TRAVERSE CITY -- The proposed restoration of a historic downtown building with a grass roof and 10 affordable housing apartments would require more than $4.3 million in public funding to take root.
Bob Sutherland, president and founder of Cherry Republic, wants to convert two floors where he currently rents space beneath the Whiting Hotel into an urban version of his Glen Arbor business, a popular tourist destination.
A remodeled portion of the Whiting could feature a full restaurant, bakery, wine tasting, retail and play area on Front Street, where he estimates he could employ up to 90 people during the peak summer season.
Sutherland and local development officials are proposing a mix of studio, one- and two-bedroom apartments, 25 units in all, for the upper portion of the Whiting.
"My goal is to make walk-to-work housing," Sutherland said. "There's a lot of housing need for single people in town."
Traverse City's housing task force endorsed the project and the concept will go before the city commission Tuesday night.
Public funding for the $8 million project is divided into three separate categories, Sutherland said.
Restoring the 1893 building's exterior to its original look will add about 20 percent to the cost, but would gain Sutherland $1.3 million in historic renovation tax credits he would sell at a discounted rate to banks. Certification of the building as energy efficient, including a possible green, living roof, makes the project eligible for $233,000 in energy efficiency grants.
Then the big ticket: adding low-income apartments would gain Sutherland $600,000 in state and federal affordable housing grants and $2.2 million in brownfield funding, or $280,000 per apartment.
"We're not talking just 10 units, we're talking workforce housing, homes for people working downtown and that's all 25 units," Sutherland said. "With the cost of space downtown, my only other option would be to build large apartments for wealthy people."
To qualify for affordable units, a single person would need income below $26,220, said Sarah Lucas, regional planner for the Northwest Michigan Council of Governments. Apartment rents could run as high as $650 a month and still be considered "affordable," but rents for the Whiting's proposed 10 affordable units would run from $475 a month for a studio to $525 for two bedrooms, she said.
"We're trying to match rent and income levels to the downtown workforce and there's quite a mix of incomes," Lucas said.
Sutherland said the other 15 units would rent from $750 to $900 a month.
Because of the "enormous amount" of grants and loans going into the project, county officials want the city commission's endorsement before the idea proceeds, said Jean Derenzy, Director of the Grand Traverse County Brownfield Redevelopment Authority.
The project isn't a contaminated brownfield, but will qualify as a state "brownfield" through partial ownership by Grand Traverse County's Land Bank Authority. The land bank will provide $1.6 million to help purchase the property for $2.65 million from a company run by local real estate investor Mike Anton.
The land bank will borrow the money, then repay it by capturing additional school property taxes created by the project.
The complicated land deal will require the creation of three separate limited liability companies: Cherry Republic, the land bank, and Homestretch, a nonprofit housing corporation that will manage the affordable housing units.
City Manager R. Ben Bifoss said he'll recommend city commission endorsement, based on the project's economic impact.
"I think if we can get an $8 million investment in Traverse City with no local tax funds involved and the creation of local jobs and affordable housing, that's a good thing for Traverse City," Bifoss said.
