Heritage Tower, Battle Creek Heritage Tower, Battle Creek

Large-scale developments in Kalamazoo, Battle Creek secure state incentives

BY SYDNEY SMITH Tuesday, November 27, 2018 06:27pm

Two major Southwest Michigan development projects are moving forward after receiving approval for state incentives.

The board of the Michigan Strategic Fund on Tuesday approved local and school tax capture of more than $3.8 million for the construction of Catalyst Development Co. LLC’s seven-story mixed-use building in downtown Kalamazoo. As well, the board approved $10 million in economic assistance for the renovation of the “dilapidated” and long-vacant 19-story Heritage Tower in Battle Creek.

“These community vitality projects will dramatically increase the vibrancy and populations of downtown Battle Creek and Kalamazoo,” said Jeff Mason, CEO of the Michigan Economic Development Corp.

The Michigan Community Revitalization Program incentives for the Heritage Tower project include a $1.7 million loan and nearly $8.3 million as an equity investment, for which developers will need to pay a one-time fee of 1 percent of the award amount.

Developer Heritage Tower BC LLC worked for five years with the state and local partners to create a financing plan for the more than $32 million, 115,000-square-foot project. The city of Battle Creek is contributing $5 million toward the project and has approved abatements totalling $3.1 million. Other funds include $3 million from economic development firm Battle Creek Unlimited and a $450,000 contribution from the Battle Creek Community Foundation.

The state investment and $2.4 million in brownfield tax increment financing help address a remaining funding gap for the project, MEDC staffers wrote in the memo.

Developer Mark Harmsen of MDH Development LLC said construction will continue through October 2019, but residential units will be ready for tenants in the late spring of next year. He said he expects they’ll go quickly.

Meanwhile, Catalyst Development’s more than $70 million project in downtown Kalamazoo involves the construction of a seven-story mixed-use building at the southwest corner of North Edwards Street and Water Street, the site of a former parking lot.

Plans for the 290,000-square-foot development call for two floors of market-rate and affordable housing, four floors of office space and 400 parking spaces within a multi-level parking deck.

Catalyst Development secured commitments of office space from law firm Warner Norcross + Judd LLP, economic development organization Southwest Michigan First, The Kalamazoo Promise and The Kalamazoo Promise Institute, as MiBiz previously reported.

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