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Agenda Item Review Form
Muskegon City Commission
Commission Meeting Date: September 23, 2025 Title: Brownfield Plan Development &
Reimbursement Agreement, 351 Phase Il, LLC
Submitted by: Jocelyn Hines, Development Department: Economic Development
Analyst
Brief Summary:
City staff is seeking approval of the Development and Reimbursement Agreement (D&RA) for 351
Phase Il Redevelopment Project of the brownfield plan amendment.
Detailed Summary & Background:
City staff is requesting approval of the Development and Reimbursement Agreement (D&RA) for the
351 Phase Il Redevelopment Project. The City Commission previously approved the Brownfield Plan
Amendment for this project on May 13, 2025.
The developer, 351 Phase II LLC, has submitted a D&RA in connection with the Lakeview Lofts Il
project, a mixed-use development located on 0.5 acres adjacent to Lakeview Lofts |. The project
consists of the construction of a new five-story building that will include approximately 3,112 square
| feet of first-floor retail soace and 64 new residential units comprised of studio and one-bedroom
apartmenis.
Under the terms of the agreement, the Brownfield Redevelopment Authority will reimburse the
developer for eligible activities and costs through tax increment revenues for a period of up to 30
years. Reimbursement shall not exceed $6,540,560.
The project qualifies for housing development activities as 50 percent of the residential units will be
designated for households with incomes at or below 120 percent of the area median income.
Goal/Action ltem:
2027 Goal 2: Economic Development Housing and Business
Is this a repeat item?:
Explain what change has been made to justify bringing it back to Commission:
Amount Requested: Budgeted Item:
N/A Yes No N/A a
Fund(s) or Accounk(s): Budget Amendment Needed:
Yes No a N/A
Recommended Motion:
I move to approve the 351 Phase Il, LLC Brownfield Development and Reimbursement Agreement
and authorize the Mayor and City Clerk to sign.
Approvals: Name the Policy/Ordinance Followed:
Act 381
Immediate Division
Head
Information
Technology
Other Division Heads
Communication
Legal Review ||
DEVELOPMENT AND REIMBURSEMENT AGREEMENT
This Development and Reimbursement Agreement (the “Agreement”) is made this 7" day
of August, 2025, between the Muskegon Brownfield Redevelopment Authority, a Michigan
public body corporate, whose address is 933 Terrace St, Muskegon, MI 49440 (the “Authority”),
the City of Muskegon, a Michigan public body corporate, whose address is 933 Terrace St,
Muskegon, MI 49440 (the “City”), and 351 Phase II, LLC, a Michigan limited liability company,
whose address is 15120 Cross Creek Dr., Spring Lake, MI 49456 (the “Developer”).
RECITALS
A, The Authority was created by the City pursuant to the Brownfield Redevelopment
Financing Act, Act 381 of the Public Acts of Michigan of 1996, as amended (“Act 381”). Pursuant
to Act 381, the Authority has prepared a Brownfield Plan, which was duly approved by the City
Commission of the City (the “Brownfield Plan’).
B. The Developer owns or has an agreement to purchase approximately 0.5 acres of
partially improved and vacant land in the City located at the corner of W. Western Ave, and 2"
Street (the “Property”), which is legally described in the attached Brownfield Plan for the 351
Phase II, LLC Redevelopment Project (the “Amendment”) attached as Exhibit A, and is considered
a “housing property” as defined in Act 381.
C. The City of Muskegon Downtown Development Authority (the “DDA”) has agreed
to waive its capture so that the Authority may capture one hundred percent (100%) of the available
captured taxable value from the Property to reimburse the Developer for eligible activities incurred
for the Project.
D, The Amendment was recommended for approval by the Authority on May 13, 2025
and approved by the City Commission of the City on May 13, 2025, with concurrence from the
DDA on May 13, 2025.
E, The Developer proposes to redevelop the Property into a mixed-use project with
first-floor retail space and new residential multifamily above (the “Project”). The Project will
include department specific, activities (i.e. baseline environmental assessment activities) and
housing development activities to support development of a new residential housing at the
Property, The Project involves the construction of a new five (5) story mixed-use addition to the
original Lake View Lofts project and includes a mix of studio and one-bedroom units with
approximately 3,112 square feet of first floor retail space with residential units above. In total, the
Project will include sixty-four (64) new residential units (adding to the existing twenty (20) units
for a total of 84 units), consisting of forty-one (41) studios and twenty-three (23) one-bedroom
units, The Project is expected to include construction of new covered parking that will support the
housing. The Project will have the effect of assisting in the redevelopment of the Property,
increasing housing inventory, increasing the tax base, creating jobs, and otherwise enhancing the
economic vitality and quality of life in the City.
