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CITY OF MUSKEGON
CITY COMMISSION WORKSESSION
Monday, November 7, 2016
5:30 p.m.
City Commission Chambers
AGENDA
1. Muskegon County “Rec” Authority
2. Downtown Residential Zoning
3. Any Other Business
4. Adjournment
Minimum Lot Sizes
Under the current zoning requirements, a portion of Muskegon’s urban neighborhoods
are forced to be something they are not. The changes we are proposing are our attempt to
align the zoning of these neighborhoods with the realities of the way in which they are
built.
The areas that these changes would affect have historically been platted and built up
using a 33’ minimum lot width. Currently, the minimum required lot width in an R-1
Single-Family Residential zone is 50 feet with a 6,000sf minimum lot area. By increasing
the minimum lot width to 50 feet, it was ensured that any house demolished on a lot
smaller than 50 feet wide could not legally be rebuilt on its original lot.
Also to be taken into consideration are the future changes facing Muskegon’s urban
neighborhoods. An aging housing stock combined with ongoing blight fighting efforts
will result in newly vacant land largely located in these older, urban neighborhoods.
Because many of the blighted houses being demolished predate the current zoning
ordinance, they leave unbuildable vacant lots in their place.
Vacant lots, aside from being unused land and largely non-tax generating, are a
maintenance liability (mowing rotations paid for by the City, etc.). These lots will
continue to play a detrimental role until they are either sold to adjacent property owners,
combined with neighboring lots to meet the buildable threshold, or made legally
buildable as they exist.
In order to reassign these lots to a buildable status, we propose a new zoning district that
would serve as an urban alternative to the ubiquitous R-1 Single Family Residential zone.
This rezoning would best be achieved through a new Context Sub-Area within
Muskegon’s Form Based Code (FBC). The proposed, expanded FBC boundaries brought
about by these zoning changes have been determined by proximity to the downtown and
major corridors, and focused around the concentration of existing small lots.
This new zone is not expected to drastically alter the character of the neighborhoods it
affects, it is simply meant to allow homes to be built on underutilized lots currently
deemed too small to be legally built on. Smaller homes should be more affordable and –
combined with their central location – will reflect the walkable urban places the market
desires at this time.
Missing Middle Housing
The City of Muskegon’s Form Based Code emphasizes building types; among these are
building types classified as Missing Middle Housing. "Missing Middle" was coined by
Daniel Parolek of Opticos Design, Inc. in 2010 to define a range of multi-unit or
clustered housing types compatible in scale with single-family homes that help meet the
growing demand for walkable urban living.
These diverse housing types, while popular in the pre-WWII era of building, have all but
vanished from the current selection of newly constructed housing. Most examples of
Missing Middle Housing in the City of Muskegon date from before the 1940s. Over time,
changes in policy and zoning have made these housing types illegal to build today.
Land-use zoning or density-based zoning often leave a gap in the allowable housing types
that may be built within a city. The jump from single-family detached homes to medium-
density, multifamily housing excludes Missing Middle Housing. Missing Middle building
types have densities too high for single-family zones, yet building footprints and building
heights too small to meet the requirements of multifamily zones.
Much of the multifamily residential development in Muskegon (RM-1, RM-2, RM-3)
falls under the common trend of suburban garden apartments on combined lots. As an
isolated multi-family zone, separated by density, most multi-family developments are not
interspersed with other types of housing or well integrated into existing neighborhoods.
In established urban neighborhoods, Missing Middle Housing typically comes in the form
of infill development utilizing smaller lot sizes. Its housing types are designed and scaled
to fit well into their respective contexts while providing a blend of densities. This blend
increases the overall density of an area, but maintains a low perceived density.
16 dwelling units per acre is seen as the density level at which a neighborhood can
support local services and amenities within walking distance and existing/future public
transit. Muskegon’s current Single Family Residential zoning (R-1) restricts the
maximum density of an area to 7 dwelling units per acre.
Missing Middle Housing will help to strengthen the livability of our neighborhoods by
revitalizing underused land within the urban core, incrementally increasing density to a
point where it can support existing/future transit and services/amenities within walking
distance, and providing more affordable and varied living options.
