MSF Grants Marquette Development Projects Access to $60M

Posted by Lake Superior Community Partnership on February 25, 2015

Two major Marquette-based development projects received the green light from the Michigan Strategic Fund (MSF) board today.

One project involves the use of $55.7 million in tax capture to relocate a Marquette hospital to a Brownfield site that has a city-owned structure that would have to be demolished.

The other involves $4.1 million in state loan participation to complete funding for a project that had scared away some investors because of the price of the underground parking garage.

Rep. John KIVELA (D-Marquette) was on hand to lend his support to both projects, and the MSF board approved both today.

The first project involved the Marquette hospital. The local Brownfield authority wanted permission to use $55.7 million in tax capture to redevelop the site where the city’s major hospital would relocate to, since the site is considered a Brownfield site by the state.

Duke LifePoint Healthcare acquired Marquette’s General Hospital in 2012, which is when the company decided the current facility and location would not meet its needs, according to the Michigan Economic Development Corp. (MEDC) memo outlining the project.

The $55 million in local tax capture would also pay for demolishing the city municipal service center that currently occupies the site that the hospital wants to relocate to. There would also be a variety of infrastructure improvements to the surrounding roads as well.

The rationales given for moving to this site is that it currently generates no tax value and that moving the hospital to this site would serve as a “catalyst for downtown Marquette.”

Kivela called the project “a game changer for our community.” The project is expected to result in $170 million in capital investment and 150 full-time new jobs.

The other project also was in Marquette, brought forth by Liberty Way Hospitality, which is proposing to redevelop a site into several buildings with office, residential, restaurants and lodging space.

The request before the MSF today involved the phase of the project that would construct a hotel and residential facility. But the key fixture of this part is also the underground parking garage.

In the briefing memo and at the meeting, MEDC officials acknowledged the developer ran into complications in fully securing financing because of the cost of the underground parking, which “traditional financing sources are unwilling to finance.”

The reason, according to officials presenting to the MSF board today, is that the parking garage would take millions to construct but not generate quite as much as revenue. The memo said the parking garage would cost more than $3.5 million, which it labeled a “non-traditional cost.”

When asked if that was a red flag in terms of the state getting involved, MEDC CEO Steve ARWOODsaid “it’s their risk to get it done,” adding that these kind of deals have repayment terms, so the state “is expecting to see our money come back.”

So the state will fill the funding gap, to the tune of $4.1 million in loan participation through the Michigan Community Revitalization Program (MCRP). The project in total is expected to generate $20 million of investment into the city and create 19 jobs.

In other action by the MSF board today:
The MSF granted $4.325 million in MCRP loan participation to 55 Ionia Partners, LLC, so it can renovate a 13-story building in Grand Rapids, which is expected to result in total capital investment of $34.4 million and create 25 jobs.

Source: Acuitas LLC