F, Subject to the Michigan State Housing Development Authority (“SMSHDA”)
approval of the Act 381 Work Plan for the Project (the “Work Plan”), with respect to the state
education tax and taxes levied for school operating purposes (the “Educational Taxes”), Act 381
permits the Authority to capture and use the property tax revenues generated from the incremental
increase in property value of a redeveloped brownfield site constituting an “eligible property”
under Act 381 to pay or to reimburse the payment of costs of conducting activities that meet the
requirements under Act 381 of “eligible activities” (hereinafter the “Eligible Costs”),
G, By undertaking the Project, the Developer incurred and will incur Eligible Costs,
which include costs associated with department specific activities (Phase I&II environmental site
assessment and baseline environmental assessment), housing development activities, and
brownfield plan preparation and development, all as definedin the Amendment. The Developer’s
Eligible Costs shall not exceed $6,540,560.
H. The Developer is eligible for “housing development activities” under the Act based
on. Developer’s commitment to reserve a portion of the Project’s residential units as income
restricted units for income qualified households (i.e. household incomes at or below 120% area
median income (AMI)) (the “Annual Unit Income Restriction”) in accordance with the
Amendment. The Annual Unit Income Restriction for the Project includes a total of fifty percent
(50%) of the residential units (i.e. 32 units) for tenant households earning 120% AMI or less for
the Term of this Agreement.
1. The Authority has incurred and will incur certain eligible administrative costs
associated with the Amendment (the “Administrative Costs”), for which it seeks reimbursement
from Local Tax Increment Revenue (“Local TIR”).
J. Act 502 of the Public Acts of Michigan of 2012 amends Act 381 to provide that
during the period up to the first twenty-five (25) years that the Developer is reimbursed for Eligible
Costs the amount of Tax Increment Revenues (as defined below) captured annually shall be
reduced by fifty percent (50%) of the state education tax levy (the “SET SBRF Tax Increment
Revenues”), which is required to be paid to the Michigan Department of Treasury (“Treasury”)
for deposit in the state brownfield redevelopment fund (the “SBRF”).
K. Following reimbursement of all amounts due the Developer, and all amounts
payable to the Authority as Administrative Costs from applicable Tax Increment Revenues (as
defined below) and payment to Treasury of the SET SBRF Tax Increment Revenues for deposit in
the SBRF, additional tax increment revenues will be deposited into the local brownfield revolving
fund, if available, which is in accordance with Section 13(5) of Act 381, which limits such deposits
to be made for no more than five (5) years after the time that capture is required to pay the Eligible
Costs.
L, In accordance with Act 381 and subject to the terms of this Agreement, the parties
desire to use the property tax revenues that are generated from an increase in the taxable value of
the real and personal property resulting from the redevelopment of the Property to which the
Authority is entitled to receive (the “Tax Increment Revenues”) to reimburse the Developer for
the Eligible Costs, to pay the Authority for Administrative Costs, to pay Treasury the SET SBRF
Tax Increment Revenues, and to fund a local brownfield revolving fund pursuant to Act 381,
M. The parties are entering into this Agreement to establish the procedure for such.
Terms and Conditions
NOW THEREFORE, in exchange for the consideration in, and referred to by this
Agreement, the parties agree as follows:
1, Capture of Taxes: During the Term of this Agreement, the Authority will capture
all of the Tax Increment Revenues it is entitled to from the Property and use those Tax Increment
Revenues as provided in this Agreement.
2. Submission of Costs: For those Eligible Costs for which the Developer seeks
reimbursement from the Authority, the Developer shall submit to the Authority:
a) a written statement detailing the costs;
b) a written explanation as to why they are Eligible Costs;
Cc) copies of invoices from contractors, engineers or others who provided such
service, or, for the Developer's personnel for whose services
reimbursement is being sought, detailed time records showing the work
performed by such individuals;
d) copy of occupancy permit, as applicable,
e) copies of local required building permits, inspection reports, and any other
information which may be required by the Authority or its auditors.
