New development plans shine through gloom

REGION – The nightmare on Wall Street hasn't prevented companies and nonprofits from pursuing their dream development projects in the Grand Traverse region.

They have visions of a new YMCA facility on Silver Lake Road, a 271,000 square-foot shopping center in Acme, a cancer center in Garfield Township, badly needed affordable housing in Frankfort, and a number of other projects.

In a sure antidote for the prevailing pessimism, developments like the Cambria Suites hotel on Munson Avenue serve as a reminder that dreams can come true even in the toughest of economies.

One difference this year is that developers are taking things more slowly and planning more carefully, often tying their project launches to cold-eyed economic assessments. In the end, success or failure may depend on avoiding cookie cutter approaches and targeting precisely the right niche, at the right time and in the right location.

Gateway Village

Joe Hollander of Portage-based Hollander Development Co. and co-developer Art Jeannot, president of Honor State Bank, believe they have the right targets in their sights. They are pressing ahead with Gateway Village, a 36-unit apartment building designed to deal with the shortage of low-cost housing in Frankfort and the rest of Benzie County.

The plans are to offer one-, two and three-bedroom apartments at rates starting below $300 a month, mainly aimed at employees of Frankfort area firms

"It is really targeted to the needs of local employers," such as Graceland Fruit and Crystal Mountain, local schools, and Paul Oliver Memorial Hospital, said Hollander. "They really need housing that is accessible to their workforce."

He said the high-quality apartments won't look like affordable housing. "We call it stacked flats, which means each unit has its own exterior entrance, and units on the second floor have their own interior stairwell."

Hollander says he plans to select Okemos-based Oakwood Construction Co., a firm with experience in this kind of housing. It is likely to hire subcontractors locally. "Our policy is a requirement to do everything you can to secure participation by local firms," Hollander said.

Construction may start as early as this summer if the project and funding receive their state and local approvals, he said.

A combination of tax credits, low interest loans and other funding sources are making it possible to keep rental rates low, he said. He and Jeannot are working with Michigan State Housing Development Authority on low-interest loans.

Jeannot has signed up five Michigan community banks as investors in the project. Small community banks are an unusual funding source. Typically, affordable housing projects "sell" tax credits to much larger companies, such as utilities or major financial institutions.

But due to the slow economy, those companies have been more selective in their investments in tax credits lately. "Their dollars are being limited to the largest of markets," Jeannot said. This posed a problem to Hollander Development when it was delving into potential sources of financing about a year ago.

Jeannot, who was chair of the Benzie County Economic Development Corp., offered to team up with Hollander on the project when financing became a problem.

Jeannot considered community banks a possible source of funding even though this kind of investment is an unusual step for them. It took time to find several that were willing to consider "buying" the credits.

They came aboard only after months of work educating them about the opportunity and restructuring the size of the investment to meet their needs.

That involved an effort to persuade the customary administrator of the tax credits, Great Lakes Capital Fund, to handle investments and credits as low as $250,000. It was used to investments on the order of $1,000,000 or more.

When the administrator and the banks got on the same wavelength, the project became doable. Banks are now taking advantage of dollar-for-dollar federal tax credits.

"The good news is that more and more community banks have a better understanding of these opportunities and I am hopeful this will make them more receptive to helping other affordable housing projects in the state," Jeannot said. This could benefit small communities that normally have a hard time encouraging new housing projects.

The credits have definite advantages: A bank investing $250,000 in an affordable housing project could shave down its federal tax obligation each year over more than a decade. Over the period of the deal, the tax break would eventually reach the entire $250,000. In the meantime, the bank may benefit from depreciation for tax purposes and from income that the project generates.

Jeannot sees potential for the project elsewhere in the state, if developers and investors master the details. "The accounting for it tends to be more complex than we like to deal with," he said.

Bates Crossings

Although it's not clear when the first shovel will go into the ground, the Acme Township board is expected to make a decision on the site plan for the 271,000 square-foot Bates Crossings development in Acme Township in roughly two to four months, said Township Manager Sharon Vreeland in mid-February.

Generations Management in Traverse City wants to put up a 150,000-square-foot main building and three others, two with 50,000 square feet and one with 20,000. The developer has not named an anchor tenant for the project, Vreeland said. Representatives of the firm could not be reached for details on its schedule.

"What they have told us is that they have had queries from several parties, but no one is willing to commit until they see what the result is of the SUP (special use permit) process," she said.

Tied in with the site plan approval, the SUP process can set restrictions to limit harm to the community.

The planning commission is expected to continue discussions on Bates Crossings early this month and then make a recommendation to the township board. The board may take one to two months to deliberate on it, "since it is such a big project," Vreeland said.

In recent weeks, township officials and the planning commission have been discussing water and sewer connections and improvements to M-72 that would be needed to handle the 180-acre shopping center.

While it would not be a downtown for Acme Township, it has sparked discussions about grouping other potential projects nearby to create one. One idea from Generations Management could help a downtown reach critical mass: It wants a nearby 40-acre parcel to be rezoned for mixed housing. It was first zoned for manufactured housing in 1995 at Generations' request.

