Bank receives TIF assignment for project
The Downtown Development Authority board of directors recently approved an agreement with 20 Monroe Building Co. LP to assign the developer’s right to receive tax increment reimbursement associated with the Venue Project at 20 Monroe Ave. NW to the commercial lending partner.
Since Mercantile Bank of Michigan has partnered with 20 Monroe Building Co. to provide construction financing, the bank requested the assignment of a portion of the Venue Project Tax Increment Revenues as part of the terms of the lending package.
The company is managed by Greg Gilmore and The Gilmore Collection.
Mercantile Bank indicated the “collateral assignment” is in “consideration for the bank providing construction financing,” according to the Jan. 13 DDA agenda.
Mark Augustyn, senior vice president and regional commercial loan group leader at Mercantile, said, as a community bank, Mercantile has done a tremendous amount of work in the downtown area with real estate lending.
“Overall, we think a lot of The Gilmore Group, and helping them grow downtown is something that we are a big fan of,” said Augustyn. “The TIF program has been a nice program that has allowed projects to take place that probably wouldn’t have taken place if wasn’t available.”
The DDA board originally approved up to $650,000 through a Development and Reimbursement Agreement in support of the project, which is adjacent to The B.O.B. The nearly 36,000-square-foot, two-story, flex entertainment venue is anticipated to feature a beer garden, food kiosks, and space for concerts, weddings and other events.
The agreement was intended to provide financial support to the overall $10.7 million budgeted project since it is located within the TIF District A, which prohibits the use of a Brownfield Redevelopment TIF plan. The nearly $650,000 allocated for costs associated for public facility improvements was an approximately 75 percent reimbursement for a 15 year-period.
Augustyn said TIF programs have certainly spurred growth in the downtown area.
“Those TIF streams have been instrumental over the last decade in enhancing development projects within the greater downtown area, and instrumental in the fact that they have provided companies some additional capital or boost to catapult some projects, in our opinion, that wouldn’t have been developed,” said Augustyn.
The Venue Project is being constructed at the same site as the $22 million Venue Tower, a 14-story apartment building comprised of nearly 90 market-rate units. The tower was planned to be built “in conjunction” with the flex entertainment venue and also received up to $1.09 million of financial support from the DDA.
Augustyn said the bank was pleased to be able to partner with a well-established, family-owned company.
“Part of our mission is to grow with our clients,” said Augustyn. “(Gilmore) has been talking about doing a project downtown to really continue to grow the entertainment base in Grand Rapids.”
During the 2015 calendar year, Mercantile Bank financed more than 3 million square feet in new construction or renovation, with total project costs reaching more than $300 million, according to Augustyn. While the bank didn’t finance the entire $300 million, Mercantile has financed portions of the various projects while other portions have come from TIF plans and the owners.
“That is something that we have put significant effort in,” said Augustyn. “Over the last 20 years, we have been participating in many strong projects in West Michigan and real estate, obviously, is a part of that. I think that shows our commitment to the community.”