No Public Works Progress

February 16, 2007
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GRAND RAPIDS — Even with the Request For Proposal deadline for the city-owned Public Works Island arriving Friday at 5 p.m., the city isn’t any closer to having another location for the key departments situated on the property than it was last fall.

That’s because the city never planned to have a new site selected by the due date.

“No, we haven’t found a site and we hadn’t intended to by this time. The process is still tracking as we have proposed,” said Deputy City Manager Eric DeLong.

“We’ve had people suggest sites to us. But we’ve not secured a site and have not taken any action on those sites so far. There are some that we may be interested in, that at least fit part of the bill, and some that have no potential,” he added.

The city is trying to sell the nearly 16-acre riverfront parcel at 201 Market Ave. SW for $35 million to one of three development firms that were invited to respond to the RFP last fall. Their responses are due at the end of the week. As of last week, DeLong said none of the three had told the city they wouldn’t be responding.

Moch International of Grand Rapids, Barnes-Stevens Redevelopment of Buffalo, and Grand Rapids Development Corp. of Atlanta were asked by city commissioners to answer the RFP. The trio responded to a letters-of-interest request last spring that didn’t require detailed financial information or specific development features.

DeLong said he hasn’t talked price with anyone who suggested a parcel for the city. But he did say the relocation cost the city released in September is still good today. It will cost the city nearly $64 million to relocate from the island, should the city sell it.

Most of that expenditure, $54 million, would go toward moving the Public Works Department and its fleet of nearly 200 vehicles, the operations division of Parks and Recreation, and some shared support service groups to the new site.

The city needs to build about 252,000 square feet to house everything in single-story structures. DeLong said last fall the city would only put up one-story buildings on the site and that’s why the new parcel has to be 20 acres. The island is smaller at 15.8 acres, but not all of its buildings are one story.

The remaining $10 million would be spent on moving the administrative operations of Parks and Recreation, Information Technology and its equipment, records belonging to the clerk’s office, and engineering field services to as many as four other locations, some of which are already owned by the city.

The cost estimate for the city’s relocation is reflected in 2008 dollars because it will take the city a few years to move from the site. Fishbeck, Thompson, Carr & Huber assisted the city in arriving at its relocation estimate.

The city will pay for the move with the receipts from the property sale — $35 million — and with the property tax-increment revenue that rises from the development on the island.

That means the development’s tax value should range from $55 million three years after the closing date to $70 million five years after closing. And that means the winning bidder would have to invest from $110 million to $150 million in the development, in addition to the purchase price and remedial costs on a site that will certainly qualify as a brownfield.

In all, if someone buys the island they’re looking at a price tag near or above $200 million.

But for now, it’s wait-and-see time for the city.

“We’re kind of in a pause of the process,” said DeLong. “We’re waiting for the next phase to step out.”     

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