SOUTH HAVEN — More construction is planned along Center Street in downtown when the historic Hale block undergoes a $2.7 million renovation project that will create 10 new apartments and renovated commercial space. Several old buildings will also be demolished, with the plan to build new ones.
The project is expected to start in November and be completed in about a year’s time, according to Randy Locker of Locker & Locker Properties LLC, developer and owner of the Hale block buildings.
To help jump-start the project, South Haven City Council members voted this week to grant Locker & Locker a 10-year commercial rehabilitation tax break that will exclude the development from paying property taxes on the $2.7 million investment, but not the taxes currently being charged.
“We have a unique situation occurring downtown,” City Manager Brian Dissette said. “We are reconstructing Center Street at the same time a local developer and his team are looking to rebuild up to a block of that same section of street. This is really rare.”
The Hale block consists of a historic three-story building and several other one and two-story buildings on Center Street, between Quaker and Phoenix streets. Locker intends to create 10 one-bedroom apartments and two two-bedroom apartments on the second and third floors of the 15,000-square-foot, three-story building, plus renovate commercial space on the first floor. He also plans to tear down the old buildings south of the three-story building, with the exception of the one that houses Johnny’s Jewelry at the corner of Center and Phoenix.
Locker purchased the property and buildings earlier this year, a fact that very much pleased city officials.
“Just a couple of years ago we were planning demolition (of the buildings),” Dissette said. “Now we’re talking about making it grow. ... City staff has been working for 10 years to try to fill large vacancies on Center and spur development downtown.”
Locker and his contractor Randy Timmer are not only planning to renovate the Hale block, they’re also planning to create apartments in the upper levels of three commercial downtown buildings in the 500 block of Phoenix Street. The buildings currently house MI Coast, Gravity Winery and Harbor Light Brewery. By November 2020 the second story of those buildings will house six one-bedroom apartments and a two-bedroom unit. City council members this week also also granted a 10-year tax abatement for that $1.1 million investment.
Creating more affordable housing options has been a goal of the city council over the past year, but one council member questioned whether the new apartments being constructed by Locker and Locker will actually be affordable.
Locker said the apartments will cost renters from $900 to $1,200 per month.
“It should be affordable compared to market rates out there,” he said.
Council member Letitia Wilkins disagreed, saying she knows young adults she works with at South Haven Public Schools, including teachers, who cannot afford to pay $900 a month for rent.
“The average college student cannot afford $900,” she said. “Are we trying to bring the missing middle from somewhere else or accommodate the missing middle in South Haven?”
But other council members disagreed with her.
“I have three adult children who would gladly pay that,” said Mayor Pro Tem Clark Gruber, adding that his children live and work in other towns in West Michigan. “That’s what we’re seeing as the norm.”
“For downtown that’s a great rate,” said council member Chris Campbell, who owns a retail shop downtown. “For the last 10 years I’ve seen apartments (downtown) going for $800 to $900. It’s a prime location.”
Market rate vs. affordable rate
Dissette told council members that city staff is keenly aware the creation of affordable housing is one of the council’s biggest priorities, but he also said the city not only needs affordable, workforce housing, but market rate housing.
“Does this (the apartments Locker intends to create) address affordable concerns? Probably not,” Dissette said. “Does it address market-rate concerns? Yes.”
Dissette went on to say that a housing study the city commissioned a year ago shows a need for more market-rate housing in South Haven.
“There’s a need for 100 market rate apartments in the downtown area,” he said, pointing out that new market-rate apartments being constructed at a three-story mixed-use building now under construction at 335 Center Street are being rented at a considerably higher rate than what Locker intends to charge.
“The new apartments are going up to $1,700 a month and they’re spoken for,” he said. “He’s (Locker) renting at below that. That will force pressure and should create more affordable housing.”
Randy Timmer, the contractor for Locker’s downtown renovation projects, said it would be cost prohibitive to charge less than $900 a month, considering the renovations that are being made to the Hale block and the Phoenix Street parcels.
“We’re trying to create as affordable of housing as we can,” he said. “We’re completely rehabbing buildings. It’s a huge cost.”
The housing study also indicated a need for workforce housing. Dissette said the city is working on this with consulting company, Housing Next.
The creation of more affordable housing will most likely involve a partnership with a public entity such as the South Haven Housing Commission, Dissette said.
The city recently developed a partnership with the housing commission and South Haven Township to find suitable locations and encourage the development of affordable housing options in the greater South Haven area.
“One way to have affordable housing is to manage it as a public project. Something the city hasn’t done for three decades,” Dissette said.