DDA shaping new incubator plan

April 15, 2011
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The program may turn out to give as much of a financial boost for downtown building owners with vacant and under-used storefronts as it does for new retailers.

Members of the Downtown Development Authority accepted the general concept of a proposed plan to establish retail incubator space in the district last week, but they also sent the proposal back for more polishing.

“To me the concept isn’t in doubt; it’s the guidelines,” said Mayor George Heartwell, a DDA member.

Heartwell felt that the 16 eligibility guidelines for retailers to qualify for the new program were too restrictive and not inclusive enough. So DDA Executive Director Jay Fowler will take another look and bring back a revised set of guidelines for the board’s May meeting. “This is a program in development that will take some time to launch,” said DDA Chairwoman Kayem Dunn.

At the same time, Fowler and DDA Counsel Dick Wendt, a partner at Dickinson Wright, will put together space agreements for 50 Louis St. SW and multiple storefronts on two blocks of 100 S. Division Ave. The respective owners, First Ward LLC and Dwelling Place of Grand Rapids, have requested to have their storefronts designated as incubator spaces. Those agreements are also expected to come before the board next month.

“I think we can spend more time with the guidelines and work with the property owners,” said Fowler. “We want to make sure that the property owners aren’t increasing the rents with the DDA at the table. We’re supporting the retailers.”

Because Wendt said the DDA doesn’t want to be a tenant or sub-lease space, financial support for the retailers would come in the form of a rent subsidy for the first 18 months of their existence. There are three subsidy levels: up to 50 percent, or a maximum of $830 a month for the first six months; up to 30 percent, or $498 a month for months 7-12; and  up to 20 percent, or $332 for months 13-18.

Once the eligibility guidelines are established, applications will be accepted from promising retailers. Those accepted into the program will receive broad business advice and possibly mentoring from the Small Business Technology and Development Center and Grand Rapids Opportunities for Women. A five-member advisory committee will oversee the program.

“These groups have offered to partner with us and haven’t asked for a subsidy,” said Fowler. “I think an important piece of this is establishing an advisory committee.” 

“We will require that an applicant access these groups,” said Dunn.

“We will have several layers of programming available for them,” added Anne Marie Bessette, a retail specialist with the DDA.

The advisory committee will consist of GROW Executive Director Bonnie Nawara, Neighborhood Ventures Executive Director Mark Lewis, SBTDC Regional Director Dante Villarreal, Verdandi Consulting’s Sandra Cochrane, and a banker to be named later who will most likely come from Fifth Third Bank.

The DDA plans to invest $150,000 annually in the incubator spaces; the money will come from the property-tax revenue it gets from building owners. But DDA Treasurer Jana Wallace told the board last week that the total value of commercial properties in the district fell by $4.4 million last year. So with values down and fewer tax dollars coming to the board, the DDA’s Priority Committee will soon recommend how the tax-increment revenue should be allocated for the 2012 fiscal year budget. The year begins July 1.

Although the board didn’t directly allocate money to the program last week, DDA funding through a couple of building grants indirectly got the incubator program going. The board gave First Ward LLC $50,000 in two grants to renovate the basement, first floor and a retail suite at 50 Louis, also known as the Trade Center Building. First Ward wants to fill an empty suite with aspiring retailers. And the DDA awarded a $75,000 grant to the Peck Building at Division Avenue and Monroe Center to renovate vacant ground floor space into a multi-unit incubator.

“We are looking for as much support as we can get. We want to do a good job. It’s a pivotal corner,” said Kurt Hassberger, COO of Rockford Cos., who added the firm would spend up to $400,000 on the project.

Rockford renovated the Peck, which is actually three buildings, more than a decade ago and has empty space on the ground floor since Café Bloom closed. A motion to reduce the grant to $50,000 wasn’t supported.

“This is a different model for incubators,” said Fowler, of the multi-unit approach, “and a good reason to support it (at $75,000).” On top of that, a consultant to the DDA said Monroe Center was a priority for housing incubator space.

The DDA also supported the second Restaurant Week, which will be held in November, by giving the event $25,000 toward its $90,000 budget. Experience Grand Rapids President Doug Small, who suggested the event, said details would be released this week.

The board also gave the Downtown Alliance $33,241 to pay for outdoor banners and the hardware needed to hang them along Monroe Center. “We had to come up with a creative way to display our banners,” said Nicole Weichelt of the alliance.

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