Kalamazoo mixed-use development receives additional state loan as construction costs spike COURTESY RENDERING

Kalamazoo mixed-use development receives additional state loan as construction costs spike

BY Tuesday, April 26, 2022 12:45pm

KALAMAZOO — The developer planning a 52-unit, mixed-use project at a former industrial site north of downtown Kalamazoo will receive $1.2 million in additional state loans as construction costs escalate.

The Michigan Strategic Fund board today approved an amendment to the Michigan Community Revitalization Program performance-based loan, increasing it to $3.4 million. The MSF board also changed the repayment structure from principal and interest payments based on a 30-year amortization to debt service coverage dependent payments, with the potential for up to $1.2 million to be forgiven. 

The MSF Board initially approved a $2.2 million loan to the developer, 619 LLC, on Oct. 26, 2021, as MiBiz previously reported

The development team requested the loan increase based on “significant escalation in construction costs,” which caused a 27-percent increase in the project budget, or $3.05 million gap in funding, according to a memo filed with the MSF board. Additional funding to make up for the project’s cost increase is coming from a $1.8 million equity contribution. 

Developers requesting increased funding from the MSF board is uncommon, Michele Wildman, senior vice president of community development at the Michigan Economic Development Corp., said during a media briefing.

“However, we are seeing impacts in the construction industry in pricing and project issues that have come up related to labor and (the) supply chain, so we continue to address these situations for those critical projects that were already underway,” Wildman added. 

The 619 LLC development team was formed by Jeff Nicholson, Craig Bush and David Michal Scott to construct the planned five-story structure on 1.4 acres at 619 Porter St. in Kalamazoo. Nicholson has helped lead other local development efforts as the founder of real estate redevelopment company PlazaCorp Realty Advisors Inc. Bush is a private equity investor, and Scott is president and CEO of KZ Asset Management LLC, which has 3 million square feet of commercial space in Kalamazoo. 

Apartment units are planned to have a range of affordable rates for tenants, including about 10 percent of the 52 units being designated for households earning 60 percent of the area median income. The remaining units will be targeted to households earning between 80 and 120 percent of the area median income. The development also is set to contain 11,049 square feet of commercial space.

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Read 882 times Last modified on Friday, 29 April 2022 10:07