2015 FBC Priorities – ranked by importance, as determined by the public
1. Facilitating higher density development/adding new residents to the downtown.
2. Fostering economic development/building the tax base for the city.
3. Balancing transportation modes/enhancing choices (ie. walk, bike, transit, vehicle).
4. Providing access to businesses, community attractions, and schools.
5. Supporting transit ridership through available parking (park n’ ride).
6. Providing ample and affordable parking.
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THIRD AMENDMENT TO DEVELOPMENT AGREEMENT
THIS THIRD AMENDMENT TO DEVELOPMENT AGREEMENT is made this ___ day of November,
2016 (the “Third Amendment”), by and between the CITY OF MUSKEGON, a Michigan municipal
corporation (the “City”), whose address is 933 Terrace Street, Muskegon, Michigan 49441, and PARKLAND
MUSKEGON, LLC, a Michigan limited liability company of 75 W. Walton Suite A, Muskegon, Michigan
49440, and PARKLAND MUSKEGON, INC., a Michigan corporation whose address is 75 W. Walton Suite
A, Muskegon, Michigan 49440 (collectively the “Company”)(collectively the “City” and the “Company”
may be referred to as the “Parties”).
RECITALS
WHEREAS, the Company and the City are parties to a certain Development Agreement, dated as
of September 4, 2007, as amended by a certain First Amendment to Development Agreement dated as of
March 26, 2013 (collectively the “Development Agreement”). Unless otherwise defined herein,
capitalized terms shall have the meaning given to them in the Development Agreement; and
WHEREAS, the Parties agreed on terms and the Muskegon City Commission approved a Second
Amendment to Development Agreement (“Second Amendment”), which was contingent upon the
Company receiving approval of amendment applications from the Michigan Economic Development
Corporation (“MEDC”) for previously approved incentives; and
WHEREAS, the aforementioned contingency has been met and the Parties desire to enter into this
Third Amendment to Development Agreement (“Third Amendment”) for the mutual benefit of the
Parties, to cure any default of the Company under the Development Agreement and Second Amendment,
provide for other obligations; and
WHEREAS, the Parties wish to further amend the Development Agreement and Second
Amendment on the terms and conditions set forth in this Third Amendment (collectively the
“Development Agreement”, “Second Amendment”, and “Third Amendment” are referred to as the
“Agreement”).
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. INCORPORATION OF RECITALS AND DEFINED TERMS. The above recitals are hereby
incorporated into this Third Amendment as if fully set forth herein.
2. COMPANY AGREEMENT. The following subsections in Paragraph 2 of the Development
Agreement are amended to read as follows:
2.1 Redevelopment of the former Hackley Bank Building, at the corner of 1st Street
and Western Ave. in downtown Muskegon, an 8 story structure constructed in
1916, to be renovated and adaptively reused as 47 market rate housing units on
floors 3 through 8, and commercial units on the 1st and 2nd level (and possibly
the lower level) (the ”Project”).
2.2 Unless otherwise amended by this Third Amendment, the performance of all
other undertakings set forth in this application.
3. SALE TO THE CITY. The Parties agree to initially use the City Parking Lot identified in
Paragraph 3 of the Second Amendment as a single large lot. However, if the Company determines that
its guest, residents, tenants and owners are leaving the Project due to parking inconveniences, the
Company may, with two (2) months written notice, inform the City of its need for parking restrictions and
the parking allocation procedure set forth in the Second Amendment shall be implemented. In addition,
the Parties agree to execute a ninety-nine (99) year lease for one dollar ($1.00) in lieu of the non-
revocable, appurtenant, perpetual and exclusive easement identified in Paragraph 3 of the Second
Amendment, however, such lease to provide the exact same benefits to the Company.
4. GARAGES AND ENTRANCE. Until the garages identified in Paragraph 4 of the Second
Amendment are constructed, the City may construct surface parking lots in the garage easement area for
use as described in the Second Amendment.
