Grand Rapids advances $103M incentives plan for Factory Yards project

By Kate Carlson

Originally Published in Crain’s Grand Rapids Business

A Grand Rapids board has approved a developer’s request for $103 million in “transformational” tax capture incentives, advancing plans for what would be the first project in Grand Rapids to use the state funding tool.

The city’s Brownfield Redevelopment Authority board approved a Transformational Brownfield Plan for the proposed $147 million Factory Yards mixed-use project on Grand Rapids’ southwest side. Metro Detroit-based developers Ben Smith, Scott Magaluk and Dennis Griffin are behind the massive redevelopment of the former industrial properties.

The project calls for the redevelopment of four vacant buildings at and around 655 Godfrey Ave. SW, as well as the construction of three new buildings. The project will span 15.5 acres currently hosting obsolete, vacant manufacturing buildings in Grand Rapids’ Roosevelt Park neighborhood.

“We’re just really excited about what we’ve been hearing and what (the developers) have been doing,” Reggie Smith, president of the Roosevelt Park Neighborhood Association, said during today’s Grand Rapids Brownfield Redevelopment Authority meeting. “We’re excited that they’re willing to invest in our neighborhood.”

The Transformational Brownfield Plan is subject to approval by the Grand Rapids City Commission as well as the Michigan Strategic Fund board. Both bodies are expected to consider the proposal by October.

In addition to the $103 million that the developers expect to recapture from the Transformational Brownfield Plan, an additional $6 million would be recaptured for the project by the Local Brownfield Revolving Fund. Developers are also seeking nearly $10.2 million in incentives through the Obsolete Property Rehabilitation Act.

The state has approved three Transformational Brownfield Plans in Detroit and Vicksburg since the program was created in 2017. The powerful incentive tool lets developers apply to keep income and withholding taxes from people who work and live at certain sites associated with their project, along with sales taxes on construction materials and income taxes from construction crews on projects.

Gov. Gretchen Whitmer on July 18 signed changes to the transformational brownfield incentives into law that double caps within the program and expand the criteria for qualifying projects. While Factory Yards would not leverage any of the recent changes, Grand Action 2.0 plans to apply for transformational brownfield incentives for an outdoor amphitheater downtown.

When completed, Factory Yards will contain a total of 489,000 square feet of newly constructed and renovated buildings. Site plans call for:

• A total of 467 apartment units, 20% of which would be rented below market rate.
• A 22,000-square-foot food hall and event space with 11 vendors.
• 30,000 square feet of commercial office space, a 28,000-square-foot fitness area, a 50,000-square-foot self-storage facility, and 31,000 square feet of ground-floor commercial space.
• A boiler room on the property could also be repurposed into a brewery or distillery.
• An outdoor green space plaza, a 605-space surface parking lot and a parking ramp with 220 spaces.

Grand Rapids-based Wolverine Building Group is the general contractor on the project, and Norton Shores-based Concept Design Studio serves as the architect.

As part of an affordable housing agreement that the Brownfield Redevelopment Board recommended to the city commission, 20% of the Factory Yards apartments would be rented below market rate.

The transformational brownfield tool allows developers to leverage additional incentive revenue if they have a mixed-income component to a development, said Jonathan Klooster, executive director of the city’s Brownfield Redevelopment Authority.

Per the Affordable Housing Agreement in the Factory Yards development plan, 10% of the 467 apartment units will be rented to households earning 60% of the area median income, and 10% of the total units will be rented to households earning 80% of the area median income. The rent-restricted units would be spread out across the buildings in the development and will encompass an array of apartment types, Klooster said.

“We know we want housing for all of our people, not only in the neighborhood, but for Grand Rapids,” said Smith, from the local neighborhood association. “I’m excited they are willing to spread it out through the project.”

Guillermo Cisneros, who chairs the Brownfield Redevelopment Authority board, asked developers to ensure they are designing the project so it is welcoming to everyone, especially considering that it is located in an area with the largest concentration of Latinos in Grand Rapids. Cisneros is also president and CEO of the West Michigan Hispanic Chamber of Commerce, which plans a new $9.5 million headquarters about a mile away from Factory Yards.

“Many of us are very excited about this project,” Cisneros said. “This will be truly transformational for our neighborhood. Many of us love this city and want to see beautiful things instead of dilapidated buildings in this neighborhood.”