DDA Likely To Rescue The Gallery
GRAND RAPIDS — A struggling development that has been proposed for one of downtown’s busiest corners is likely to get a major financial boost from the Downtown Development Authority next month.
“It’s been two years since the development team has been going through due diligence and trying to make the project work,” said DDA Executive Director Jay Fowler. “The DDA hasn’t been involved in the project so far, and we need to discuss this.”
The Gallery on Fulton is a mixed-use development that RSC Associates of Chicago and Second Story Properties of Grand Rapids have been trying to make happen at the southwest corner of Division Avenue and Fulton Street since 2005.
The 37,000-square-foot site was once home to the city-owned City Centre parking ramp, and the developers, doing business as Two West Fulton for the project, agreed to buy the property from the city in May 2005 for $2 million.
But because Two West couldn’t find a tenant quickly enough to anchor the development, it paid the city $25,000 for two six-month extensions to push back the closing date for the purchase.
The next scheduled closing date is Jan. 31. Now, though, the DDA is expected to step in and buy the land at its next meeting on Jan. 9 and then sell the parcel to Two West at terms friendlier to the developer.
“We hope to come back in January with the term sheets,” said Fowler.
Board members are also expected to agree next month to reimburse Two West for some of the project’s “eligible activities,” which the DDA can support financially. Two West will ask the state for another brownfield award next month. But the partners need a local match to qualify for it, and funds from the DDA would fill that requirement.
“We have invested a lot of hard money into the project and have shrunk our margin,” said Second Story Properties President Sam Cummings.
Cummings reiterated that the Urban Institute for Contemporary Arts will be the anchor tenant. He said UICA will have 32,000 square feet in The Gallery.
“It’s a very impressive organization and important to keeping our city vital,” he said. “We are inches from our final agreement with UICA.”
Cummings said the nonprofit has raised nearly $3 million of its $6.5 million campaign to make the move from 41 Sheldon Ave. SE to The Gallery. He also said UICA members are racially diverse and are exactly the type of demographic downtown needs.
The Gallery will also offer 66 rental apartments, some small retail shops along Division Avenue, and 278 public parking spaces. Cummings said the apartments would rent for $1.60 per square foot, or $1,600 a month for a 1,000-square-foot unit. Roughly 22,000 vehicles go through the intersection each weekday, making the property a very visible downtown site.
If the DDA buys the land and financially supports the project next month, Cummings said a groundbreaking ceremony would take place in the spring and the building would be LEED certified.
In another action last week, the DDA gave the developers of the Tall House at 45 Ionia Ave. SW an extension to start construction. Work on the mixed-use project was supposed to begin by the end of this month, but now that start date has been pushed back to Sept. 30, 2008.
Tall House partner George Haworth said a weak housing market has slowed sales of the condominiums the project offers. Mary Witte, also a partner, said about 25 percent of the condos have been reserved. She added that requests for information on the condos and the commercial spaces have increased recently.
“On the marketing side, I’m pleasantly surprised at all the response to our marketing,” said Witte.
The Tall House would go up on a small parking lot just east of Van Andel Arena that the DDA still has possession of until the end of the month. In granting the extension, board members also agreed to turn over the lot’s receipts dating from August 2006 through last month to the developers to help them cover the carrying costs that have originated from their purchase of the lot. Tall House bought the site from Rockford Construction. Fowler said the parking revenue totaled $14,500.