The Lofty on Rowe

[XLFD]

In late October 2022, the Lofts on Rowe project was complete and ready for occupation after its grand opening.  Years in the making, the 67 units ranging from studios to three-bedroom apartments was supposed to help the supposed housing crisis in Ludington, which it hasn't nor is it likely to.  In fact, I would propose it has made the affordable housing situation that much worse.  Lofts on Rowe is not affordable housing, nor is it desirable, and this is an objective conclusion.

Why would I say such a thing?  Well, because it's true and it honestly hurts saying it because I like the idea of being able to save the historic Haskelite Building and providing more housing options to area residents.  Sentimentality aside, the facts and warnings we all had access to before and during this project should have been a sign for possible reconsideration; fortunately, I had noticed some of those issues and offered my own caveat emptor along the way.  As if our public bodies would heed them.  

                                     A finished bedroom at Lofts on Rowe, showing unfinished walls and ceilings

Back in the summer of 2019, city officials accommodated this project by significantly adapting their standards for living quarters, standards they had put in place months before in that same year.  I noticed it then and spoke out at a meeting of the Ludington City Council:

XLFD:  (July 2019 LCC meeting) "... I am suspicious that [Third Coast Development LLC] have made deals covertly with city council and planning commission members, as Councilor Kathy has signaled for the PC's Text Committee to relax the minimum square footages of living spaces for adaptive reuse of existing buildings at the July 10th PC meeting, likely in preparation for what she has heard from the LLC."

These minimum square footages were actually set by the Ludington City Council earlier that year, determining that it would be a negative living environment if it was any smaller, as the January 14, 2019 packet shows:

So keep in mind that before the Lofts on Rowe project came about, 400 sq ft. (effectively a 20' X 20' space) was the minimum size for a Ludington efficiency in a building reconfigured from a past purpose to residential quarters, while 1-bedrooms needed at least 550 sq, ft.  

Even without the inflation we've seen occur over the last two years, the project was having issues being financed, despite the local governments pitching in $2.8 million from Tax Increment Financing (TIF) and $1 million from the local Pennies from Heaven Foundation.  The initial LLC who swore they would not be seeking money from the public, and lied, walked away and were replaced by another shady outfit that demanded even more money from the public through their governments during the height of the pandemic, when they could so easily do so, as I cautioned folks 15 months later and preserved here at the Ludington Torch in my public comment:

 

XLFD:  (Oct 2020 LCC meeting)  "... Tonight, this council is set to significantly amend a Brownfield Plan they passed just 10 months ago.  Gone is Third Coast Development LLC and the promises they made to the people of Ludington.  This amendment is actually calling for a lot more community sacrifice and a smaller amount of investment by Michigan Community Capital.  In December 2019, the TIF Plan was set to capture $2.9 million in local taxes,

the new plan is set to capture $4.3 million, nearly a 50% increase.

Instead of a 22 year plan it becomes a 26 year plan.  The money lost to local taxing authorities combined with the added strain on city services and infrastructure will be shouldered by the rest of the community in this gamble.  

Let's couple that with MCC's investment in this project decreasing.  In December, they were investing $12.2 million into this project, with the amended Brownfield Plan, which includes a $1 million donation from a local foundation, that investment goes down to $11.8 million. 

We are now told that the Brownfield Plan agreed to in December where our local contributions were fair, reasonable, and accepted by MCC is insufficient now, and that the only way it can go through is with an increase of nearly 50% to our burden while their contribution decreases.  The promises Third Coast Development LLC made are being overlooked now that they've ran away from the project and it seems as if MCC wants to take advantage of our community, when it has many other challenges coming at it..." 

Shocking and true.  Developers and officials at the time told us they had not the money to do this project and were only asking for more public handouts for enough to squeak by.   When you consider that inflation jumped up from a reasonable 1.23% in 2020 to 4.7% in 2021 and 6.5% in 2022, the last year of this project, one suspects they cut corners somewhere as construction inflation was much higher, 19.6% in 2021 to a still unreasonable 14.1% in 2022.  

One can look at the brick walls, unfinished ceilings, and original support beams littered around the project and wonder whether those are for historical effect or whether they may have cut corners on hazard mitigation procedures-- let us not forget that from between 1944 and 1989, 45 years, this building was a big producer of Wolverine Sportswear.  You may recognize the brand as a defendant in a contamination lawsuit in Kent County Michigan, where 1700 people won a $54 million settlement against the company for their dump/release of "forever chemicals" (PFAs) in the environment.  Maybe one can sleep well in their loft apartment if they believe that was an isolated case.

