Proposed Grand Rapids apartment building approved for $3.6M in tax incentives
GRAND RAPIDS, MI – The board of directors of Michigan Economic Development Corporation (MEDC) has approved a $ 3.6 million tax incentive for a developer looking to convert a three-story empty industrial building along Market Avenue SW into 173 off-market homes.
The $ 31.3 million project is proposed by 3F Properties of Chicago. Rent for the apartments, which are expected to include studio, one-bedroom, and two-bedroom units, ranges from $ 975 to $ 1,700 per month.
The $ 3.6 million incentive approved by the MEDC board of directors is part of the state’s brownfield program.
It uses tax increase funding to reimburse developers for certain expenses related to the remediation of contaminated, functionally obsolete, tainted, or historic properties. For the 470 Market Ave. the developer would receive reimbursement over a period of 25 years.
While the brownfield incentive is expected to be $ 3.6 million, it could be used for up to $ 4.8 million, according to a MEDC memo.
The project has also received a 10-year Obsolete Real Estate Remediation Act incentive worth $ 2.9 million.
Dana Kollewehr, a community assistance team specialist at MEDC, said the incentives were necessary to make the project successful.
“We looked at the financial performance of the project and its ability to be fundable without the incentive and without the brownfield TIF incentive. This really limits their ability to cover debt servicing for the project,” she said.
The building, 470 Market Ave. SW, formerly housed the American Boxboard Company and other commercial and industrial uses. It is located in an industrial area on the northern edge of the Roosevelt Park neighborhood, where more than three-quarters of the population are Spanish and a significant number of families live below the poverty line.
The developer’s request for tax incentives was pushed back in March 2020 by a member of the Grand Rapids Downtown Development Authority. Board member Luis Avila said he refuses to give a public grant to a project that does not include units reserved for low-income residents.
The DDA and the Grand Rapids City Commission previously approved the incentives for the project.
Mike Obloy, Principal of 3F Construction, could not be reached for comment. In an interview with the DDA last year, he said: “For a project like this, the subsidies are necessary to make the project financially viable.”
Studies have shown that more living space is needed in Grand Rapids.
A study conducted for the city of Grand Rapids by Housing Next group estimated that the city would need 5,340 additional homes by 2025 to meet demand. Of this, about 2,400 units are needed for people earning $ 45,000 and more.
Grand Rapids city spokeswoman Katrina Danko said 3F Properties’ application for a building permit was approved on Monday and the company could begin construction once it paid the building permit fee. The company stated in its application that it intends to begin construction once its permit has been approved, she said. The expected completion date for the project is May 2022.
The proposed home is located near the Grand River, south of a large-scale planned redevelopment along Market Avenue between Fulton and Wealthy Streets. Preliminary plans for the area include a 12,000-seat outdoor amphitheater, housing, retail and green space.
“This is an important housing stock that is needed,” said Jeremiah Gracia, director of economic development for the city of Grand Rapids.
The $ 5.1 million project in Portage and Pitcher Streets will add bike lanes and extend the street diet
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