DDA Helps Downtown Developers
GRAND RAPIDS — Rockford Development and Parkland Properties got boosts from the Downtown Development Authority last week for separate projects each is doing in the central business district.
DDA members gave Parkland Properties of West Michigan LLC a $50,000 grant from their Building Re-use Incentives Program (BRIP) for the firm’s plan to convert seven floors of the Peoples Building from office space into residential condominiums. Normally, this type of DDA funding isn’t awarded to projects that are located in the Renaissance Zone, as the Peoples Building is, but the long-term tax payoff for the city from purchased homes is quite a bit higher than the return it would get from leased office space.
“With all things considered this makes good sense for us right now,” said Verne Barry, DDA chairman.
“Another consideration is that the developer, Mr. (Jonathan) Rooks, has done a pretty good job in Monroe North,” he added.
Rooks owns Parkland Properties and has successfully turned the Ammerman warehouse at Monroe and Trowbridge into a filled residential and commercial building called Monroe Terrace, which is also in the zone. Rooks is using the same marketing plan to sell condos in the Peoples that he used to fill Monroe Terrace.
“I have a number of preliminary lease agreements signed,” he said.
Rooks told the DDA that building condos raises his construction cost $450,000 above what it would cost him to build office space. Most of that extra charge comes from having to build a common entrance at the back of the building and from installing utilities. His plan calls for 26 condos to be laid out across the top seven floors of the Peoples. The first four floors are commercial condos and are sold. He bought the building in July and estimated that the entire project would run about $2.5 million.
Rooks said the DDA grant would only be used on the residential floors. The grant amount, he pointed out, represented 11 percent of the additional cost to convert those floors into homes. Each condo would receive less than $2,000 of the DDA money.
“It’s a close call, but I’m going to support this,” said Mayor John Logie, a DDA member. “We may see more of these requests.”
The DDA has an annual BRIP budget of $200,000.
Board members also agreed to transfer a property option from SIBSCO, the real estate company of the Peter Secchia family, to Rockford Development. The piece of land is the Area 3 parking lot on Ionia Avenue between Oakes and Weston streets, just east of the Van Andel Arena. The option is from a complicated 1999 deal between the DDA, SIBSCO and Rockford, when the two firms were partners in the Cherry Street Landing project.
The DDA bought a 22,000-square-foot parcel that adjoined a 44,000-square-foot piece of land it owned near Cherry Street and the new U.S. 131 exit ramp. The board combined the two sites for a new surface parking lot. The partners offered the property to the DDA for $25 a square foot, or $550,000.
But by giving the partners a five-year option on Area 3, the cost for the land was discounted to $10 a square foot, or $220,000. And if the partners exercise the option, as it appears Rockford will, the DDA will pay $15 a square foot, or $330,000.
This means that Rockford will pay the DDA $27 a square foot for the 37,000-square-foot parking lot, but does so with a $15-a-square-foot credit in its favor. The firm sees the site as a central piece to developing Ionia Avenue into an entertainment sector.
Activity on that development should accelerate soon as the city recently gave Rockford preliminary approval to raze the Milner Hotel at the corner of Ionia and Oakes and across the street from the parking lot. Rockford considered the decaying structure a barrier to the overall project.
Rockford Development COO Kurt Hassberger told the DDA that his firm should get final approval to tear down the Milner next month. He also said Rockford was “within an eyelash” of signing an agreement with a bank for the south end of the parking lot.
“We’ve got a great deal of interest in the property and I think some things will happen very quickly,” said Hassberger.
Rockford bought the Milner from Owens-Ames-Kimball, a local general contractor, last year and partnered with the DeVos family to continue development of the Landing project this year. The initial plan for the Area 3 lot was to build three, two-story buildings on the site with commercial space on the ground floors and housing on the upper levels.
The property option is good until next August, but Rockford has to give the DDA six months’ notice that it plans to pick it up.