A promotional video put out by Michigan Community Capital (MCC, already mentioned in my public comment, an operational arm of the MEDC) highlights the insides of the building before it was worked on and the people who were instrumental in getting this project done.  It starts with Marilyn Crowley of MCC speaking about investing (mostly taxpayer money) in communities to create economic prosperity, and then it really goes nuts.

Ludington City Manager Mitch Foster then says he's looking forward to seeing the impact that it will have on our community, failing to report the infrastructure drain imposed by having this property pay taxes as if it was vacant for 26 years, and of how it would be seriously depreciated by that time.  County Board Chairman Janet Anderson follows, the county's brownfield authority secured that TIF Plan, telling us irrelevantly that businesses depend on a stable work force as they pan around the rough interior.

Crowley reappears and tells us how amazing our people are (for heavily financing this, naturally) and that we are suffering from a huge housing shortage (thanks to government over-regulation of rental units driving affordable units out of the market).  Monica Schuler of Pennies from Heaven, indicates it will attract new talent to the Ludington area and offer alternatives to those already here.  Not likely, as we will see.

Sean Welsh of PNC Bank echoes that, and talks of the waste of going the route of demolishing a historic building to build anew, calls this a gamechanger, and how they invested as an equity partner.  Raymond Biggs of West Shore Bank says the area is already experiencing good economic growth, implying a need for more housing.  These two executives and their banks make out big time when there is millions of TIF money floating on a project, like they obviously did here.

The two main triggering moments for me, however, came at the end, with City CEO Foster saying:  "But to see what it does to the neighborhood, to the surrounding properties, to see other people making more investments in their property."  Have you saw that develop in the two years since the video was made, with high inflation on most everything and having to sink $4.2 million into this, do you really think there is discretionary income available to most homeowners to better their property significantly, Mr. Foster?

Bank CEO Biggs would come back later and say the project turns an older factory "into very usable and affordable housing, which is something that is deeply needed".  Raymond Biggs idea of affordable housing assuredly is different than yours and mine, but let's look at what he calls affordable housing, and the main point of this essay:  that Lofts on Rowe is neither affordable or desirable/usable housing.

When a preapplication booklet uses computer generated pictures of the outside and inside of the building, you see a little more of the idealism and absence of reality that the people in the video had.  They do allow for a virtual tour of their largest one-bedroom unit (574 sq. ft.), where you can gauge the size of the unit for yourself (which is 50% larger than most other one-bedroom units), otherwise you can see the MCC's promotions for these units at Lofts apt. details, where You may see this for example of one-bedroom units, 50 of the 76 units are of this type which is why you see these as being most of what's available:

Lofts on Rowe charges $950 per month for a lot of rooms that are 386 sq. ft.  Remember, this small of an apartment would not qualify as even studio apartments back before this project was considered.  For every square foot, you are paying $2.46 every month.  If that sounds steep, it is.  Let's take a look at rent.com stats compiled after this project put up to 76 more units on the local market:

One-bedroom apartments in Ludington are costing $766, meaning that this project's 50 units of that type actually jacked up the average rent in Ludington significantly, being about $200 over the average.  And size matters, the 17 one-bedroom units at LOR on the market average less than 400 sq. ft., but when compared to newly created one-bedroom units throughout the country, this is incredibly small in comparison, would you believe they are nearly twice as big in area?

One would expect an 'average' one-bedroom apartment in Ludington to be between 750 and 796 sq. ft and rent for $766, or you would be paying about $1 per month/sq. ft., rather than the $2.46 that Lofts on Rowe costs.  Let's compare with a more concrete example almost directly to the east, Pineview Apartments, which was created the old-fashioned way, without heavy community and government subsidies and remains solvent in the same manner.  

Their one-bedroom apartments are below average in size, 644 sq. ft., but they are also very affordable at $450.  They additionally offer amenities roughly equal to Lofts on Rowe and include balconies (verandas on the first-floor apartments).  Their cost is 70 cents per sq. ft. per month.  If you multiple that by 3.5, you still don't get to the $2.46 per sq. ft. at Lofts on Rowe.  And if you think that this website is inaccurately portraying the numbers, the numbers they offer for Lofts on Rowe are accurately portraying the numbers MCC offered.

It should be noted that 41 (82%) of the one-bedroom units at LOR are 403 sq. ft. or less. 

So let's put it all together when comparing these two apartment complexes.  Lofts on Rowe apartments are about 60% the size of Pineview's, but they are over twice the cost. 

Pineview was built to be apartments by a local developer who keeps the rent very affordable despite having no problems finding tenants (you'll be put on a waiting list, as they have been 100% full over the last decade).  Their buildings have about 20 apartments each and they offer a bit of green space.

