City extends agreement with JLL
Grand Rapids contracted Chicago-based real estate firm to evaluate city-owned property on Market Avenue.
A new amendment to the city of Grand Rapids’ agreement with Jones Lang LaSalle (JLL) Inc. will allow the city to retain the firm until 2019.
The Chicago-based real estate firm was contracted to lead a team of consultants to evaluate and prepare the city-owned 201 Market Ave. SW site for possible redevelopment. The city’s GR Forward plan identified the site as a potential “hub of activity.”
As the Business Journal previously reported, the city and JLL elected to move forward with due diligence with Indianapolis-based developer Flaherty and Collins’ plan for the 15.8-acre site in December 2017.
The city commission approved the original agreement with JLL in May 2016 in an amount not to exceed $335,000. The first amendment to the agreement was adopted in May 2017 and the terms of the agreement were extended until May of this year.
The city and JLL currently are working with Flaherty and Collins to refine the expected cost of infrastructure and identify which improvements will be eligible for Brownfield Tax Increment Financing. The parties also are working to identify additional incentives or resources to support the development.
Remaining work on the project consists of finalizing the proforma, submitting an application to the Michigan Economic Development Corporation Transformational Brownfield Plan, completing a test fit on the site, securing the site and negotiating a term sheet for the city commission’s consideration.
The staff tied to the project has not requested any added consulting fees.
“This actually just extends the agreement through next year, so they continue with their work regarding relocating city property off of 201 Market and exploring the cost of that and utilities provided,” Second Ward Commissioner Ruth Kelly said. “This is really just an extension of time and not an allocation of money.”
City Economic Developer Kara Wood also emphasized no changes have been made to the city’s plans, but finalizing approvals on the state level will require more time.
“There’s been no change in the process, no cause for alarm. We just need time to work on it,” she said. “What we’ve been told and understand from the state is there’s a process that could take up to six months, plus we have to negotiate the term sheet.”
Wood also pointed to the recent sale of the Areas 4 and 5 parking lots to Jackson Entertainment as an example of large-scale developments taking time to finalize.
The Areas 4 and 5 parking lots will become the new home of the Studio Park mixed-use project. The Business Journal has tracked the almost five-year process of turning over the lots to private developers. Jackson Entertainment was able to purchase the properties in February, with construction beginning on the site in March.
The resolution to extend the agreement with JLL received almost unanimous approval except for one “nay” vote from Third Ward Commissioner Jon O’Connor.
O’Connor expressed concern over the fact the city is continuing to negotiate without a full appraisal of the site in what he called a “cart-before-the-horse” scenario.
“JLL was contracted to help the city navigate all of those different challenges, and the fact that we gave them a contract for a year — they were supposed to help us identify a site and we don’t have any information about that,” he said.
O’Connor added the city should have had a real estate appraisal to know the value of the property before moving forward with the Flaherty and Collins proposal in December.
“The city is not in the private development business,” he said. “Maybe they should let the private development tell them what is possible.”