City Backs West Side Projects

December 21, 2007
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GRAND RAPIDS — City commissioners gave Robert Israels a green light last week to continue revitalizing a near west side neighborhood as they extended the Renaissance Zone designation for four of his properties.

In turn, Israels plans to invest up to $32 million and create at least 150 jobs on the four sites that are situated along Seward Avenue between Third and Seventh streets.

The owner and president of Israels Designs for Living plans to make that investment and create those jobs in the buildings at 528 Fourth St. NW, 601 Third St. NW, 600 Fifth St. NW and 600 Seventh St. NW.

“He is committed to the creation of 150 jobs, but up to 500 can be created on the properties,” said City Economic Development Director Kara Wood.

Renovation work is underway in at least two of those structures.

The building at 600 Seventh St. is being renovated into a furniture showroom and is home to the design firm’s fine-furniture retail outlet, The Other Store. Israels named the structure the Aslan Building after a character in “The Chronicles of Narnia,” a book by C.S. Lewis, and is adding a third floor to the structure. Israels initially planned to feature 26 apartments on the second and third levels, with half being live-work units, but is now leaning toward filling those floors with commercial spaces.

“We could still go residential, but there are too many opportunities to create jobs with the commercial space,” he told commissioners last week.

So far, Israels has invested $11 million into the building and plans to put $6 million more into it before the project is completed next year. American Seating once made church pews in the building.

Work is also underway at 600 Fifth St., which has a dual address of 615 Fourth St. NW. Known as the South Widdicomb Building and once owned by the John D. Widdicomb Furniture Co., the 120,000-square-foot structure will have a fifth floor added to it and is being renovated to match the already completed Israels Designs for Living Trade Center directly across Fifth Street at 601 Fifth St. NW. The Trade Center renovation was finished in 2002.

Israels said he has invested about $6 million in the South Widdicomb Building and plans to double that investment to create a retail and office center in the structure. That project is set to finish in May.

The building at 601 Third St., at the northwest corner of Third and Seward, was once home to the Drueke Game Co. and more recently was used as a recycling center. Israels plans to invest $10 million in the building and create retail space large enough for roughly 100 workers.

“It will be a nice retail center,” said Israels.

The building at 528 Fourth St. recently became vacant when the Enterprise Iron and Metal Co. moved to another site. Israels plans to invest at least $2 million into the small structure and adjacent scrap yard and create a mixed-use building and parking lot that could employ 20 workers.

Wood said the projects meet the city’s threshold criteria for zone extension and would serve as a catalyst for other developments in the neighborhood. Commissioners extended the nearly tax-free zone for 15 years.

“The current Renaissance Zone begins to phase out in 2009, making it of very little value to the new tenants, since the renovations will not be complete until at least 2010,” she said.

“The extension would provide an additional 12 years of tax abatement, making the final expiration date December 31, 2022,” added Wood.

Israels said he couldn’t redevelop the properties without the city’s help and noted that he wasn’t asking for an extension for all of his zoned properties, as a portion of those parcels will go back on the tax roll when the initial designation expires on Jan. 1, 2012.

“It’s a big risk on my part. I did this out of my own heart for the neighborhood,” said Israels, who was raised on the blocks he is now reviving.

Because the four properties that received the extension are already in the zone, the sites are not on the current tax roll and the exemptions would not affect on the city’s zone cap — which Wood said stood at $137,500. When commissioners adopted the zone in late 1996, they set a cap of $500,000 as the limit of property-tax revenue they were willing to lose each year to the zone.

Wood told commissioners that if Israels adds 150 new jobs to the properties, the city would collect an additional $92,500 in income-tax revenue each year, as the average hourly wage for those jobs would be $17.80. If the properties were on the tax roll, the city would receive $50,960 in property-tax revenue, or $40,000 less than the city can expect from the income tax the jobs are expected to provide.

Wood also said the renovation work would create 138 construction jobs at $35 an hour and would deliver $100,000 into the city’s income-tax coffer.

“It’s amazing what you’ve done over here,” said outgoing Commissioner Roy Schmidt, whose 1st Ward is home to the Israels campus. “Now you’re going to commit to do more and create more jobs.”

The state also has to approve the extension.

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