Ferndale approves developer deal for mixed-use parking garage project
A public-private partnership is moving forward to finance and construct downtown Ferndale’s first mixed-use parking garage development.
City Council unanimously approved Monday night a development agreement between the city and Royal Oak-based developer Versa Wanda LLC, according to City Manager Joseph Gacioch.
Construction started in February on the long-planned, city-financed portion of the approximately $40 million DOT (Development on Troy) at 221 W. Troy St., behind Rosie O’Grady’s. The city is spending $21 million, financed through bonds, to build a 400-space parking deck, a ground-floor 15,000-square-foot retail shell and shared-street infrastructure along Troy.
Versa Wanda agreed to build 20,000 square feet of elevated Class A office space — Ferndale’s first — on top of the deck, build out the retail space and also build at least 12 apartment units in an adjacent building. It committed in the development agreement to invest at least $9.4 million in the office and retail portion; a price tag was not spelled out for residential.
Gacioch touted that Versa Wanda will make at least 50 percent of the housing units designated “affordable” for those earning a mix of 50 percent ($35,450), 60 percent ($42,500) and 80 percent ($56,700) of regional area median income ($70,900) as defined by the U.S. Department of Housing and Urban Development.
The city and developer also plan to seek small, local businesses for ground-floor retail space, using initial lease rates in line with what’s being paid by others downtown: around $18-$22 per square foot, according to Gacioch and development agreement documents.
“We wanted to preserve the small business character that defines our town,” he said. “That really involves finding a development partner who recognizes the importance of that and is willing to work with us on … staving off economic displacement that can occur with higher lease rates.”
This comes in accordance with Ferndale’s “business gentrification management policy,” the development agreement says.
Versa Wanda must submit construction plans for office space and building out the retail shell by Sept. 1 and start construction by Nov. 1, the development agreement says. Ferndale expects the garage to open in May 2020 and for the developer to finish the office space by September that year; construction of residential units would start by April 1, 2021.
Ferndale issued $20 million in bonds to pay for its portion. The city’s construction contractor is Macomb Township-based Colasanti Construction Services Inc. Versa Wanda is also expected to work with Colasanti.
To help finance the public-private project with economics that are “tight at the margins,” the city and developer are seeking state incentives through the Michigan Economic Development Corp., Gacioch said. The project is also eligible for up to $3.3 million in city brownfield tax incentives and $2.3 million in state brownfield tax incentives.
Ferndale began negotiating exclusively on the development deal with Versa Wanda last September. It took nearly a year to finish discussions because the scope of the project is “ambitious” and “complicated,” Gacioch said.
Posted By: Crain’s Detroit Business on July 9, 2019.