5. CLOSING. Subject to the other provisions of this Third Amendment, the “Closing” of the
transaction contemplated in Paragraph 3 of the Second Amendment will be held at a date and time agreed
to by the Parties, within thirty (30) days of execution of this Third Amendment or final approval of the
Neighborhood Enterprise Zone application by the City (as described in Paragraph 9 of this Third
Amendment), whichever occurs later. If the Parties are not able to agree on such a date and time, the
Closing will be at 2:00 p.m. on the 30th day, or the next business day if the 30th day is a holiday or weekend.
At Closing, Seller will deliver copies of the plans of the 24 units previously planned to be built on the
Property that is being transferred to the City.
6. CONSTRUCTION TIMELINE. The construction timeline outlined in Paragraph 9 of the
Second Amendment is amended as follows:
6.1 The Company shall begin pressure-washing or sand blasting the exterior of the
Project by November 15, 2016, or within two (2) weeks of the final approval of
the Neighborhood Enterprise Zone application by the City, whichever is later
(weather permitting).
6.2 The Company shall apply for building and construction permits by December 15,
2016, or within six (6) weeks of the final approval of the Neighborhood Enterprise
Zone application by the City, whichever is later.
6.3 The Company shall complete the exterior renovation of the Project by September
1, 2017, which will include replacing or repairing the exterior walls, windows,
panels, doors and entry ways of the Project, as more particularly described in the
attached Exhibit A, except for sections of the exterior that must remain open to
accommodate the interior renovations. Any exterior sections that are left
unfinished to accommodate interior renovations and the new exterior fire escape
shall be completed by June 30, 2018.
6.4 The Company shall complete the interior renovations of Floors 3 through 8 by
June 30, 2018, which includes construction of 47 market rate housing units. The
Company shall complete interior raw white box renovations of Floors 1 and 2 by
December 31, 2018. For the purpose of this Agreement, “raw white box” shall
include rough mechanical installation of rough fire suppression, rough HVAC,
rough electrical and plumbing for the space, as well as filling the large holes in the
first floor of the Project with concrete. It shall not include dry walling ceilings or
walls, adding new interior walls, plugs and outlets, light fixtures, or painting.
6.5 The City and its departments shall ensure all building and construction permits
and occupancy permits are issued in a timely manner and that no undue hardship
is placed on the Company to receive these permits (honoring 11/16/2015 Plan
Review attached as Exhibit B). The City shall also work with the Company to
ensure that the Project can be built according to the specifications of the City and
MEDC.
7. SPECIAL ASSESSEMENT. This paragraph replaces Paragraph 10 in the Second
Amendment. In a manner that will not create interest expenses or penalties for the Company, a special
assessment in the amount of four hundred thousand dollars ($400,000.00) will be placed in escrow in
November 2016 and applied to the December 2018 tax bill for the property located at 285 West Western
Avenue (“Special Assessment”); however, if the Company meets the conditions outlined in Paragraph 4
of this Third Amendment, the City will not exercise its right to apply and collect the Special Assessment,
and the Special Assessment will be discharged and deemed satisfied. The Special Assessment is in lieu of
the previously described $121,330 assessment identified in the Second Amendment. Nothing contained
in this provision admits the Company’s liability for the Special Assessment in the event this Third
Amendment terminates due to the Contingency in Paragraph 9 of this Agreement not being satisfied.
8. ESCROW DEPOSIT. Upon execution of this Third Amendment, the Company shall deposit
one hundred thousand dollars ($100,000.00) with the City to be held in escrow (“Deposit”). The Deposit
shall be released from escrow to the Company within ten (10) days after Company receives a Certificate
of Substantial Completion or a Certificate of Occupancy on the 47 units. In the event the Company fails
to meet the conditions outlined in Paragraph 4 of this Third Amendment, at no fault of the City, the
Company shall forfeit and the City shall apply the Deposit against the balance of the Special Assessment
outlined in Paragraph 5 of this Third Amendment.