Lofts on Rowe was built to be a manufacturing facility and was used for that purpose for around 100 years manufacturing, in order:  men's clothing, furniture, wood products (including Carrom games), airplane glue, plywood, airplane bodies, canoes, sportswear, packaging equipment.  Repurposing them into apartments retains not only the history but potentially contamination from all that manufacturing.  The costs are well above fair market value for similar properties, leaving many of the small units vacant 20 weeks after opening. 

The owner of this 76-unit apartment building is a faceless corporation named Michigan Community Capital, based in Lansing, which identifies itself as an independent non-profit 501(c)(3) tax-exempt public charity who strive to "counter gentrification and create upward mobility and wealth-building opportunities for underserved individuals and families in Michigan."

The outrageously overpriced glorified cubicles they have built within this profit-factory (a 'wealth building' opportunity for them, a bad investment for their tenants) prove otherwise, these are just an excuse for them to exploit the resources of a small town and rake in money from those who would accept their terrible terms.  

[Willy]

Well done X.  I completely agree with you. This is one of thousands of projects thought up by proponents of expanding the reach of Government into private enterprise. Not only are most of these projects promoted under false pretenses but many are just plain corrupt. The taxpayers are always on the losing end of these deals. From the Government, to the banks, to contractors and local authorities these type of projects continue to feed the greed and under belly of conniving promoters and politicians. Thanks for your attention regarding this situation, now and in past articles.

Didn't the City own the property just north of this building? If memory serves me the City used it for storage. I could be wrong.

[XLFD]

You can see that structure in the aerial views of the Haskelite Building on the video, it was the City's storage facility, mainly for road salt, garbage barrels, and picnic tables-- they called it their salt barn, and they sold it to MCC for a modest price, if I remember correctly it was under condition that MCC would erect a pole barn on the back of the DPW property to serve the same purpose.

It's easy to blame government for problems in housing, because they are often the ones at fault.  The invisible hand of the free market would always be solving housing affordability, shortages and surpluses in short order, but the government seeking more power and control keeps intruding into the issue and turning it into fertilizer and keeps private entrepreneurs who want to be developers out of the picture. 

God bless Mitch Bogner who was trying to add 80 affordable units to the housing stock without seeking any government assistance, only their approval, and ran into hostility at Planning meetings and city council meetings.  Even with the resistance from city hall, Forest Hill snobs, and mysterious barrels half buried on the construction site, Bogner got it done and offers extremely affordable workforce housing for young families.  This is how nice and easy it would be if government would abide by our federal and state constitutions and quit meddling in the housing markets.

[XLFD]

You can see them demolishing the salt barn in this promotional video made in January, with the usual suspects taking credit for this highly subsidized government apartment complex.  I wonder, if MCC is a non-profit agency who used primarily public funding from at least three federal programs, a local Brownfield, and a cool million from PFH-- what was their final cost and why do they feel that theses rental rates are appropriate payback to the community for urban style sub-sized living quarters?   

Speaking of suspects, I see four County Commissioners together in the picture from the video below (L to R starting at 2nd person:  Squires, Hull, Anderson, and Castonia), and as this wasn't a chance social gathering where a quorum of that body is together and deliberating with others about what a Godsend this project is, I can't find the public notice for that January meeting of the county commissioners or the requisite minutes.

 

[Willy]

Thanks for the additional information X. Making a video about how wonderful they are is so obnoxious.

[XLFD]

Isn't it nauseating?  Every single entity involved put this effort on the back of the Ludington taxpayer, the Michigan taxpayer, and the federal taxpayer (i.e us) reaching deep into our low and middle class pockets to finance this project, then boldly pat each other on the back for a job well done without mentioning the taxpayers-- then deeply insult our intelligence by setting their rents more than twice what they should be and call it affordable housing (as Mayor Miller and WSB CEO Biggs directly said in these videos).

[Barney Reinberg]

One of my first researched articles for the Torch covered the development on the old bowling alley and fire department property. Same problems different developers. I think the article was worthy of a Pulzer prize but X never submitted the article.

[XLFD]

I don't recall rejecting your submission on such a topic I have a keen interest in, but if you resubmit it I'll give it a second look, and grant you a complimentary Pulzer Prize.  If you look real close at this development, you may piece together familiar faces or at least familiar entities fronted with different faces from the bowling alley block development.

Sure the developer is different but the MO is similar-- an LLC comes in and pitches their plan, the plan runs into difficulty securing public funds, so a different group not bound by the earlier promises steps in.  John Wilson was instrumental in both using his Pennies from Heaven group, then there's West Shore Bank, the City of Ludington, the county's brownfield authority, and let's not forget the COLDNews, whom are effectively the public relations firm for all of the above, giving them free advertising and support at each point in the project so that these crooks can charge rents over twice what these apartments should be going for.