"I am beginning to think that if we already have some development in the Bates area, maybe we should capitalize on that instead of starting fresh somewhere else," Vreeland said. "But that's part of a larger conversation that is going to be coming in the future."

The Acme Township board has passed a resolution supporting the realignment of Bates Road and M-72, and it has been working with the Grand Traverse County Road Commission, MDOT, Consumers Energy, and property owners on the issue. The intersection with Bates would be moved about 70 feet to the west, creating a squared-off intersection more suited to development.

In its current state, North Bates Road and South Bates Road do not directly meet at M-72 since a railroad right of way forces South Bates to detour from the most direct route.

SkipStone Crossing

SkipStone Crossing, a $32 million project, is underway on Munson Avenue near East Front Street. One section, the Cambria Suites hotel, is under construction and due to be completed in May. An office and retail building is scheduled to be added this year, and senior housing at a later date. Alex Mowczan, owner of the Best Western Four Seasons next store, is SkipStone's owner and developer.

The new hotel will consist of a 68,000 square-foot building with 92 rooms as well as a fitness center, meeting rooms, shops, and a bar and grill. The rooms are larger and offer more amenities than the typical hotel does, said Mike Wills, director of marketing. These include flat-screen LCD televisions, CD/DVD players, MP3 jacks and complementary wired and wireless high-speed Internet access.

"This is a new franchise, with about 10 hotels open nationwide," he said. "It has been extremely well received."

The hotel also has a number of "green" features: a white reflective roof, motion detectors that turn lights on and off and thermostats controlled from the front desk that turn the heat down in unused rooms. The exterior is built with concrete forms incorporating foam, making its value as insulation 40 percent greater than most other methods.

The hotel was designed to satisfy an unmet need for a hotel catering to business travelers, Wills said. The remainder of SkipStone Crossing grew out of Mowczan's interest "in doing something complementary" at the site, Wills said.

The three-story, 36,000 square foot office and retail center is planned for Munson Avenue and East Front Street, and is partly aimed at businesses looking to escape congestion downtown. The ground floor is targeting retailers, and the upper floor office tenants. It will have both on site parking and underground parking.

Wills said he has commitments for 65 to 70 percent of the building. Prospective tenants include a coffee shop and nutrition and wellness center on the first floor, and a dentist, property manager, and a physical therapist and fitness center on the upper floors.

He expects construction to start this spring or summer.

The senior "independent living" component will follow when economic conditions permit. Seniors currently have difficulties selling their homes, Wills said, and financing is in shorter supply than usual.

The plans call for 146 apartments with full kitchens and baths, weekly cleaning and linen services, common areas and social activities. There would also be a commercial kitchen and common dining area.

Copper Ridge parking deck / cancer treatment center

On Silver Lake Road near Barnes Road in Garfield Township, two interrelated projects, a $5.7 million parking deck and a potential Munson Medical Center cancer treatment facility, are under consideration.

Late last year, Grand Traverse County's brownfield authority approved the property tax funding for a parking deck next to the possible center at the Copper Ridge development

Even though still tentative, the plans for the use of property-tax funds drew criticism. The funds would come from tax increment financing, a form of tax break that diverts property taxes in a specific area to help fund developments.

The plans for the structure and the cancer center are still off in the future, said Barbara Gordon-Kessel, a spokesperson for Munson Medical Center.

"We are developing a business plan to evaluate the feasibility of a cancer center somewhere in Traverse City," she said. "Frankly, the current economic conditions may affect that plan."

The issue will go before the Munson Medical Center board this summer.

Copper Ridge is considered a good location because Northwest Michigan Surgery Center, a private facility, is located there, said Rick Deneweth, managing partner at Copper Ridge LLC, the developer.

Munson is also in the first phase of a construction and rehabilitation project expected to add more operating room space at its main Traverse City facility, Gordon-Kessel said. It is likely to take two years to complete. "It is a very complex project."


The Grand Traverse Bay YMCA has plans for the first phase of a new facility on Silver Lake Road south of West Middle School. But it won't proceed until it lines up most of the $12 million in donations needed for it.

"I do not want to sound flip, but we will proceed with the project when we get another $6 million," said David Eitland, the Y's new director of development.

So far the Y has received $5.2 million in donations.

The project will have about 22,800 square feet of space for gymnasiums, 13,300 for a fitness center, 6,900 for a pool and spa, and 6,200 for a day care center and related play areas.

The fund-raising is being conducted in partnership with the Grand Traverse Regional Community Foundation.


Along M-22 in Elmwood Township, CenterPointe is seeing the payoff for its renovations over the last two years. Occupancy has risen from 11 percent last March to 68 percent at year's end, said David Mathia, a partner in CenterPointe Unlimited. Tenants include financial planning services, insurance companies, a massage therapist, a Pilates studio, and a boat leasing firm, among others.

This year, 34 new boat slips are being added to the marina, bringing the total to 50 by this spring. A private shower is also under construction and will join an existing living room area, fitness center, and a full kitchen as amenities for the marina.

Renovations have been underway at CenterPointe, the former Harleysville Lake States building, since CenterPointe Unlimited bought the building in 2007. BN