A new downtown apartment building could bring more housing to Kalamazoo, backed in part by public financing tools the city commission discussed this week.
The project, known as Rose Phase III, would add a 71-unit mixed-use building at 116 W. Cedar St. and adjacent parcels at 427, 431, and 433 S. Rose St, part of the same corridor as the existing 400 Rose apartments. Of the 71 units, 15 would be income-restricted for 20 years, with rents affordable to households earning roughly 30 to 94 percent of the area median income, according to city records. The building would also include a small ground-floor commercial space intended for residents rather than as new downtown retail. Developer AVB is partnering with the Hinman Company, the same team behind the two earlier phases of 400 Rose, under the project entity 116 West Cedar, LLC. Total private investment is estimated at roughly $19.3 million, with construction anticipated to wrap up in 2028.
For residents, the project matters both for what it could add to the housing supply and for how it would be paid for. Before any public assistance is approved, a third-party firm, Plante Moran, reviews the project’s finances to confirm it genuinely couldn’t move forward through private financing alone.
At the Kalamazoo City Commission’s September 8 Committee of the Whole meeting, Jamie McCarthy, the city’s Development Manager, and Curt Aardema of AVB walked commissioners through the proposal. Commissioners Hess and Slaby asked questions about the types of units planned, affordability, and how the project fits with the city’s housing demand study.
Later at the commission’s regular business meeting, two of the project’s public financing pieces came up for a vote as part of the consent agenda, and both were approved unanimously. The first approved a Neighborhood Enterprise Zone (NEZ) tax certificate, which qualifies based on 28 of the 71 units renting at or below 80 percent of area median income and a reduction in on-site parking. If approved by the state, the certificate would reduce the property’s city operating and solid waste taxes by an estimated $526,881 combined over 15 years, part of an estimated $2.49 million in NEZ tax reduction across all local taxing jurisdictions.
The second approved the project’s Act 381 Brownfield Plan, which allows the city to reimburse the developer for eligible redevelopment costs using future tax revenue generated by the project itself, rather than existing tax dollars. The plan identifies roughly $4.97 million in eligible costs, including site preparation, infrastructure, environmental work, and a $2.53 million gap tied to keeping 15 units income-restricted, to be repaid over up to 30 years through tax-increment revenue the project is expected to generate. The Brownfield Plan estimates that revenue at about $7.85 million over the life of the plan, with the remainder funding Brownfield Authority administration, state and local revolving funds, and eventual returns to taxing jurisdictions once the plan concludes.