9. LISTING OF COMMERCIAL SPACE. By February 1, 2017, the Company shall list the
available commercial space in the Project with a licensed broker in the State of Michigan. The Parties
acknowledge that the Company intends to either lease or sell the commercial space in the Project, and
any sale of the commercial space shall not be deemed a default by the Company under the Agreement,
or the Brownfield Development and Reimbursement Agreement dated August 27, 2012 (the
“Reimbursement Agreement”), as amended, nor shall such sale result in the loss of any interest to be
paid to the Company under the Reimbursement Agreement.
10. BROWNFIELD DEVELOPMENT AND REIMBURSEMENT AGREEMENT. The Parties entered
into the Reimbursement Agreement in which the Company is to receive reimbursement for certain eligible
activities. Subject to the allowable sale of commercial units on the lower level and the first and second
floors, outlined in Paragraph 9 above, in the event the Company sells the Project before the
reimbursement of the eligible activities is completed under the Reimbursement Agreement and the net
proceeds are in excess of six million six hundred fifty-eight thousand six hundred dollars ($6,658,600.00),
interest reimbursement to the Company shall automatically terminate. The Parties agree to seek approval
of an amendment to the Reimbursement Agreement from the Brownfield Redevelopment Authority to
increase the cap on eligible activities plus interest to $1,000,000. The City shall retain the right to pay off
the eligible activities early as is currently outlined in the Reimbursement Agreement.
11. RESALE OF THE BUILDING AND CITY PROFIT SHARING. Subject to the termination date
below, the Parties agree that in the event the Project is sold, and the net proceeds to the Company exceed
at closing (after selling commissions and closing costs) six million seven hundred thousand dollars
($6,700,000.00), then ten percent (10%) of the net proceeds exceeding $6,700,000.00 shall be paid to the
City of Muskegon. If any portion of the Project is sold as a condominium unit, the net proceeds (after
commissions and closing costs) shall not trigger the profit sharing defined herein, however, shall be
included in the measuring when the $6,700,000.00 threshold amount is reached. This provision in this
agreement automatically terminates without cost to the Company one year after the expiration of the
Neighborhood Enterprise Zone tax abatement.
12. CONTINGENCY. The obligations of the Company under the Agreement are contingent
upon approval of a Neighborhood Enterprise Zone designation by the City and approval of a fifteen (15)
year Neighborhood Enterprise Zone abatement application by the City and State of Michigan State Tax
Commission. The City agrees to work with the Company to seek approval from all necessary taxing and
governmental authorities.
13. MISCELLANEOUS.
13.1 Entire Agreement. This is the entire agreement between the Parties regarding the
subject matter of this Third Amendment. It may not be modified or amended except in a written
amendment executed by both Parties.
13.2 Construction. The terms of this Third Amendment amend and modify the
Development Agreement and Second Amendment as if fully stated therein.
13.3 Ratification. All other provisions of the Development Agreement and Second
Amendment not specifically modified by this Third Amendment are preserved, confirmed and shall remain
in full force and effect.
13.4 Counterparts. This Third Amendment may be signed in counterparts and
delivered electronically or by facsimile, and each such counterpart and delivery will be a binding and valid
execution and delivery of this Third Amendment.
13.5 Binding Nature. This Third Amendment shall be binding upon the Parties and their
subrogees, successors, and permitted assigns.
13.6 Non-Transferrable. The Parties may not sell, assign or transfer their obligations
under this Third Amendment, except with written consent of the other. Construction must be completed
by a construction company hired by Parkland Muskegon, Inc.
13.7 Legal Counsel. Each of the Parties had the advice of legal counsel (or an
opportunity to obtain the same) before entering into this Third Amendment and it is to be interpreted as
if it were mutually drafted.
13.8 Authority. Each of the undersigned who execute this document on behalf of an
entity represent and warrant that they are authorized by the appropriate agents, members, managers,
directors or stockholders of the entity for the purpose of binding the entity to the obligations of this Third
Amendment.
THIS THIRD AMENDMENT IS HEREBY EXECUTED ON THE DATE IDENTIFIED ABOVE.
CITY OF MUSKEGON, a Michigan municipal
corporation
By: ________________________________
Its: __________________________
PARKLAND MUSKEGON, INC., a Michigan
corporation
By: ______________________________
Jonathan Rooks
Its: President