Island Deal Prompts Questions
GRAND RAPIDS — Even though the company was one of three firms to express an interest in the city-owned Public Works Island, Moch International doesn't see the project that it wants to build on 15.8 riverfront acres at 201 Market Ave. SW as a done deal.
At least, not yet.
Joseph A. Moch, who owns the firm with his father, Joseph W. Moch, spoke at length last week with the Business Journal and said his company has questions about how much it will cost to get the land into a developable condition. He said the city has to provide those answers before he and his father will go ahead with a project that could carry a price tag of $250 million.
Grand Rapids Development Corp. and Barnes-Steven Redevelopment were the other firms that submitted letters of interest to the city for the Market Avenue site.
The city will sell the island for $35 million. But Moch International wants to know how much it will cost to remediate the site, which surely contains contaminated soil, and how much will have to be invested to upgrade the infrastructure — two expenditures that the buyer has to bear, according to the city's proposal.
"I think it's a great opportunity. But I also think that, considering what needs to be done, it borders on the verge of being impossible to do. You hate to say that, because it would be a tremendous redevelopment. But there are some significant costs there, and I hope that those will be identified up front so everybody can be on the same page going into it," said Moch.
"It will be interesting to find out what really will be the land cost, because $35 million is not cheap. But certainly if you double that for the infrastructure and the environmental, it gets a little silly. It will take a real serious look at it to find out if it can be done."
Still, Moch is excited about their potential project. It revolves around a $150 million performing and visual arts center that will contain up to four theaters — with the largest having about 2,500 seats — along with screening rooms, classrooms, concession areas, dressing rooms and more.
Moch said he continues to work with the local arts community on the building's contents, but he added that the concept for the project came from a visit he made to the Mesa Arts Center in Mesa, Ariz.
"When I was down there, I felt something like that would be a tremendous asset for downtown Grand Rapids, and the rest of the project just evolved from there," he said.
The "rest" includes a hotel with at least 150 rooms to support the city's growing convention business; an apartment building with 200 rental units; a year-round marketplace similar to the 130-year-old North Market in Columbus, Ohio; a 2,000-space parking ramp; a watersports activity center; and up to four restaurants.
Moch said rates at the hotel, which could have up to 300 rooms, would be in the mid-market range. Apartments, rather than condos, are part of the project because more than 1,000 condominiums have been proposed for downtown over the past few years, including the $60 million Icon on Bond development the Mochs are building at Trowbridge Street and Bond Avenue. The nine-story structure is expected to open in June 2007.
"I think people have overlooked the market for apartments to a certain degree and it's one that we think is strong. It has potential, and high-quality rental projects really have not been done to date. Plaza Towers is probably the newest rental building in town and it's 15 to 20 years old. So there isn't a great, stand-alone rental project in downtown, and we certainly could use one, I think," said Moch.
"If you look at the Van Andel Institute, the GVSU facility on the hill, and what is being built right now, we're really going to have to have spaces for a year or two, or three years, for people who aren't really going to want to buy at that point in their lives. They are going to want a high-quality place and then want to leave in a year or two, and not have to worry about trying to sell it," he added.
Moch International is also building the Presido, an apartment complex with 171 rental units, at 235 Grandville Ave. SW. Construction on the $25 million project should begin this summer and take less than a year to complete.
Atlanta businessman Duane Faust, who unintentionally sparked a media frenzy with the RiverGrand Development earlier this year and who heads GR Development Corp., said the city's 15.8 acres would be part of his firm's 36-acre project of housing, office, retail and entertainment space. Faust said construction would cost from $1.5 billion to $2.5 billion.
Gregory Stevens, of Barnes-Stevens Redevelopment of Buffalo, N.Y., outlined a mixed-use project with a hotel, offices, condos, entertainment and a conference center built around a town square and near a rebuilt riverwalk. Stevens said his project would cost from $150 million to $300 million to build and that his firm has $300 million available for the project.
Although the city is moving quickly on the deal, as a task force has already reviewed the trio of projects, Moch thought it would be at least two years after the sale before a buyer could even access the property, and three more years before a new development could be completely built on the land. Time will be needed for the city to find a new place to store its 200 vehicles and its mounds of rock salt, for the buildings on the island to be razed, and for the environmental tests to be done on the land.
"With all the hype that has been surrounding this thing, people are thinking that it will be done tomorrow. I don't think people understand the full magnitude of everything that is involved," said Moch.
"We've been through a lot and we've learned an awful lot. It's been like earning a Ph.D. doing this project, and it's certainly not something that happens overnight. It sounds like maybe some of these other groups haven't really been that actively involved in real estate, and there is a learning curve there. It will be very interesting to see what happens."