3. Payments: The Tax Increment Revenues received by the Authority shall be paid
to the Developer to reimburse the parties for Eligible Costs. Local TIR generated fromof the
Property shall first be retained by the Authority in an amount equal to five percent (5%) the
annual Tax Increment Revenues up to the maximum amount allowed annually for Administ rative
Costs under Act 381 for all Authority projects and the SET SBRF Tax Increment Revenu es
realized from the Property during the period up to the first twenty-five (25) years that the
Developer is reimbursed for Eligible Costs shall be paid to Treasury for deposit in the SBRF.
After retention of such Local Tax Increment Revenues and payment to Treasury of the
SET SBRF Tax Increment Revenues, Project Tax Increment Revenues shall be used to reimburse le
the Developer for Eligible Costs; provided, however, if Developer has not paid any applicabthe
professional fees and costs (legal, environmental, etc.) incurred by the Authority related toCosts
Developer’s request to use Project Tax Increment Revenues to reimburse it for Eligible to pay
within thirty (30) days of being invoiced for such costs, then the Authority is authorized are
such costs from Project Tax Increment Revenues before such Project Tax Increment Revenues
used to reimburse the Developer. The amount of Project Tax Increment Revenues used to pay such
costs shall be subtracted from the Developer’s total Eligible Costs and Developer shall note thebe
entitled to reimbursement of such amount. The Authority shall have no obligation to reimburs y
Developer for Eligible Costs from Tax Increment Revenues captured and received by the Authorit
after December 31, 2056. The amount of taxes levied as Educational Taxes that will be used to
reimburse the Eligible Costs of implementing eligible activities at the Property will be limited to
the Eligible Costs of eligible activities approved by MSHDA.
Unless the Authority disputes whether such costs are Eligible Costs or the accuracy of
such costs, the Authority shall, after review by an Authority Board member or the City Economic
Development Coordinator and approval by the Authority Board, pay to the Developer the amounts
for which submissions have been made pursuant to Section 2 of this Agreement within thirty (30)
days after the Authority Board has approved such payment provided Tax Increment Revenues have
been received from which the submission may be wholly or partially paid and provided, further,
an occupancy permit shall have been issued for those portions of the Project for which there are
Eligible Costs. Ifa partial payment is made by the Authority because of insufficient Tax Increment
Revenues, then the Authority shall make additional payments toward the remaining amount within
thirty (30) days of its receipt of additional Tax Increment Revenues until all of the amounts, for
which submissions have been made, have been fully paid to the Developer, or from the last winter
tax bill paid in 2057 that was generated by December 31, 2056, whichever occurs first.
4. Adjustments: If, due to an appeal of any tax assessment or reassessment of any
portion of the Property or for any other reason, then the Authority is required to reimburse any Tax
Increment Revenues to the City, or any other tax levying unit of government, and then the
Authority may deduct the amount of any such reimbursement, including interest and penalties,
from any amounts due and owing the Developer. If all amounts due the Developer under this
Agreement have been fully paid or the Authority is no longer obligated to make any further
payments to the Developer, then the Authority shall invoice the Developer for the amount of such
reimbursement. Further, the Developer shall pay the Authority such invoiced amount within thirty
(30) days of the Developer's receipt of the invoice. Amounts invoiced and paid to the Authority by
the Developer pursuant to this paragraph shall be reinstated as Eligible Costs for which the
Developer shall have the opportunity to be reimbursed in accordance with the terms, conditions
and limitations of this Agreement. Nothing in this Agreement shall limit the right of the Developer
to appeal any tax assessment.
5. Development: The Developer shall commence work on the Project as soon as
reasonably possible. The Developer will use its reasonable best efforts to complete the Project no
later than spring of 2028.
