The Michigan Strategic Fund has approved a brownfield plan totaling $14 million in state tax capture for Spectrum Health’s Center for Transformation and Innovation that is under construction in Grand Rapids.
The office campus is located at 635, 706 and 725 Bond Ave. NW in Grand Rapids’ Monroe North district. Plans for the $100 million development include a new eight-story building that will be connected by a two-story bridge to the existing Brassworks building. The development also will include two, seven-story parking structures.
The project location will be “pivotal” to Spectrum Health’s ability to recruit and retain talent, Michigan Economic Development Corp. President and CEO Quentin Messer Jr. said during a conference call today.
The new office campus will consolidate approximately 1,200 employees who are currently spread across 13 offices. The Grand Rapids-based health system also expects to hire 600 more employees to work out of the Center for Transformation and Innovation offices. Construction is expected to be completed in the summer of 2023.
The Michigan Strategic Fund board also approved amendments to the state’s Transformational Brownfield Plan guidelines and funding for a new initiative to make Michigan Strategic Fund tools more accessible to a wider range of applicants.
The MSF board amended Transformational Brownfield Plan guidelines to conform to legislation that went into effect Dec. 29, 2021. The Transformational Brownfield Plan (TBP) tool was created in 2017 to incentivize large redevelopments, though it has only been used twice, in part because of strict requirements and complicated application process.
Changes to the transformational brownfield tool were made with the passage of Senate Bill 671, sponsored by Sen. Ken Horn, R-Frankenmuth. The bill extended the sunset for TBP applicants by five years through the end of 2027.
The legislation also increased the threshold for requiring third-party underwriting from $1.5 million to $10 million in tax capture per year. Other incentives also can now be used alongside the TBP.
The MSF board also approved amendments that specify the source used to determine a municipality’s population and define a limit on the calculation criteria of the safe harbor option for income tax capture and withholding tax capture revenues.
The MSF board also approved the Build MI Community Grant Initiative, which aims to serve less experienced developers and make funding tools available to a more diverse group of applicants. The MSF board approved the transfer of $5 million from the Michigan Community Revitalization Program to fund the new initiative.
The Build MI Community Grant Initiative will be paired with outreach to a more diverse group of developers and property owners through partnerships with nonprofits that support community development, according to an MEDC briefing memo. Grants can be approved with the sign-off from the MSF president or fund manager.
Grants through the new initiative will support new developers and provide gap financing for up to 50 percent of eligible project costs or $250,000, whichever is less. Some applicants will be eligible for an additional 10 percent of funding costs or up to $275,000 for a project. Eligible applicants will include individuals or entities with limited commercial and mixed-use development experience who are engaged in development projects with a total cost of $2.5 million or less.
“The biggest aim for this program here is to reach a large group of applicants,” MEDC Commercial Real Estate Investment Manager Julius Edwards said during the MSF board meeting. “We’re focused on less experienced real estate developers. The idea is to build development capacity as well as expand the pool of developers that the MSF works with.”