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Knapps development receives $5.9M federal loan guarantee
Posted: October 06, 2012 - 3:55 PM
LANSING, MI – The City of Lansing's application for a $5.9 million federal loan has been approved, federal officials announced, finalizing the financing package for the $36 million redevelopment of the Knapp's building in downtown Lansing.
"This is another testament to the power of a public-private partnership in pulling off what everyone said was impossible," Mark Clouse, CFO for the Eyde Company, said in a statement. "We are going to restore Knapp's to its iconic Art Deco majesty and bring jobs to the whole city block. I want to thank Mayor Bernero and his entire economic development team for helping us make it happen."
The Eyde Company owns the building and is acting as the developer.
The city borrows the money, which is raised through bond sales, and then loans the money to the developer, in this case the Eyde Company, said Laura Feldman, a spokeswoman for the U.S. Department of Housing and Urban Development, of HUD.
"Ideally, the project would create new jobs, expand existing businesses, and generate sufficient income to cover the debt load associated with the venture," Feldman said in an email. "Loan notes are collected twice a year. If the developer cannot make the note payment (through the City to HUD) then HUD will take the payment from the City's Line of Credit."
The loan must be repaid within 20 years, she said. As a condition of the loan, at least 51 percent of the jobs created – pegged at 200 in the media release – must be offered to low- and moderate-income persons.
The Knapp's redevelopment will include 22 residential units on the top floor and retail space on the ground floor.
A fashion and design incubator, dubbed "The Runway," will be housed on the first floor and mezzanine levels. The incubator, a project of the Lansing Economic Development Corp., is being developed by the Lansing Economic Area Partnership, or LEAP, which now handles economic development duties for the city.
"Not unlike the power station project, as a team working together, we once again proved we can make the possible out of what once was considered impossible," said LEAP CEO and President Bob Trezise, referring to the redevelopment of the former Ottawa Street Power Station into what is now the headquarters for The Accident Fund.
According to the media release, final financial closings between the developer and financiers are slated to happen this month.
Once the closings are finished, construction will begin and is expected to take 12 to 18 months.