6. Reporting - Documentation and Reporting:
(a) Income and Rent Documentation and Reporting:
i. Developer shall monitor and annually provide to the Authority and/or a third-party
providing verification services to the Authority sufficient evidence to demonstrate
its compliance with the Annual Unit Income Restriction.
ii, The Developer or its designee must verify prospective renters’ eligibility at the time
of initial occupancy by self-certifying using the MSDHA Household Income Self-
Certification Form or other process/form required or approved by MSHDA.
iii. If after the Authority’s review of the Developer’s Annual Unit Income Restriction
report, the Authority determines that Developer did not meet the Annual Unit
Income Restriction for the previous 12 month period based on occupied units,
Authority may withhold a pro-rata share of the total Tax Increment Revenues
received from the Project in an amount equal to the percentage of the total units of
the Project determined to not be in compliance with the Annual Unit Income
Restriction. If the Developer returns to full compliance at the time of the next
Annual Unit Income Restriction report, then the Authority shall reimburse the
Developer any amounts previously withheld. If the Developer fails to return to
compliance at the time of the following Annual Income Restriction report (i.e. 2
consecutive years of non-compliance), then it will be ineligible for reimbursement
of the amounts previously withheld but shall remain eligible for future
reimbursement if Developer returns to compliance at the time of the next due
Annual Income Restriction report. If, based on the formula outlined above, the
Authority has any Tax Increment Revenues withheld at the end of the Term, the
Authority may retain such funds for deposit in the local brownfield revolving fund,
as provided under the Act, or remit such funds to the respective taxing jurisdictions...
iv. The Developer shall provide to the Authority, within 30 days after the Project
receives an occupancy permit, and annually thereafter no later than May 1 of each
year during the Term of reimbursement under this Agreement, or as needed so that
the Authority may make a timely report to MSHDA, a report of the following, as
applicable, for the preceding calendar year pursuant to reporting requirements
under Section 16 of Act 381:
(1) Total investment and new capital investment since the prior year’s report.
(2) Square footage of new construction or renovation, whether residential,
commercial, or other use, and use of new or renovated space. .
(3) New jobs created. pay rat
(4) Total number of housing units and total number of Annual Unit Income |
Restriction units, indicating the number rented at rates at or below the
applicable AMI ranges subject to this Agreement.
(5) Number of Annual Unit Income Restriction units rented to, or available to
be rented by, income qualified household renters.
(6) Annual Unit Income Restriction units’ rental rates.
(7) Racial and socioeconomic data on the individuals purchasing or renting the
Annual Unit Income Restriction units, or, if this data is not available, racial
and socioeconomic data on the census tract in which the housing units are
located.
(8) Other information required to be reported to the State of Michigan to under
Act 381 or by MSHDA unless that information is readily available to the
City Treasurer.
The Developer shall notify the Authority of any reporting error within seven (7) calendar days of
a discovery of any reporting error,
7. Prohibition of Short-Term Rentals: During the Term of Tax Increment Revenues
capture and reimbursement, and in accordance with Section 15(12)(m)(iv) of the Act, no short-
term rentals are allowed in any of the residential units. Leases shall be consistent with the City’s
zoning. The Developer agrees to include notice of the short-term rental prohibition in any lease
and is responsible for monitoring compliance with this provision.
8. Interpretation: This is the entire agreement between the parties as to its subject. It
shall not be amended or modified except in writing signed by the parties. It shall not be affected
by any course of dealing and the waiver of any breach shall not constitute a waiver of any
subsequent breach of the same or any other provision.
9. Assignment - Binding Effect: This Agreement and the rights and obligations under
this Agreement shall not be assigned or otherwise transferred by any party without the consent of
the other parties, which shall not be unreasonably withheld; provided, however, the Developer may
assign its interest in this Agreement to an affiliate without the prior written consent of the
Authority; provided, any such assignee shall acknowledge to the Authority in writing on or prior
to the effective date of such assignment its obligations upon assignment under this Agreement;
provided, further, that the Developer may make a collateral assignment of the Tax Increment
Revenues after review of such assignment and consent by the Authority’s legal counsel and
approval of the Authority’s Executive Director. As used in this paragraph, “affiliate” means any
corporation, company, partnership, limited liability company, trust, sole proprietorship or other
individual or entity which (a) is owned or controlled by the Developer, (b) owns or controls the
Developer, or (c) is under common ownership or control with the Developer. This Agreement shall
be binding upon any successors or permitted assigns of the parties.
10.Indemnification: The Developer agrees to indemnify, defend, and hold the City of
Muskegon City, the Muskegon Brownfield Redevelopment Authority, as well as all officers,
agents, employees, and assigns thereof harmless against (a) any and all claims by any person
claiming for personal or property injuries or damage due to the Developer’s redevelopment of the
Property, provided pursuant to the terms of this Agreement, and/or (b) claims by any third parties
which may arise out of, or be related to, the Developer’s redevelopment of the Property pursuant
to this Agreement. The Developer shall not be obligated to indemnify any persons under this
section if the liability arises out of the person’s negligence, willful misconduct, or breach of this
Agreement, or the negligence or willful misconduct of any person or entity acting by, through, or
under any such persons.
