GRAND RAPIDS — Developers behind the $150 million Factory Yards redevelopment south of downtown Grand Rapids plan to seek rarely used state tax incentives to offset substantial costs of the project.
Developers behind Factory Yards, a 467-unit mixed-use redevelopment plan that was pitched to city officials earlier this year, plan to seek up to $103 million through the state’s Transformational Brownfield Plan program.
Adopted in 2017 and amended in late 2021 to support more projects, transformational brownfield plans have only been approved for two projects in Michigan: Dan Gilbert-backed developments in downtown Detroit and the redevelopment of a defunct paper mill in Vicksburg. State officials are considering a $616 million transformational brownfield incentives request for proposed District Detroit projects spearheaded by the Ilitch family and billionaire developer Stephen Ross.
Three metro Detroit-based developers — Ben Smith, Scott Magaluk and Dennis Griffin — are behind the Factory Yards project. The development team on Tuesday presented their tax incentives plan to the city’s Economic Development Committee. The developers intend to apply for transformational brownfield credits, $20 million in traditional brownfield credits, and Obsolete Property Rehabilitation Act incentives.
The developers are communicating with city officials as well as the Michigan Economic Development Corp. as they compile a Transformational Brownfield Plan application. They have not yet officially applied for the incentive plan.
In addition to the $20 million in traditional brownfield credits, the developers could qualify for up to $103 million more in transformational brownfield credits, which would reimburse eligible costs including building renovations, alterations, and other construction costs.
Securing transformational brownfield incentives is “integral” for the project to move forward, said Smith, who is a founding partner at TerraNovus Capital.
“You can’t get a project like this done without it,” Smith said. “That’s why they created the (Transformational Brownfield Plan) legislation, to facilitate these types of placemaking projects.”
Legislation creating the Transformational Brownfield Plan program became law in 2017. State lawmakers in 2021 amended the law to open up the incentive program to more developers of large projects, as MiBiz previously reported. Under the revisions, developers can now layer multiple incentives alongside transformational brownfield funding, which the Factory Yards developers plan when seeking Obsolete Property Rehabilitation Act (OPRA) incentives for the project. The OPRA program freezes the taxable value of commercial and commercial housing properties that have been labeled obsolete.
Transformational brownfield funding would ultimately need approval by the Michigan Strategic Fund. The program allows developers to capture various state and some local taxes to offset project costs.
Major redevelopment
Early plans for the Factory Yards project include partially demolishing and redeveloping existing industrial buildings, and adding new construction over more than 15 acres in Grand Rapids’ Roosevelt Park neighborhood. The project site includes several parcels around 655 Godfrey Ave. SW, several of which have been rezoned to facilitate the project, containing four buildings totaling 550,000 square feet.
In addition to 467 apartment units, the plan also calls for ground floor commercial space with a variety of uses, including commercial offices, a fitness center and self-storage space, which would require another rezoning approval. A portion of the commercial space would include a food hall with 11 vendors, a brewery and event space. The plan calls for 800 parking spaces, including 220 in a parking deck.
The project timeline is dependent on the tax incentives approval process, though the developers expect a total three- to five-year timeframe. The first phase of the project would include a five-story building and a three-story building with a total of 382 apartment units, the food hall and ground floor commercial space.
Smith said the project aims to bring much-needed housing to the area, while the team plans to preserve about 77 percent of the existing buildings on the site. The developers are working with the city to create an affordable housing plan for the apartment units.
Magaluk said the price point for the apartments is a “moving target.” Most of the units would be priced at around market rate, but the developers are considering making 10 percent of the units affordable for households earning 60 percent of the area median income, and another 10 percent of the units affordable to households earning 80 percent of the area median income.
Smith called the project an “important connector” with the neighborhood that preserves historic assets on a large property at the south end of downtown.
Grand Rapids-based Wolverine Building Group is the general contractor on the project and Norton Shores-based Concept Design Studio serves as the architect.
City officials say Factory Yards signifies ongoing efforts to draw in developers from outside of the region.
Grand Rapids’ ability to draw the interest of developers from outside of West Michigan is a success of the city’s efforts to attract quality developers from across the state and country, said Jeremiah Gracia, director of economic development at the city of Grand Rapids.
“This is a very complex but very important redevelopment project for this area of our city and the density is important,” Gracia said during Tuesday’s committee meeting.
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April 12, 2023 at 03:58AM
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Factory Yards developer to seek up to $103M in 'transformational brownfield' funding for Grand Rapids project - MiBiz: West Michigan Business News
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