DDA supports $35M Waters Building project
The developer is also seeking brownfield financing through the city.
(As seen on WZZM TV 13) The Grand Rapids Downtown Development Authority has approved the recommendation of its Downtown Grand Rapids Inc. administrative staff to provide $70,000 in two grants and up to $1.48 million in future tax increment receipts to support the planned $35 million total re-development of the historic Waters Building on Ottawa Avenue downtown.
Waters Building LLC is also seeking brownfield tax increment financing from the city of Grand Rapids in the amount of $2,675,110 for the project, expected to require hard construction costs of about $12.5 million and expected to begin in late 2014, with completion in 12 to 15 months.
Grand Rapids Economic Development Director Kara Wood said the Waters Building qualifies for brownfield status because there are concentrations of copper, mercury and zinc in the soil, and because it is an underutilized property that is 50 percent vacant.
The 290,000-square-foot, six-story building is one of the largest in downtown Grand Rapids and was built in 1898 as the Waters Furniture Exhibition Building, used by the large number of residential furniture manufacturers in the area.
The building, used for decades for retail and office space, will be completely rehabilitated and repurposed as mixed use, including about 75,000 square feet of office space, 64,000 of retail, 50,000 of residential apartments and 100,000 of hotel space.
Waters Building LLC was represented before the DDA by Bill Mast of Visser Brothers General Contractors and Mark Finklestein of Edmark Development. The two companies, combined as Waters Building LLC, bought the building in February for $12.75 million. It had previously been owned by Three Oaks Group LLC, which bought it in 2006 but lost it to foreclosure a year ago.
The extended-stay hotel planned within the building will have 100 rooms and be patterned after a Homewood Suites by Hilton. According to Grand Rapids Economic Development, the hotel will create an estimated 30 new jobs.
Eric Pratt of Downtown Grand Rapids Inc. said plans also call for construction of 50 market-rate apartments in the building. When fully occupied, those apartments are calculated to infuse approximately $1 million in annual consumer spending potential in the core of downtown.
The developers applied to the DDA for assistance through three of its programs: Development Support Policy, Streetscape Improvement Program and the Areaway Fill Program.
The Development Support Policy is the one involving up to $1,484,000 of future increased tax revenues generated by the redeveloped Waters Building in future years. That amount is 75 percent of all the increase in tax collections, allowed for developments of old buildings that require substantial investment in new barrier-free access and related costs of compliance with the Americans with Disabilities Act.
To ensure barrier-free access, the redevelopment will require new elevators, one for the hotel portion and the other for the renovated office/residential part of the building, at a total estimated cost of $756,860. Other barrier-free improvements throughout the building will add $390,000 to the cost. Adding other costs of barrier-free parking, building permits, fees, architecture/engineering and contingency will bring the total barrier-free cost to an estimated $1,481,127.
The DDA also granted the developers’ request for a $35,000 Streetscape Improvement Grant for new sidewalks and streetscape fixtures, possibly including a snowmelt system, along the Pearl Street and Lyon Street sides of the building.
Also granted was a $35,000 grant from the DDA’s Areaway Fill Program, specifically to fill in an existing areaway under the sidewalk on the Pearl Street side of the building, and rehab of the Ottawa Avenue and Lyon Street areaways.
“Areaway” is an architectural term referring to subterranean passages under the sidewalks adjoining many old commercial buildings. They were essentially an outward extension of the basement, and were originally used with openings in the street level “cap” to permit access of large objects into the basement of the building, which in the case of the historic Waters Furniture Exhibition Building was furniture for the exhibition areas.
Technically, the areaways are the responsibility of the building owner, but collapsing sidewalks above areaways in many U.S. cities have occurred, creating a public hazard. The Pearl Street areaway will be filled in, but those on the other sides of the building contain utilities so will only be renovated to ensure safety of the public.
The Waters Building brownfield plan being proposed to the city would reimburse the developers over time for the estimated $2.6 million cost of baseline environmental assessment, asbestos abatement, demolition, site preparation, infrastructure improvements and other expenses involved in returning the property to the tax rolls at a higher level. The asbestos abatement cost alone is figured at $905,000, with infrastructure improvements at $800,400.
At the meeting last week, both DDA board chair Brian Harris and vice chair Kayem Dunn commented on the total amount of reimbursement sought from the DDA Development Support Policy. Harris asked DGRI president Kris Larson to ask the city’s Alliance for Investment members to consider whether the policy is still needed on that large of a scale to encourage downtown development.
Harris told the Business Journal after the meeting he was not specifically concerned about the Waters Building project, but rather the general costs of encouraging development. He said he wondered if, in view of the improving economy, developers “really need the help.”