Construction, Economic Development, and Real Estate

DDA backs downtown projects

Hotel, market-rate apartments eligible for development support funds.

September 14, 2018
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The Grand Rapids Downtown Development Authority recently approved two downtown construction projects that are eligible for development support funds.

Portage-based Hinman Company requested use of the DDA’s development support program to reimburse eligible expenses associated with its proposed hotel and retail venue on 10 Ionia Ave. NW in downtown Grand Rapids.

According to a memorandum from Tim Kelly, DGRI president and CEO, Hinman has requested reimbursement of 75 percent of tax increment revenues generated by the project over 15 years — an estimated $1.23 million — to pay for eligible DDA activities.

The estimated cost of the 10 Ionia project is $36 million and construction is slated for early 2019. The new hotel and retail structure are expected to create 143 new jobs once complete.

Previous Business Journal reports detailed Hinman’s original plans to build a 42-story hotel and apartment complex on top of a triangular parking lot back in 2016, but earlier this year, the company scaled the project down to a 13-story hotel with ground-floor retail.

Hinman cited market conditions like the size and shape of the would-be structure and its proximity to other downtown residential buildings as reasons for the change. The company acquired the lot in the mid-1990s and was waiting for the right time to develop an “iconic building.”

Although the structure was shortened to become more economically feasible, it still would maintain its glass and concrete exterior and “flatiron” shape outlined in 2016.

Rich MacDonald, CEO of Hinman Company, said the project plan also includes adding an overhead walkway connecting the hotel to an adjacent parking structure Hinman owns on 30 Ionia Ave. SW.

“For us, that was pretty important, because hotels want to have their lobby connected to all their adjacent services,” MacDonald said. “And by being able to have this walkway, we’re able to put the lobby on the second floor which allowed us to free up the ground floor for more traditional retail.”

Development support funds would be used to reimburse the cost to improve public infrastructure associated with the project, like sidewalks, snowmelt, street furniture, landscaping and improvements associated with bringing the project into compliance with the Americans with Disabilities Act, such as new doors, ramps and an elevator.

Kelly said Hinman’s proposed development provides an opportunity to develop a vacant parcel and deliver more hotel space to downtown. The ground-floor retail aspect also would further the vibrancy of Fulton Street.

Construction is expected to begin January 2019 and take 18 months to complete.

The DDA also approved a downtown enhancement grant for the development of a three-story retail and apartment complex on top of the sunken lot at 12 Weston St. SW, next to Rockwell Republic. The proposed project would have 22 market-rate apartments and approximately 2,200 square feet of ground-floor retail space.

Apartments range between 400-square-foot studios to 1,000-square-foot two-bedroom units, and rents are estimated at $700 to over $1,000 per month

The developers also are pursuing approval of a plan through the city’s Brownfield Redevelopment Authority.

The developer, Division and Weston LLC, sought a DEG for $35,000 to offset the cost of the $32-million project. Like with 10 Ionia, the funds would be utilized for DDA-eligible activities associated with the project, including barrier-free improvements, filling of the existing areaway and streetscape improvements.

Division and Weston LLC originally sought and was granted support for a $23-million redevelopment of the site back in 2015. The developers originally proposed a 12-story, 150,000-square-foot office building with ground-floor retail, but plans were later scrapped when the developers could not find interested tenants.

Kelly said, in the past five years, the DDA has approved more than $22 million in support for downtown projects, which have contributed over $484 million in private investment in the same time. These include Warner Tower and Hyatt Place hotel at 150 Ottawa Ave. NW, which was granted $3.78 million in DDA support, and Studio Park, which was granted $5.35 million.

In order for a project to be eligible for DDA assistance, it must meet the following criteria:

  1. Be located within the DDA’s Downtown Development Area.

  2. Conform to all building code and zoning ordinance requirements.

  3. Result in the retention and/or creation of permanent jobs or the addition of residential units to the downtown. The amount of DDA reimbursement shall not exceed $10,000 for each job or residential unit.

  4. Construction-related private investment in excess of $5 million.

  5. The maximum expenses eligible for reimbursement the DDA will make for any project shall not exceed the estimated 10-year TIF capture generated by that project, or the life of the TIF plan, depending on which is less.

  6. DDA assistance would be administered and paid to the developer on a reimbursement basis, as described in the development agreement between the DDA and developer.

  7. Reimbursements cannot exceed 75 percent of the annual local TIF capture generated by the approved project.

  8. In the event of a transfer or sale of the property, the development agreement might be assigned to the new owner of the property with prior written consent by the DDA, provided the sale of individual residential condominium units tied to the project would not require assignment of the agreement or approval of the DDA.

  9. The developer must provide an analysis of the project to the DDA’s legal counsel. Said analysis shall be used to verify the need for reimbursement and reasonableness of the request.

  10. If approved by the DDA Board, eligible costs for off-site public facilities also might be eligible for payment of accrued interest on unpaid reimbursable costs at an agreed upon rate of interest.

  11. If approved by the DDA Board, eligible expenses for on-site public facilities are eligible for reimbursement without interest.

  12. The obligation of the DDA to reimburse the developer for eligible costs shall be subordinate to existing and future debt obligations of the DDA.

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