Old city schools may be reinvented as residences

January 16, 2012
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Grand Rapids city commissioners will hold four public hearings next week on one developer’s request to convert 16 floors of vacant elementary classroom space into apartment houses at a total cost of roughly $18.2 million.

Affiliated Developers of Berkley, Mich., doing business as GR School Lofts LLC for the project, proposes to redevelop the former Eastern, Lexington, Oakdale and Stocking elementary schools into residential units. The four were once part of the Grand Rapids Public Schools system. Affiliated Developers also has pledged to donate a portion of land at each site to the city so it can develop a park on each property.

Stocking and Lexington elementary are on the city’s northwest side, while Oakdale is on the southeast side and Eastern is on the northeast. Each building has four stories.

Some residents near the schools have voiced concerns about the buildings being redeveloped.

“I think neighbors are concerned about what is going to happen to the buildings and they expressed some questions to the developer. We suggested that they take the input and go back and review it and try to come up with a development plan that would be more acceptable to the neighbors. I think we’re going to see more of that in the future as we see populations shifting and students leaving the school system. So I think we need to have some things in place to reuse or redevelop the properties,” said Commissioner Elias Lumpkins.

Lumpkins said commissioners and administrators need to hear from residents and developers for the city to accomplish that. He also thought the city needs to keep a close eye on market conditions. In the meantime, he felt the project would go forward. “I think the public hearings will give us one more chance to get input and I think the developer will be able to fine tune this project,” he said.

But Lumpkins also said that he hasn’t heard any comments about the project from business owners in the respective neighborhoods. “But I would think that if it’s a restaurant or some service provider, I think having more people in the area would be helpful to them. It’s just like downtown was many decades ago. We had a lot of shuttered buildings and businesses then. But as people began to move downtown, we had people come back to downtown and it’s a booming area now,” he said.

The public hearings, one for each school, will determine whether the proposed development qualifies under Public Act 381 of 1996. If so, the developer would receive brownfield redevelopment financing and an exemption of state and local property taxes for remediating the sites and putting the buildings back into use. The firm could collect up to $7.4 million in public financing for cleaning up the properties and for making the empty schools viable again. The city ultimately stands to collect more property-tax revenue from the buildings that were never on the tax roll.

City Economic Development Director Kara Wood said Affiliated Developers has never done a project in the city. One of the firm’s key individuals is Bruce Michael, a development officer with the firm. He reportedly has 30 years of experience as a developer and has developed more than 6,000 multi-family residential units, as these would be, that have involved government subsidies and financing. Michael does the acquisition and underwriting of the firm’s projects and also oversees construction.

In another housing matter, commissioners granted Brookstone Capital of Midland tax exemptions and a payment-in-lieu of taxes program for three residential projects last week. Brookstone wants to build separate apartment complexes at 205 S. Division Ave. and 26 Cherry St. SW and turn a former church at 834 Lake Drive SE into rental residences at a cost of roughly $32 million. The company intends to use various financing sources for the projects, including bank loans, low-income housing credits and federal HOME funds.

The firm plans to develop 100 one- and two-bedroom apartments at the three sites. One-third will be market rate, while the rest will be targeted to low-income residents. Instead of paying property taxes, Brookstone will pay the city 4 percent of its rental income each year for up to 40 years. Brookstone Capital plans to have all three projects LEED certified.

“By approving a PILOT, it increases the probability for a project owner to qualify for low-income housing credits,” said Erin Banchoff, community development department manager.

“I know this developer and thank him for his interest in the city,” said Commissioner Dave Schaffer of Brookstone Capital principal Karl Chew.

“We need more collaboration (like this) to get out of this so-called recession,” said Lumpkins.

Commissioners also agreed last week to award the city’s Downtown Development Authority $200,000 of a $1 million grant the city received from the U.S. Environmental Protection Agency in 2010 for its brownfield revolving loan fund. The DDA plans to use the grant to help clean up 3.5 acres on Ionia Avenue SW near Wealthy Street that it owns for the Urban Market project that it is doing with the Grand Action Committee.

The grant requires the DDA to put up a 20 percent match of $40,000; the remediation of the site is projected to cost about $1 million. Work on the property will begin this year and should be completed by the spring of 2013.

Another downtown project — the Michigan Street Corridor Study — received a sustainable communities grant of $459,225 from the U.S. Department of Housing and Urban Development. The grant pushes the project’s total funding over the $800,000 mark.

“There is no further match requirement from the city,” said City CFO Scott Buhrer.

City Planning Director Suzanne Schulz, who spearheaded and is directing the project, will update commissioners on where the study stands next week.

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