State gives Wyandotte mixed-use project with housing a $3M boost

BY NICK MANES

A proposed mixed-use development in the Downriver area is poised to move forward following approval of incentives of nearly $3 million by the state’s economic development arm.

The board of the Michigan Strategic Fund on Tuesday morning approved tax increment financing and loan incentives for a nearly $10 million residential and retail development in Wyandotte.

3131 Biddle LLC, affiliated with Wyandotte-based Rise Above Entertainment LLC, plans to redevelop a city-owned vacant building in the city’s central business district, just blocks from the Detroit River. A briefing memo from the MSF says the project will include 35 “workforce” rental units at below-market rental rates, as well as retail and restaurant space and various “public improvements,” such as parking and alleyway improvements.

Ron Thomas, owner of Rise Above Entertainment, could not immediately be reached for comment.

The developer was previously behind another mixed-use project in downtown Wyandotte that brought 13,000 square feet of office space, six apartments and one restaurant named The Vault.

In total, the MSF board, which controls the state’s economic development checkbook, approved nearly $1.4 million in TIF tax cap- ture and more than $1.56 million in a Michigan Community Revitalization Program loan. e overall project of just more than $9.7 million is expected to generate a 10.3 percent return over 20 years, according to the MSF memo.

Thomas, as the developer, is bringing about 13.6 percent — just over $1.32 million — in equity to the project.

The MSF briefing memo says the incentives are needed to help the development achieve its rent goals

A 3-percent rate cap on a shortterm loan of, say, $50 million or $60 million would have cost perhaps $25,000 in 2018, Denomme said.

“ e same cap today is probably close to $1 million,” he said.

Data from Riverside Risk Advisors LLC, cited by the WSJ, says a threeyear, 4-percent cap on a $100 million loan rose from $200,000 in October 2021 to $2.2 million in October 2022. It was $45,000 in October 2019.

And it’s not just landlords who are grappling with this.

Developers working with construction loans may also be feeling the pinch, said Tim Kalil, senior managing director for Huntington National Bank in Troy. If those loans are coming due and need to be converted to what’s colloquially referred to as “mini-perm” — miniature permanent — debt, there could also be concerns. “ at could have a lot of the same implications,” Kalil said.

But Joshua Bernard, principal of South eld-based Bernard Financial Group, said there is an upside.

Lenders are responding with more loan options for 3-to 5-year xed interest-rate debt rather than oating-rate loans.

“A new xed rate loan may not require as much of a capital infusion to right-size the loan balance for the current interest rate environment as would otherwise be paid towards a new interest rate cap contract if refreshing or extending a oating rate option,” Bernard said. “ e question for the upside-down borrower remains: would you like to rent or buy your next 12-24 months of debt service? And if you would only like to rent, how much are you willing to pay in premium for that option without gaining any real long-term relief?”

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB of being reserved for those making as low as 80 percent of the area median income, about $53,600.

Housing advocates around the state have long talked about the need for such types of residences, often called workforce housing.

State lawmakers late last year passed a package of bills — which were signed by Gov. Gretchen Whitmer — to help spur such activity.

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes