Developer Should Pay

January 19, 2007
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GRAND RAPIDS — If Parking Services builds a temporary surface lot on the former City Centre parking ramp site at Division and Fulton, parking commissioners agreed that the likely buyer of the property should cover any revenue loss the city may sustain from the lot.

"We're in this position now because the developer has a delay," said Monica Sekulich, parking commissioner. "I can't imagine the city paying for this."

RSC Associates of Chicago and Second Story Properties of Grand Rapids entered into a purchase agreement with the city for the 37,000-square-foot site and were to close on the $2 million deal next week. But they are willing to pay the city $30,000 for a six-month extension on the closing date, and city commissioners will take up their request tomorrow, Jan. 23.

RSC and Second Story, doing business as Two West Fulton, outbid four competitors in May 2005 for the right to buy the site. They proposed a $22 million mixed-use development of retail shops, a jazz club, condominiums and public parking.

But since the public ramp was closed in late 2004 to make way for a privately funded project, parking in that part of downtown and the adjacent Heartside Business District has become scarce. Parking Services tried to build a temporary lot on the site, which is in the Heartside Historic District. The Historic Preservation Commission, though, said no.

Downtown Alliance Chairman Kurt Hassberger recently urged the Parking Commission to take a second look at building a temporary lot on the site. The board agreed to do that when members approved the extension for the Two West Fulton project.

Parking Services Director Pam Ritsema has set a series of meetings with city agencies to get approval for the lot, a timeline she hopes will gain city commission approval on March 13. One of those meetings is to go over the lot's design with the HPC.

"It looks like they're willing to work with us, now that there is a plan for the site," she said.

Ritsema said much of the design work was done when she tried to get the lot approved earlier. So her biggest concern is keeping construction and operational costs to a minimum because the lot will be only open until work begins on Two West Fulton, which has been estimated to start in 2009.

So as a cost-cutting move, Ritsema wants to build the lot with the recycled asphalt the city rotomills from streets in the spring. She said construction firms use this type of asphalt to surface temporary driveways.

The used asphalt is less than half as costly as a gravel pave — $100,000 vs. $225,000 — has less water runoff than regular gravel, and wouldn't have to be re-graded twice a year like gravel would.

Ritsema said the lot would have from 80 to 100 spaces, and her department would install parking meters rather than build a more expensive gating system.

"But with the meters, we won't capture every dollar as we would with control of the entry and exit from the lot," she said.

Ritsema estimated she would need $20,000 in monthly revenue for at least a year to break even on the lot, meaning it would cost about $240,000 to build and operate for that time period. The estimate to build the lot three years ago was $400,000, so Ritsema has cut plenty from that cost. She said construction could be done in a month and the lot could open in May, if the project is approved according to her timeline.

The Two West Fulton project has changed. Instead of condos, rental apartments are going to be built. Two unidentified retailers are reportedly interested in space. And the developers have targeted the Urban Institute for Contemporary Arts as the anchor tenant.

"UICA, we believe, would add a synergy to the area," said Susan Shannon, economic development director for the city.

But 1st Ward Commissioner James Jendrasiak said the Two West Fulton project was selected to buy the property because it contained commercial tenants that would pay taxes, and UICA is a nonprofit that doesn't pay taxes.

Still, commissioners are likely to give RSC and Second Story the extension, which would push the closing date back to July 31 and could give Parking Services two years to operate the lot before work on the project begins. More time would help the department recoup its investment.

"We are planning on going forward pending more information from the developer," said Ritsema. "We're going to ask to do the minimum possible."    

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