Skip to content

Giving Public Money to Private Developers in Grand Rapids

March 29, 2017

MLive announced yesterday that Lofts on Wealthy LLC, a division of 616 Development, has been granted a $970,250 in tax breaks to redevelop the former Kregel book publishing site. 

The tax breaks were awarded by the Michigan Strategic Fund, which is part of the Michigan Economic Development Corporation. The MEDC is a quasi state entity that claims to market the state of Michigan and attracting business development and investors.

The people who sit on the board of directors of the Michigan Strategic Fund are those who also represent the business community, such as Fifth Third Bank, Greenstone, the Michigan Farm Bureau and Truscott Rossman. There are a few state employees on the board, such as Nick A. Khouri, a former VP with DTE and Shelly Edgerton, a longtime state legislative operative. You can easily see why the Michigan Strategic Fund would want to grant major tax breaks to developers, allowing them to make even larger profits by using public funds.

The 616 Development project on Wealthy plans to include retail on the ground floor, along with 75 apartments that will range from $775 for a micro-unit and up to $1,975 for a three-bedroom. This means 616 Development will on average generate $112,500 a month from rent, not including the money they make from the retail spaces. So lets say that will bump it up to $150,000 a month that the developer will make, which comes to roughly $1.8 million a year. 

616 Development claims that they will invest $11.7 million into the building, which means that the project will pay for itself in less than 7 years.

Had the Michigan Strategic Fund not provided the tax breaks totally just under $1 million, this would mean that the company would need another year to pay off their investment.

Imagine what $970,250 could do for providing truly affordable housing in Grand Rapids. Imagine was millions of dollars that are being granted in tax breaks each and every year would amount to in actual construction of affordable homes for families that are currently being displaced from all of the market rate housing projects across Grand Rapids.

There seems to be something fundamentally wrong with the fact that millions of dollars of public money (tax breaks) are benefitting developers, while thousands of families can’t afford the cost of rent in Grand Rapids.

%d bloggers like this: