When developer Sam Cummings set out to redevelop a building at 25 Ionia St. SW in Grand Rapids nearly two decades ago, he needed to leverage the site’s historic designation to make the project economically feasible.
If he had been forced to redevelop the property using existing building codes — which called for a number of expensive upgrades, the project would have been cost-prohibitive and never would have gotten off the drawing board, he said.
“Historic designation is a valuable tool not only for asset revitalization but for neighborhood revitalization,” said Cummings, a managing partner at Grand Rapids-based CWD Real Estate Investment Inc.
The building’s historic status “gave local officials some cover” in considering alternative egress options that preserved the character of the building and made the economics of redeveloping it work, he said.
Today, the Lemon-Wheeler building at 25 Ionia in Grand Rapids’ Heartside neighborhood is occupied by BarFly Ventures LLC’s flagship HopCat restaurant, a nationally expanding craft beer bar chain.
“The solution was not by the book, but because it was historic, we could look into getting some leniency,” said Cummings, noting the designation has played a key role in dozens of his redevelopment projects.
But under proposed state legislation, those historic preservation tools could change.
As introduced in late January, House Bill 5232 and Senate Bill 720 would make it more difficult to form historic districts and most likely make it easier to unwind a historic designation, sources said. The bills were still going through the legislative process as this report went to press.
The bills’ sponsors, State Rep. Chris Afendoulis, R–Grand Rapids Township, and Sen. Peter MacGregor, R–Rockford, argue that reforming the state’s 78 historic districts will better protect private property rights and give more control to local municipalities as opposed to state government, which traditionally handles appeals.
“I’m sensitive to historic preservation, but it always struck me that when you’re in a historic district, you kind of give up some of your rights in terms of what you can do to your home and property,” Afendoulis said.
The original intent of the 1970 law focused on preserving neighborhood and property aesthetics, but Afendoulis argues that its current interpretation allows historic preservation commissions to wield broader powers over property owners.
“I think in some ways, there’s been a mission creep with this,” he said, adding that issues such as landscaping requirements and required construction materials can be frustrating for homeowners and get very expensive. “It seemed like a good time to revisit this and see if we can’t put some reform in place that at least puts the balance back to individual property owners.”
While property rights advocates favor the reforms, the bills have drawn harsh criticism from historic preservation activists from around the state
“Michigan’s historic places drive economic development, attract businesses, draw tourists and new residents, create a sense of place, and enhance our quality of life,” the Michigan Historic Preservation Network said in a statement posted on its website.
“Keeping these historic places is so important that historic preservation has been upheld as a public purpose under the U. S. Constitution — preserving historic resources is a valid governmental goal and local historic district ordinances have been upheld as an appropriate means to secure that goal.”
The bills as introduced contain a number of worrisome provisions, according to historic preservation advocates. However, sources said it is likely the bills will change significantly as they move through the legislative process.
One of the most controversial pieces of the introduced legislation hinges on a provision that would require all historic districts in the state to renew their status through a vote of the property owners in the district every 10 years.
But the process to renew the status every decade would be a struggle and could potentially lead to a scenario where investors could buy property and then eventually demolish historic buildings, according to a source who works for a Grand Rapids historic district. The person was not cleared to speak publicly on the matter and asked not to be identified.
As this report went to press, Afendoulis said he planned to introduce a substitute bill that removed the sunset provision and had other minor changes.
Both Afendoulis and MacGregor stress that they do not want to unwind existing historic districts, but rather update what they perceive as an outdated law.
“We’re not looking to remove, stop or get rid of historic landmarks,” MacGregor said. “What we are trying to do is bring back some of the accountability to the local level.”
But advocates in the Grand Rapids historic preservation community aren’t buying it.
Jim Payne, president of Grand Rapids’ Heritage Hill Neighborhood Association, wrote in a statement that the bills go against exactly what they’re trying to fix.
“(T)he Historic Preservation Modernization Act proposed by Representative Afendoulis and Senator McGregor (sic) purports to enhance the personal property of residents in historic districts, when in actuality it is precisely the historic district status that protected both the personal rights of residents through local control and significantly increased the property values of these homes,” Payne wrote.
Observers of the bills say that the legislation, if passed, would make for marked changes to the state’s stance on historic preservation.
“If the substance is made law, it would be a significant overhaul of the current status quo,” said Patrick Lennon, a partner in the Kalamazoo office of law firm Honigman Miller Schwartz and Cohn LLP.
Lennon, whose practice focuses on zoning and land use issues, added that the limits of historic districts are a source of frustration for many of his developer clients.
“From a developer’s standpoint, it would appear to provide more flexibility in historic districts and make it more difficult to create new ones,” Lennon said.
FINDING A PROBLEM
The genesis of the push to reform the historic preservation statutes stemmed from a 2014 battle among residents to create a new district in a neighborhood of East Grand Rapids.
The move came after a resident on Cambridge Avenue requested a variance to tear down an existing home, which many neighborhood residents argued was a historic home that should be preserved. After a lengthy public process, the East Grand Rapids City Commission voted against creating a new historic district in November 2014.
Afendoulis, whose district includes East Grand Rapids, said that the 2014 fight did raise his awareness of the contention surrounding the creation of new historic districts.
Separately, both Afendoulis and MacGregor reiterated throughout interviews with MiBiz that the goal of their legislation is not to undo the state’s historic districts, but rather to promote private property rights and update a 45-year-old law.
But developers including CWD’s Cummings contend that the districts have been a driver for economic development and tend to encourage higher property values simply because of the designation.
Moreover, Cummings, who said he’s redeveloped approximately 35 buildings with historic designation, said that the state legislature shouldn’t be focusing on bills that would further make Michigan an outsider compared to neighboring states.
“There’s some uniformity (to historic districts) around the country, and having another anomaly in the state of Michigan would be a bad thing,” Cummings said. “Overwhelmingly, it’s a solution looking for a problem.”
Editor’s note: This story has been updated from its original form to correct the second mention of the address of the Lemon Wheeler building, which is at 25 Ionia in Grand Rapids.