Developers who purchased the former Traverse City Area Public Schools (TCAPS) Administration Building on Webster Street will appear before Traverse City commissioners tonight (Tuesday) with a proposed brownfield plan to redevelop the property to include 12 workforce apartments. Apartments will be committed to renters earning between 60 and 100 percent of the area median income (AMI) – but if brownfield funding is rejected, the project will go forward with market-rate condominiums instead.

Architect Ken Richmond and licensed contractor Eric Gerstner – under the name Boardman Building LLC – purchased the building from TCAPS for $750,000 with the goal of preserving the site and converting it into residential housing. TCAPS has relocated its administrative offices and boardroom to the former Glenn Loomis school on Oak Street. According to project documents, in honor of the building’s history as Traverse City’s oldest school structure – it was built in 1913 as the Boardman School and operated until 1970 as a school – the property will be renamed the Boardman Building.

Richmond and Gerstner plan to build four market-rate condominiums for sale on the top floor of the building and “white box office space” on the middle floor that could be leased to one or more tenants. The lowest garden level calls for 12 income-qualified apartments, including five studio apartments, six one-bedroom apartments, and one two-bedroom apartment.

“Rents are expected to be $1,000 a month for a studio, $1,200 a month for a small one-bedroom unit, and $1,575 for a large one-bedroom or two-bedroom unit,” the developers wrote. “If the brownfield TIF (tax increment financing) is approved, rents will be kept at or below rates affordable for residents earning up to 100 percent of AMI for the duration of brownfield TIF reimbursement,” or up to 28 years.

The proposed brownfield plan covers $4,233,712 in eligible expenses, covering renovation costs for the income-restricted apartments, environmental due diligence, TCAPS relocation expenses, and other brownfield costs.

Michigan legislation changed recently to allow brownfield TIF to be used for workforce housing. Two other projects have come forward locally proposing to use brownfield TIF, including in Garfield Township and East Bay Township. Developers hoping to use brownfield TIF in the City of Traverse City face a notable hurdle in that voters in November could approve a ballot measure that would require all TIF plans – including brownfield TIF plans – to go to a public vote before being approved. Some developers and community leaders have speculated such a move would make brownfield and other TIF tools prohibitive to use in the city, including for housing.

Richmond and Gerstner said it would be impossible to include income-qualified apartments in the building without brownfield funding, providing a pro forma that shows them losing more than $100,000 annually without the funding support. In that scenario, “no lender will make a loan on the project,” they wrote. If the brownfield TIF is not approved, the developers said the workforce apartments will be scrapped.

The developers said construction costs “have skyrocketed in recent years,” and that renovating the Boardman Building will require stripping the site bare and rebuilding it from the inside. “Old plumbing, heating and electrical systems, walls, floors, and bathrooms must be removed, bricks tuckpointed, and the structure stabilized before new construction can begin,” they wrote. “The old boiler can only be removed by cutting a hole in the roof. The ancient elevator must be replaced. The cost to renovate the garden level for workforce housing is almost as much as renovating the two upper floors combined.” There is also a plume of environmental contamination migrating onto the property that must be addressed, Richmond and Gerstner said.

The developers noted the brownfield TIF capture will come from the “difference between the current property taxes on the property – which were zero under TCAPS’ ownership – and the taxes based on the value of the completed project.” If the project is approved, the State of Michigan will pay 47 percent of the cost of the brownfield plan. “The remaining 53 percent of costs are split between Traverse City and Grand Traverse County’s future tax revenues,” the duo wrote. “None of these jurisdictions will lose any current revenues since the property was not taxed under TCAPS ownership.”

According to the commission agenda, both the developers and Grand Traverse County Brownfield Redevelopment Authority Executive Director Anne Jamieson-Urena will be present tonight to review the brownfield plan and answer questions from commissioners. City commissioners voted unanimously in April to rezone the Boardman Building property from R-2 (Mixed Density Residential District) to D-2 (Development District), allowing the plan to convert the building to residential units to move forward. Developers also said three additional townhomes could be added in new construction on the site. Their purchase agreement with TCAPS includes a deed restriction prohibiting any short-term or vacation rentals on the property (that restriction applies to the original Administration Building; not new construction).

According to project documents, city approval is the first step in creating the brownfield plan. It must then be approved by the Brownfield Redevelopment Authority and Grand Traverse County commission, with a public hearing likely to be held at an October commission meeting. The plan is then submitted to the state for approval. If the plan fails to gain approval at any of those levels, “the income-qualified housing will not be constructed and the garden level will be built as eight market-rate condominiums instead” sold at a likely price of $400,000-$500,000, documents state.