State approves $103M ‘transformational’ incentives for Grand Rapids development
by Kate Carlson
Originally Published in Crain’s Grand Rapids Business
October 24, 2023
A major mixed-use redevelopment of former industrial property in Grand Rapids is now the state’s fourth project to receive Transformational Brownfield Plan tax incentives.
The Michigan Strategic Fund Board unanimously signed off today on the nearly $103 million incentives plan for the Factory Yards project. The recently expanded economic development 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.
The $147 million Factory Yards project encompasses 15.5 acres on the city’s southwest side, at and around 655 Godfrey Ave. SW. Metro Detroit-based developers Ben Smith, Scott Magaluk and Dennis Griffin are behind the sprawling redevelopment of a former industrial site.
“We’re all classically trained real estate professionals with experience in urban planning, finance, management and construction,” Griffin said during today’s Michigan Strategic Fund Board meeting. “At the beginning of our careers, we were all more in (institutional real estate.) Our passion today is clearly adaptive reuse, urban infill and placemaking. This project is a very intense brownfield development, without the major components of necessary work including vapor mitigation, soil mitigation, lead, asbestos and repurposing obsolete buildings.”
The plan calls for 467 apartment units, 31,000 square feet of ground floor commercial space, a 22,000-square-foot food hall, and 30,000 square feet of commercial office space. Nearly 30,000 square feet of fitness and recreation facilities would be onsite, as well as a 50,000-square-foot self-storage facility, a half-acre courtyard and 825 parking spaces.
The project, located in the city’s Roosevelt Park neighborhood, comes with “wonderful opportunities, and a risk” if not done properly Griffin said, referencing the area’s demographics. About 70% of the neighborhood is Hispanic, and the area is also made up of a higher percentage of younger people under the age of 14 compared to the broader region, Griffin added.
The project aims to bring walkability back to the area, which formerly housed a factory that local residents would walk to, Griffin said.
“This is a very imposing building but also very calming, and when you see it you’ll feel that exact same thing,” Griffin told the MSF board. “We’re also proud of our mixed-use and income-restricted units, (which) are proportionately scattered throughout the development. Everyone will have dignity throughout the development.”
The project is able to leverage 100% of income tax capture revenues instead of the usual 50% because of the affordable housing agreement that the city of Grand Rapids approved for the development at an Oct. 10 meeting.
The affordable housing agreement calls for 10% of each apartment unit type to be rented out to households earning at or below 80% of the area median income. Another 10% of all the apartments would be rented to households earning at or below 60% of the area median income. This means 20% — or about 94 of the 467 units — would include below-market rents. The housing agreement requires the affordability rates to be locked in for 20 years.
The project will be a “magnet” for Grand Rapids, West Michigan, and the state as a whole, Jono Klooster, Grand Rapids’ interim economic development director, said during the meeting. The city has been working with the Factory Yards development team for several years, and made significant investments to the infrastructure at and around the site, Klooster added.
“We do believe this project is transformational for this area and for the city as a whole,” Klooster said. “A project this significant requires a lot of collaboration with individuals and organizations … and working toward a shared goal, and what we’re working toward here is the revitalization of more than 15 acres of obsolete, non-productive land. The Transformational Brownfield tool is really a tool that makes this project possible and we’re really grateful that the state recognizes that.”
The first phase of the project is set to begin in January, and will focus on redeveloping the existing three-story industrial building on the site, Griffin said.
Kentwood-based Wolverine Building Group is the general contractor on the project, and Norton Shores-based Concept Design Studio serves as the architect.
Factory Yards is just the fourth project in Michigan to receive transformational brownfield tax incentives. Two have been approved for projects in downtown Detroit, while another was approved for the redevelopment of a defunct paper mill in Vicksburg.