11. Governing Law. This Agreement is being executed and is intended to be performed
in the State of Michigan, and it will be construed and enforced in accordance with, and the rights
of the parties will be governed by, the laws thereof. Venue is in Muskegon County, Michigan.
12. Term: This Agreement shall terminate when all reimbursements and payments
contemplated under this Agreement have been paid, or on May 1, 2057.
13. Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed
copy of this Agreement delivered by facsimile, pdf, email, or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. Each
party further agrees that the electronic signature, whether digital or encrypted, including a digital signature
delivered via DocuSign or Adobe Sign, of a party shall be deemed an original signature having the same
legal effect as its manual signature.
14. Authorization. The parties affirm that their representatives executing this Agreement are
authorized to do so and that all resolutions or similar actions necessary to approve this Agreement have
been adopted and approved.
15. Recitals. The parties affirm and acknowledge the accuracy of the recitals set forth above
and incorporate the provisions of the same herein as if fully restated.
[signatures appear on next page]
WHEREFORE, this Agreement has been executed as of the date first written above.
DEVELOPER:
351 PHASE I, LLC
Name:
Joshua Canale
its: Managingn Member
AUTHORITY:
MUSKEGON BROWNFIELD
REDEVELOPMENT AUTHORITY
Meavthe eL Sole Mh lox
By:
y Wench \ vce LiiDonbig
“PDA +B i -O ha lv
CITY:
CITY OF MUSKEGON
Ken Johnson,/Mayor
XOX NOU, VS
~ , ;
Ann Meisch, Clerk
RESOLUTION APPROVING THE BROWNFIELD DEVELOPMENT AND REIMBURSEMENT
AGREEMENT
351 Phase Il, LLC (341 West Western Avenue)
County of Muskegon, Michigan
2025-September 23
Minutes of a Regular meeting of the City Commission of the City of Muskegon, County
of Muskegon, Michigan (the “City”), held in the City Commission Chambers on the 23rd of
September, 2025 at 5:30 p.m., prevailing Eastern Time.
PRESENT: Commissioners Kilgo, German, Gorman, Kochin, and St.Clair
ABSENT: Commissioners Keener and Johnson
The following preamble and resolution were offered by Commissioner German and
supported by Commissioner Kilgo:
WHEREAS, the Authority has forwarded the Development and Reimbursement
Agreement to the City Commission requesting its approval of the Development and
Reimbursement Agreement; and
NOW, THEREFORE BE IT RESOLVED THAT:
1. The Brownfield Plan constitutes a public purpose under Act 381.
2. The Brownfield Plan meets all the requirements of Section 13(1) of Act 381.
3. The proposed method of financing the costs of the eligible activities, as identified
in the Brownfield Plan and defined in Act 3871, is feasible and the Authority has
the authority to arrange the financing.
4. The costs of the eligible activities proposed in the Brownfield Plan are reasonable
and necessary to carry out the purposes of Act 381.
5. The amount of captured taxable value estimated to result from the adoption of
the Brownfield Plan is reasonable.
6. The Development and Reimbursement Agreement is approved and is effective
immediately
7. All resolutions of parts of the resolutions in conflict herewith shall be and the
same are hereby rescinded.
Be it Further Resolved that the Mayor and City Clerk are hereby authorized to execute
all documents necessary or appropriate to implement the provisions of the Brownfield Plan.
AYES: Gorman, Kochin, St.Clair, Kilgo, and German
NAYS: None
RESOLUTION DECLARED ADOPTED.
Do ebro
“Ken Johnson, Mayor
Ann Marie Meisch, City Clerk
| hereby certify that the foregoing is a true and complete copy of a resolution adopted by
the City Commission of the City of Muskegon, County of Muskegon, State of Michigan, at a
regular meeting held on September 23, 2025, and that said meeting was conducted and public
notice of said meeting was given pursuant to and in full compliance with the Open Meetings Act,
being Act 267, Public Acts of Michigan, 1976, as amended, and that the minutes of said meeting
were kept and will be or have been made available as required by said Act.
Ann Marie Meisch, City Clerk
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