Lafayette West development secures $ 52 million in construction funding
The contractors for the project are Blaze Contracting Inc., based in Detroit, and a joint venture between LS Brinker Co., based in Detroit, and Albert M. Higley Co., which has an office in Detroit. Ghafari Associates, based in Dearborn, is the architect.
The project has seen several incarnations since it was first presented to the public in May 2018, as well as several other projects in the region. It was originally envisioned as a $ 111 million development with 322 apartments and 51 condos, although as of March 2020 it was revealed that it had been reduced to 245 apartments and 80 condos at $ 113 million.
Then, in March 2021, lead developer, Novi-based Ginosko Development Co., was acquired from the project and Bennett and Norman Pappas, president and CEO of Farmington Hills-based Pappas Financial, took over.
In August, the Michigan Strategic Fund approved $ 5 million in brownfield taxes on the $ 133.1 million project. In addition, a briefing note from MSF’s board of directors at the time stated that the project expects $ 12.7 million in tax captures on local brownfields and reductions in waste. neighborhood business area over 15 years. The note also indicates that the developer contributes more than $ 25 million in equity and that the brownfield incentive allows a “modest” return of 3%.
According to the note, for the 230 apartments, studios would cost $ 1,229 per month in rent, while two-bedroom units would rent at $ 2,876 per month, or an average of $ 2.88 per square foot. The condos, 88 in number, would sell for $ 475 per square foot, ranging from $ 216,000 to $ 585,000. Twenty percent of the apartments would be rented at 80 percent of the regional median income designated by the federal government.
Housing affordability is a tricky issue in Detroit, in part because whether a home is considered affordable is measured against the MAI, a measure designated by the federal government that takes into account household incomes in the suburbs of Detroit, which skews this figure for low-income Detroiters. The MAI for the region (and Detroit) is $ 64,000 for a two-person household and $ 80,000 for a four-person household. Eighty percent of the MAI is $ 51,200 for a two-person household and $ 64,000 for a four-person household.
PACE allows commercial property owners to receive long-term loans for energy improvements at fixed interest rates by working with local tax agencies to repay the loans through their property tax bills.
Some 32 Michigan local governments have approved PACE’s participation, including the counties of St. Clair, Wayne, Macomb, Oakland and Washtenaw, as well as 10 cities such as Southfield, Royal Oak and Troy. Local tax districts must approve PACE because payments for projects will be seen as if they were property taxes.
Construction projects that use HVAC systems, LED lights, insulation, appliances, windows, and water saving measures such as faucets, shower heads, toilets, urinals and hot water systems, may be eligible for special loans.
Bennett said the PACE funding would be the largest such funding through the program in the state’s history. In September 2019, Crain’s reported that the Cambria Hotel in downtown Detroit had received a $ 6.8 million PACE loan, which at the time was considered the largest.
Earlier this year, another Bennett / Pappas project, The Exchange, got a PACE loan of $ 13 million on the $ 64 million construction cost of the 16-story residential tower.