Orchard Park Changes Questioned

May 18, 2007
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WALKER — Cabela’s has signed a letter of intent to be part of the proposed 240-acre Orchard Park Lifestyle Center, but some city commissioners appeared both surprised and somewhat miffed Monday when the developer suggested build-out of the center’s retail district in Phase I, rather than the Phase I build-out of the town center as originally planned.

According to Orchard Park developer Northgate Holdings LLC, under the “updated plan” Phase I would begin in the fall of 2008 and would include construction of Cabela’s, a hotel water park and associated tourist-oriented retail on 100 acres at the southeast corner of the Orchard Park property, which is located along I-96, Walker Avenue and Four Mile Road. Phase II, which would launch in the fall of 2009, would include a 100-plus acre mixed-use town center with “fashion retail,” restaurants, offices and surrounding apartments, town homes and condos, according to James Bossenbroek, principal of Northgate Holdings. 

Including a later Phase III that would bring additional retail, office and residential space to the project, the overall development would have nearly 1.2 million square feet of retail space, more than 77,000 square feet of restaurant space, approximately 135,000 square feet of office space, more than 430 residential units and about 27,000 square feet of assisted-living facility space.

Mayor Rob VerHeulen said he wanted assurance that all of the elements of the original plan remain.

“We understand the residential market is a challenge these days, but as we look at it, we look at it not so much as phases, but as one comprehensive project fully built out,” VerHeulen said. “Some of the attractive features were the town center with pedestrian-friendly walkways and green space.”

Northgate’s initial partner on the project was Trademark Property Co. of Fort Worth, which came up with the original Orchard Park development plan. Trademark Properties was later supplanted by Urban Properties Co. of Chicago, which had been working with both Northgate and Trademark on the project since the fall of 2005. Urban Properties changed the plan by shifting emphasis to the retail portion of the project.

“If we shift Cabela’s to Phase I, this will give us a leg up and help us establish our whole area as a retail node that we hope will allow us to proceed with the overall project,” said Michael Levin, president of Urban Properties’ development division. “Having Cabela’s here really gives us a kick-start in terms of leasing the project.”

Levin said he believes the proposed update plan is a much better plan; it has more “sizzle” and “sex appeal” than the original, and yet is still consistent with the master plan.

But Second Ward Commissioner Barbara Holt said she was troubled by the change in plans.

“This was a town center proposal, and we’re kind of getting away from that and just talking about the retail component. You’re trying to develop retail; we’re trying to develop community, and residential was not a happenstance in this project,” Holt said. “Residential was proposed there — everybody was convinced that we needed to have it there. Right now, it looks like it’s just something that’s going to take place many years from now.”

Holt said that without assurances, the residential portion project may never happen because the housing market in Grand Rapids and the state of Michigan is soft at this time. 

Levin responded that he could not deliver the town center first because the partners are in a battle with a development site on the east side of town for tenant commitments. He said they could not get the tenant commitments or the anchor store commitments to make the town center happen today.

“The Cabela’s can happen today, and we think that will jumpstart the whole project,” Levin said. “If we don’t have Cabela’s, we can’t do many of the things planned.”

Bossenbroek said Cabela’s remains very committed to coming to Walker. He said the prototype Cabela’s store these days is 130,000 square feet. The Cabela’s in Dundee, Mich., is the chain’s largest, with a 250,000-square-foot showroom.

VerHeulen stressed that the city needs to know the commitment is there for the entire project as originally proposed. Cabela’s would certainly be a key anchor for the development, he said, but the developer can’t forget about the rest of the project.

Northgate Holdings estimates that more than $24 million will be needed for street, water, sanitary sewer, storm sewer and other infrastructure improvements to accommodate the project, as well as an estimated $22 million for cleanup and remediation of the Orchard Park site. A preliminary environmental analysis of the site revealed arsenic and other chemicals in the soil, according to the city of Walker. 

Last November, Cabela’s asked the state for a $15 million tax incentive package to offset the public infrastructure costs related to the development, but was turned down. The city of Walker made it clear from the beginning that it could not and would not contribute any funding to the project.

Northgate Holdings presented commissioners with a creative financing plan on Monday, proposing that Walker establish an Act 425 agreement with the city of Wyoming as a means of moving the project forward. Walker is not designated as a “core city,” so the Orchard Park project is ineligible for tax increment financing under the state’s Brownfield Redevelopment Financing Act. But Wyoming is a designated core city and does qualify. Act 425 is codified by the Michigan Legislature as a contractual method of temporary annexation whereby a local unit of government conditionally transfers land to another local unit of government for the purpose of completing an economic development project.

Such an agreement would allow Walker to use Wyoming’s tax-increment financing tool to help cover both the infrastructure and site remediation costs. Under the agreement, Wyoming would assume jurisdiction over the Orchard Park property for a limited period of time so that the project could qualify for TIF financing under the state’s Brownfield Redevelopment Financing Act. Wyoming’s Brownfield Authority would capture the taxes generated by the development and apply them to the infrastructure improvements and remediation effort. Meanwhile, Walker would continue to collect its current ad valorem taxes and income taxes within Orchard Park. Upon the agreement’s termination, the Orchard Park property would revert back to Walker’s jurisdiction.

Wyoming has established a half-dozen 425 agreements with other communities in West Michigan for the mutual benefit of each, Wyoming City Manager Curtis Holt pointed out. Walker City Manager Cathy Vander Meulen underscored the fact that a 425 agreement is not a tax abatement; the developer would pay property taxes based on Wyoming’s millage rate that will be captured as TIF funds.

Discussion will resume at the next Walker City Commission meeting in June.    

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