City to get a second shot at Oakdale project

March 3, 2012
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Grand Rapids city commissioners are expected to set a date next week for a second public hearing on a brownfield request for the former Oakdale Elementary School at 944 Evergreen SE because the building has a different owner.

A second hearing became necessary when GR School Lofts LLC revealed it had sold the vacant building to Charter Development Co. LLC. GR School Lofts, a division of Ojibway Development in Berkley, Mich., informed the city of the sale after city commissioners gave the developer a brownfield designation for the school in late January. The developer initially said it was going to convert the school into rental housing, but instead terminated the brownfield it was awarded for the building.

The Charter Development Co. is part of National Heritage Academies Inc., a charter school operator. Both firms are local and share the same executives. Charter Development plans to turn the former Grand Rapids public school into the River City Scholars Academy, a new kindergarten through 8th grade charter school.

Commissioners are expected to set March 27 as the hearing date and to award Charter Development a brownfield designation for its project after the hearing. The city’s Economic Development Project Team is expected to discuss the Oakdale project next Tuesday.

Last week, the city’s Brownfield Redevelopment Authority revised the plan it approved in early January and gave the designation to Charter Development, which told the panel it would invest $7 million into the school and another $350,000 to improve the site’s park property that the city will own.

Mayor George Heartwell told the Business Journal that the same day GR School Lofts closed with GRPS on the sale of Oakdale and two other vacant elementary schools, Eastern and Lexington, the developer told city officials it wanted to reprocess the purchase of Oakdale because the school was being sold to National Heritage Academies. Heartwell said he felt the developer came to the commission knowing that Oakdale wouldn’t be developed as commissioners were told in January, and he questioned the sincerity and integrity of the Berkley-based firm.

The mayor also said he heard that National Heritage was financing the $1.6 million purchase of the three schools but is planning to develop only Oakdale into a charter school. National Heritage has reportedly given GR School Lofts 90 days to buy Eastern and Lexington from the academy.

Bruce Michael of GR School Lofts said the firm still plans to develop apartments in the Eastern and Lexington buildings.

“However, we’re not sure how or why he can actually say that because he no longer owns them. The deed is all in the name of National Heritage company,” said GRPS spokesman John Helmholdt.

Helmholdt said GR School Lofts’ recent disclosure has cast a “cloud” over what the school system thought was an innovative agreement to put vacant school buildings back into play and onto the tax roll. As a result, he said similar future agreements are likely to undergo “a much higher level of scrutiny.”

Helmholdt also said school board members have asked some “understandable” questions related to the legality of how these transactions occurred. The key answer board members are hoping to get is exactly when GR School Lofts entered into a contract with National Heritage for the Oakdale building.

“When did the developer know about this agreement with National Heritage Academies? Because Mr. Michael clearly outlined what his intentions were on repeated public occasions before the city Planning Commission, before our Board of Education, before the neighborhood-community meetings that are required to be held with a sale of school property,” said Helmholdt.

“He was even asked about those intentions up to the day of closing and he maintained that he was planning to use these for apartments. Yet, after he signed, later that same day, he went into another room and sold the property to National Heritage. I think it’s more of a technical question, and we just want to understand what are the (disclosure) rules and what are the rights of Grand Rapids Public Schools, and what should we expect now and in the future,” he added.

Helmholdt said GRPS does business with integrity and respect, but a question remains as to what really occurred. “And I’ll go a step further. This is a question that needs to be posed publically because everything that Grand Rapids Public Schools does is open to the public,” he said.

“What we understand is that the charter application with Bay Mills (Community College) was done in July, and it listed Oakdale specifically on the application. Therefore, we have to surmise that they’ve known (a charter school was set for Oakdale) for at least six months, and probably more than that.”

Another out-of-town developer recently announced it wants to turn the former Riverside Elementary School into an assisted-living center for seniors. City commissioners are scheduled to vote on a zoning change for that project next week. Planning commissioners will consider whether to grant the project a “special land use” designation on Thursday.

Helmholdt said the transaction with GR School Lofts for its $535,000 purchase of Stocking Elementary hasn’t closed, but the school board has approved the sale. He said the purchase agreement, however, includes a number of approvals the city has to grant the project.

“We want what’s best for students, families and the neighborhoods, whether it’s Oakdale or it’s Stocking,” he said. Michael has said his firm also wants to build apartments at Stocking.

City Economic Development Director Kara Wood said commissioners will have to approve development and reimbursement agreements for all four schools, but wasn’t sure when those votes would be taken.

The city agreed to a term sheet with GR School Lofts that requires the properties’ owner to use tax-increment financing that will come from improvements made to the sites to develop public parks or playgrounds at all four locations. Heartwell said that agreement remains in place even if GR School Lofts doesn’t own the properties.

“It’s my understanding the term sheet applied not only to the developer but to successor corporations. We will tell National Heritage Academies that they are bound by the same term sheet,” he said of the Oakdale site. “So we think there won’t be an impact on the plans we have for developing the parkland.”

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