Knapp's is back
|By Andy Balaskovitz|
Lansing residents to have their say on tax incentives for Knapp’s building; a second shot at federal dollars for developersMonday, Oct. 18 — After receiving “very positive” feedback from the U.S. Department of Housing and Urban Development, or HUD, city officials are bringing back a tax incentive plan that would spark development in the Knapp’s building downtown.
The first of two scheduled public hearings is 7 tonight in the City Council chambers.
In August, HUD rejected the city’s proposal for a $2 million Brownfield Economic Development Initiative grant. This grant is important because it would be used to help pay off a federal Section 108 loan to the city, also from HUD, worth up to $5.4 million. The Council approved applying for that loan back in May.
The Eyde Co., which is seeking to develop the Knapp’s building, reworked its application for the BEDI grant, and city officials are confident they’ll get it this time.
Essentially, the city would borrow the $5.4 million from HUD, lend it to the Eyde Co,. which would pay it back to the city, Karl Dorshimer, vice president of the Lansing Economic Development Corp., said.
Dorshimer added that there are “multiple layers of security” to ensure the Eyde Co. pays back the loan. For one, the BEDI grant pays it back for the first seven years. Dorshimer said this gives developers time to establish tenants and revenue. After seven years, the Eyde Co. will be responsible for the payments. The “ultimate” layer of security, Dorshimer said, will be the building’s value after it is renovated, expected to be much more than the $5.4 million loan.
Dorshimer said he doesn’t know how long the Eydes would have to repay the loan.
“We feel pretty confident the 108 (loan) will be paid back in time,” Dorshimer said.
Knapp’s, at 300 S. Washington Square, would become a mix of commercial and residential space. The roughly 140,000 square-foot building has been vacant since 2003. The current version of the Knapp’s building was completed in 1939 by the Christman Co. The Eyde Co. bought the building in 1982, converting most of it to office and retail use.
There are public hearings scheduled for tonight and the Oct. 25 City Council meeting on the Eyde Co.’s brownfield plan, which seeks $24.5 million in various state and federal incentives. Overall investment in the project by the Eyde Co. is roughly $36.4 million.
Also included in the incentive plan is $10 million worth of state and federal tax credits for fixing up a historic building, $5 million in federal “new market” tax credits, a 12-year Renaissance Zone tax abatement worth $2.6 million and a brownfield Michigan Business Tax credit worth $4.9 million.
The Knapp’s redevelopment differs in a fundamental way from Pat Gillespie’s Market Place project because it is being done in a Renaissance Zone. These zones freeze state and local property taxes for 12 years as a way to entice developers to move there. Gillespie’s seeks a brownfield tax incentive that would repay him any upfront costs he pays to clean the contaminated site.
Gillespie’s Market Place project is locked in a stalemate after the Council voted against granting him the brownfield incentive last week. If the Council can not find a way to grant him the incentives — which will come down largely on wage agreements between Gillespie and local construction unions — Gillespie has said he will leave the land next to the City Market as a surface lot.
The Knapp’s project has prevailing wages in place, which guarantee certain wages and benefits for construction workers on the job. These agreements are required if the developer takes advantage of federal Section 108 loans, Dorshimer said.
Dorshimer said the brownfield plan for Knapp’s that is before the Council is being drafted to qualify the Eyde Co. for a $4.9 million brownfield Michigan Business Tax credit. If the financing is in place before the end of the year, Dorshimer expects renovations to start by spring.
In other news building up to tonight’s City Council meeting, more than 70 residents have said they’ll show up tonight to protest the votes on Gillespie’s projects. They belong to a Facebook group called #LoveLansing goes to Council.
You may have heard of the #LoveLansing Twitter hash tag, which was started as a marketing campaign by Fourth Ward Councilwoman Jessica Yorko.
She co-created “#LoveLansing goes to Council” last week as a way to rally residents who want express their vision for Lansing’s future. Yorko said she suggested the idea in response to the Council’s no-votes on Gillespie’s Market Place and Marshall Street Armory projects.
If the event page is any indication, 74 people confirmed their attendance as of 1:30 p.m. today.