continuing to have more discussions with them,” he said, adding that ICCF could make another reimbursement request.
“We will bring everything back to the table once we gather all the information,” said Wendt.
Klooster told the brownfield board it has approved 17 brownfield plans over the last three years. Eight were given obsolete property designations, eight received facility status and one was labeled blighted. Four have been completed, while six are under construction.
The 17 brownfields represent $167.4 million in committed private investments and 134 proposed new jobs.
Board member Robert Porter asked about three that were awarded to GR School Lofts in 2012 for a trio of schools that once were part of the Grand Rapids Public School system. GR School Lofts, headed then by developer Bruce Michaels, said it was going to turn the former elementary schools into apartment complexes, but work hasn’t begun on any of them.
Reportedly, Michaels negotiated the deals for all three and then sold each one to National Heritage Academies with the intent of buying the buildings back from the charter school operator. However, Michaels hasn’t followed through on that, and GRPS didn’t go through with selling Stocking Elementary to GR School Lofts. In fact, the school system has put Stocking back into play.
Although National Heritage Academies invested $7 million into the former GRPS elementary school on Evergreen Street SE and opened a charter school in the building, Klooster said the firm has no intention of redeveloping the Lexington and Eastern buildings into apartments or turning either one into a charter school.
“They remain in place and can be amended for a new project,” said Klooster of the schools’ brownfield designations. “But I’m not sure there is a plan in place for the Stocking Street School as that one was never purchased.”