GRAND RAPIDS –– For the fourth time since 2014, the Grand Rapids Downtown Market has asked permission to keep paying only the interest on its loans tied to a state economic development incentive as it seeks to restructure its debt load.
On Tuesday morning, the board of the Michigan Strategic Fund (MSF) approved the request of Downtown Market affiliate Downtown Market Holdings LLC to extend the interest-only repayment period on a Michigan Community Revitalization Program (CRP) performance-based loan until the end of May.
The “fourth and final extension” allows the organization’s development team to “firm up a proposal for restructuring” the share of debt from Fifth Third Bancorp. and the MSF, according to a memo from the Michigan Economic Development Corp. (MEDC).
The MSF board initially approved a $3 million loan for the project in February 2013, which helped to facilitate a $1 million loan from Fifth Third Bank for construction of the project, according to Otie McKinley, a spokesperson for the MEDC.
According to the memo, the 25,000-square-foot Downtown Market has been “successful” in completing construction and attracting a variety of tenants, as well as being a “landmark” in downtown Grand Rapids, but continues to struggle in other areas.
“Despite these successes, the nature of the development partnership has changed and the development team had also underestimated the level of operating expenses that would be incurred annually to operate a market of this nature,” according to the MEDC memo. “These changes have led the market’s team to believe that the market would need to restructure its debt in order to maintain the level of services the market currently offers.”
The Downtown Market, for its part, says it has commitments from undisclosed foundations and community organizations to begin paying off one quarter of its total $4 million debt obligation.
The organization plans to present its debt restructuring proposal to the MSF board at either its February or March meetings.
“The Grand Rapids Downtown Market is operating as a fully financially sustainable organization,” Brian Burch, a spokesperson for the Downtown Market, wrote in a statement to MiBiz, adding that the project has helped spur other development in the southern portion of downtown Grand Rapids. “The organization has been successful in completing construction, attracting tenants, and bringing a new and highly valued landmark to the city of Grand Rapids.”