GRAND RAPIDS — A group of investors hopes to redevelop one of downtown Grand Rapids’ last vacant buildings into low-income housing.
Keeler Flats LLC, a Grand Rapids-based Limited Dividend Housing Association, has proposed building 132 apartments at 56 North Division Ave., known as the Keeler Building. The plans also call for commercial and community space and 33 on-site parking spaces.
The investment group has proposed a three-phase redevelopment of the vacant seven-story building located at the southeast corner of Division Avenue and Fountain Street, according to documents filed with the city of Grand Rapids.
The development group plans to target a variety of low-income residents earning a maximum of 60 percent of the area median income. It aims to do so while offering energy-efficient appliances that will help tenants save money in the long run.
“We’re working on a model of ‘new affordability’ that not only provides favorable rents but looks at reducing utility exposure to tenants and then also looks at developing sites that do not require transportation (cars),” said Jeffrey Dombrowski, the registered agent for Keeler Flats and an investment property adviser with brokerage firm Sperry Van Ness in Holland.
Dombrowski noted the plan for minimal on-site parking and the building’s close proximity to multiple bus stops will allow residents to potentially forego car ownership.
That’s an important feature for encouraging more downtown density, said Kristopher Larson, president and CEO of Downtown Grand Rapids Inc., the nonprofit group that administers the DDA.
“Transportation is the second highest cost for American households, behind housing,” Larson said. “When we talk about wanting to improve affordability in our community, one of the things we can do — where appropriate — (is) to try to relieve the individuals of needing to have an auto-based transportation lifestyle.”
Dombrowski told MiBiz the development group plans to apply for its Low Income Housing Tax Credits (LIHTC) allocation in early April. If the project gets funded, the partners hope to start construction in October and bring the units online in 2019.
Principals with Keeler Flats will ask the DDA board on Wednesday to approve a tax exemption and payment in lieu of taxes (PILOT) equal to 4 percent of “annual rent receipts for the residential portion of the project and its prorated share of land and improvements,” according to the DDA agenda.
Documents filed with the city indicate a total project cost of around $45.6 million with $25.5 million coming from LIHTC, as well as a variety of other grants and tax credits.
Keeler Flats’ redevelopment plans mark the second proposal in 15 months for the 107-year-old building.
Franklin Partners LLC, a Grand Rapids- and Naperville, Ill.-based real estate investment and property management firm, walked away from its plans to convert the building into corporate office space last September after failing to come to a final purchase agreement with the building’s owner, James Azzar.
The building is currently shown as “sale pending” on the multiple listing service (MLS), with an asking price of $12.5 million.
Donald Oppenhuizen, the listing agent with Grand Rapids-based G.W. Real Estate Inc., has previously declined to comment on any redevelopment proposals for the building.
With a project that’s so dependent on a variety of tax credits, Keeler Flats’ Dombrowski said he recognizes the competitive nature of obtaining the financing.
As part of the LIHTC application process, developers are required to score their projects for submittal to the Michigan State Housing Development Authority (MSHDA), which administers the credits in the state. Dombrowski said that Keeler Flats’ self-scoring showed the project reached the highest or tied with the highest scores of projects awarded credits in the last three funding rounds.
While Dombrowski said he’s hopeful, the outcome of the “paramount” funding mechanism is still unclear.
“Today’s been an interesting day, so ‘fairly confident’ might be an overstatement,” Dombrowski said. “It is what it is. If we compare it to the last three rounds, we’re doing OK. But we don’t have any way to metric who our competition is going into the April 3 round. It’s a very daunting task to put together.”