Item Coversheet

City of Marquette, MI
300 West Baraga Avenue
Marquette, MI 49855


Agenda Date: 12/20/2021

New Business
Local Development Agreement - MDM Hemlock, L.L.C.

BACKGROUND: 

The City Commission sold Parcel 12 of the Heartwood Forestland in late 2018 to Veridea Group as part of a land sale process intended to sell surplus property and foster economic development.

 

In the interest of developing middle income housing in Marquette, Veridea has consulted with InnovaLaB Development Group and created a venture (MDM Hemlock, L.L.C.) to develop such housing on the site.

 

In order to facilitate the cost structure needed to provide a middle income project, they initially had discussed the option of utilizing an Act 381 Brownfield Plan to provide reimbursement for the eligible costs. The Community Development Director presented the idea of a Local Development Agreement, similar to the previous one done for the Harbor Vista development, as a means to direct the tax capture to the City to cover what would be eligible costs in a Brownfield Plan, thus reducing the loss of tax capture.

 

The result is the draft Local Development Agreement being presented here, wherein the City would be responsible for the up-front costs of the mutually agreeable infrastructure items found in Exhibit B of the Agreement, at a cost to the City of an estimated $1.8 million. In return, MDM Hemlock, L.L.C. agrees to a three-phase development of middle income housing with an initial investment of $5 million. The City return on investment for supporting the infrastructure up front is approximately 10 years.

 

In addition, the completion of this project will permit the City to complete the infrastructure preparation needed to facilitate the future extension of utilities needed at the Marquette Ski Hill.


FISCAL EFFECT: 

This project was not included in the FY 2022 Budget however, with the pending removal of the College Avenue reconstruction from the 2022 Capital Improvement Plan due to the potential construction at the former hospital site, there will be an equivalent amount of funds available. This will require a budget adjustment.


RECOMMENDATION: 
Approve the Local Development Agreement as presented, direct the Mayor and City Clerk to sign the Agreement, and amend the budget and Capital Improvement Plan to reflect the inclusion of this project in FY 2022.

ALTERNATIVES: 
As determined by the Commission.

ATTACHMENTS:
Description
Draft Local Development Agreement