ELKHART — An expanding River District development project involving a new supermarket and 173 residential units will receive a $1.75 million loan from the City of Elkhart.
That means the total amount borrowed from the city is $11.87 million for this project.
“We’re obviously pleased with the city’s continued participation and support of the project. We think it’s a monumental and catalytic project,” said Brad Toothaker, managing partner of Great Lakes Capital, which is behind the project.
GLC requested the loan after going $9 million over the initial budget. According to city staff, the budget has increased because the scope of the project has grown. The initial budget was $34.2 million, which would pay for 154 residential units and a 40,000-square-foot Martin’s Super Market. The new $43.4 million budget ads 19 residential units and 5,820 square feet to the supermarket.
According to Toothaker, the decision to add space and apartments was made because there was more demand than anticipated. He acknowledged that there is not a complete correlation between added square feet and the budget increase, saying that investors are also adding some amenities and that higher costs tend to follow project expansions.
Construction at the site of the Jackson Boulevard Martin’s Super Market began in June. A new Martin’s Super Market is being constructed north of the current store, thereby moving Martin’s closer to Jackson Boulevard. The existing store will be torn down when the new one opens, which was first expected to be in the early summer of 2020. Toothaker said that the late summer is now a better estimate. That is also the time he expects the first people to move into the first apartments.
The 173 residential units will, in part, be located where Martin’s sits today. The initial plan included 14 townhomes along the Elkhart River, but that space will house the additional apartments. The apartment building closest to the new Martin’s will have 6,000 square feet of retail space on the ground level.
The Great Lakes Capital investment is one of the projects aimed at revitalizing Elkhart’s River District, which the city hopes to make a walkable neighborhood that will attract many new residents. The Elkhart Health & Aquatics Center, which opened in July, is often described as an anchor in that effort. Private investors have proposed building mixed-used development in front of the aquatics center, and elsewhere in the neighborhood, Stonewater at the Riverwalk opened its 200 residential units for lease in November, and the investors behind the near-aquatics center development are also building 15 high-end condominiums at the former Alick’s property.
According to Gary Boyn, an attorney helping Elkhart’s Redevelopment Commission with this and other projects, the new loan is on the same terms as the second loan from the city. That means it has a 4% interest rate, a 20-year amortization and is due in 10 years. That makes the loan cheaper for GLC, according to Boyn.
“But at the end of 10 years, the entire principal and interest then owed would be due and payable,” he said.
The original $4.58 million loan is a tax increment financing-backed loan, according to Boyn.
“The provision there is that if the TIF is sufficient, it will be applied to all of the payments that are due under that note,” he said.
If the TIF revenue is not enough to cover the loan, GLC will have to pay the difference.
The new loan was approved by the Elkhart City Council in a 7-0 vote on Monday, with Brian Dickerson, R-at-large, abstaining due to a conflict of interest, and Pam Kurpgeweit (R-6) being absent.
Boyn said that an advantage of growing the project is that the city can look forward to a higher property tax revenue than first expected.
“And having a Martin’s and some other store of that nature downtown and available to all of the people who are being asked to consider moving their residences to the downtown area (...) was just so important,” he said.
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The project has grown from 154 to 173 residential units, and the new Martin's will be 15% larger than first planned. The budget has increased from $34.2 million to $43.4 million.