City Commissioners to Vote on Property Deals for Parking Deck, Lot O Housing
By Beth Milligan | Jan. 14, 2023
Traverse City commissioners will vote Tuesday on agreements that could allow a new downtown parking deck to move forward on State Street – a shift south in location from an originally planned spot on West Front Street – and for affordable housing to be built on Lot O at the corner of State and Cass streets.
City commissioners will consider approving an interfund loan between the city and Downtown Development Authority (DDA) that will allow the city to buy five parcels – at 118, 122, 124, 128, and 130 West State Street – from Socks Construction for just under $6.6 million. Those parcels would form the location of a new third parking deck downtown along State Street between Union and Pine streets. The city also owns the former Master Dry Cleaners building at 115 Pine Street, which it purchased in 2020 for the deck project. That property and a small parcel behind it, also owned by the city, could serve as the future access space for the parking garage.
The deal includes a land swap, with Socks Construction agreeing to buy two properties fron the city at 145 West Front Street and 103 Pine Street for just over $4.9 million. The city has been holding onto those properties for the intended construction of the new parking deck. However, moving the deck south of the alley to be along State Street instead of West Front Street will increase the number of parking spaces that can be built – up to 623, compared to 370 in the West Front location.
At a meeting earlier this month when commissioners first discussed the deal, Mayor Richard Lewis said the city needs to maximize the number of spaces it puts in the deck and might not have many other options to do so. Both Socks Construction representatives and some commissioners also said it would be preferable to put parking on State Street and use the valuable West Front-facing real estate for commercial or mixed-used development purposes. Socks Construction hasn’t yet disclosed specific plans for the properties the firm is acquiring from the city.
The interfund agreement commissioners will vote on Tuesday will allow the DDA to loan approximately $5.5 million from the TIF 97 fund to the city. Once the city completes its deal with Socks Construction, the city will transfer roughly $4.95 million back to the DDA TIF 97 fund. The remaining amount – nearly $609,000 – will be paid back over three years from the auto parking fund to the TIF 97 fund between 2023 and 2025. The deal means the city will have paid over $5.2 million total in various property acquisition costs for the new parking deck, which itself has an estimated construction cost of over $32 million.
City commissioners will also vote Tuesday to approve a deal to sell Lot O – located next to The Omelette Shoppe at the corner of State and Cass streets – to HomeStretch Nonprofit Housing Corporation for a 60-unit affordable housing development. Commissioners voted on the deal in December, but it failed in a 4-3 vote because the motion required five affirmative votes to pass. Commissioners at the time were split on the proposal because they only had a short memo describing key contract terms from staff, not a full final contract for the board to review – with some commissioners uncomfortable with approving the deal without seeing the final contract. Representatives from neighboring businesses – including The Omelette Shoppe and My Secret Stash – also expressed concerns about maintaining their rear parking and delivery access if Lot O was redeveloped.
Tuesday’s agenda packet includes the full purchase contract and terms with HomeStretch for city commissioners to review. HomeStretch will pay $470,000 for the property, including $9,400 in earnest money when the agreement is signed. As a condition of the deal – and to meet the city’s goal of developing workforce housing – HomeStretch will commit to 80 percent of the building’s apartments having an aggregate average tenant income of 60 percent of the area median income (AMI). HomeStretch will commit to keeping those units at an “affordable rate in perpetuity,” according to City Attorney Lauren Trible-Laucht, and will provide the city with an independent annual audit to confirm it is meeting that requirement.
The deal also stipulates that the city will have first right of refusal on the property in the future. After the agreement is signed, the city will execute a quitclaim deed conveying the property to HomeStretch, according to Trible-Laucht. The deed will be held in escrow for up to two years to allow HomeStretch to acquire financing for the project. Once HomeStretch has secured at least 80 percent of the total development costs and can meet all the contingencies in the agreement, the deed will be released from escrow and delivered to HomeStretch. In the meantime, the city will maintain control of Lot O and continue to use it for parking until the deed is released. If HomeStretch can’t raise the necessary funds in two years, it can terminate the agreement and receive its earnest money back – though the contract also allows for a one-year extension if HomeStretch requests it and the city approves it.
The updated agreement also stipulates that access from State Street will be built and maintained for the neighboring businesses. The deal also notes that “substantial construction must be complete within five years from the date of closing.” If it’s not, the property will revert back to the city and the city will refund the purchase price.Comment