Shaw Walker redevelopment: staff outline affordable‑housing agreement and community benefits tied to transformational brownfield plan

Jay Ekholm, director of development services for the City of Muskegon, walked commissioners through two companion documents negotiated for the Shaw Walker redevelopment project: an affordable‑housing agreement required for transformational brownfield designation under Michigan law and a voluntary community benefits agreement (CBA) staff requested the developer consider.

Ekholm told commissioners the affordable‑housing agreement responds to an amendment to Public Act 381 (the Michigan Brownfield Act) that makes state income‑tax capture available for transformational brownfield projects only when the municipality and developer agree on local affordable‑housing commitments. He said the key terms include a 20‑year affordability period that begins once the rental portion of the project is leased up (the staff draft anticipates commencement in 2028) and a rolling annual average requirement that the developer maintain an annualized average of 20 rental units at or below a percentage of area median income (AMI) as defined by MSHDA; the transcript does not specify the numeric AMI threshold in the draft agreement.

Ekholm described enforcement language the city negotiated: the agreement requires annual reporting and five‑year audits, gives the city cure periods for deficiencies, and allows liquidated damages if units are priced above the agreed rent caps. He said the remedy includes remitting up to twice the excess rent collected to the city so the city can remit overages back to affected tenants without requiring tenants to be parties to the enforcement action.

Staff also summarized a voluntary community benefits agreement negotiated with the developer, Parkland Properties. That CBA is not a statutory prerequisite for the transformational brownfield plan but is a city request to secure benefits beyond the project parcel. Highlights include: • Workforce training: the developer will formalize a workforce training agreement with Muskegon Public Schools and Muskegon Community Education Center (MCEC) to provide hospitality workforce opportunities for at least five years; staff said talks between MCEC and the developer are underway. • Park and neighborhood capital: the developer has agreed to pay for one capital improvement at Hartshorn Marina Park and one capital or public‑asset improvement for the NIMS Neighborhood Association; each item must be defined and mutually agreed upon and installed within two years of the agreement’s effective date, after which the city or the neighborhood association will accept ownership and maintenance. • Infrastructure commitments and cost sharing: the city agreed to evaluate abandoning or rerouting a 12‑inch water main under the Shaw Walker parcel (abandonment is lower cost if feasible); the city will maintain existing storm and sanitary mains unless excavation is required; the city also agreed to perform a roadway realignment consistent with the approved PUD if necessary. Consumers Energy line relocations were negotiated as a cost share: the city would cover 75% up to $200,000 and the developer 25% (and the developer would cover any remaining amounts beyond that cap).

Ekholm emphasized practical constraints: the developer’s pro forma, MEDC underwriting and state rules limit how many units can be restricted at below‑market rents without undermining the financing that makes the project feasible. Commissioners pressed staff on local hiring, apprenticeship pathways, the number of restricted units and enforcement mechanics. Ekholm and staff said the number of restricted units — the rolling annualized average of 20 — reflects the developer’s pro forma and MEDC underwriting; staff argued increasing the number of restricted units beyond the agreed level could cause the project to fail financing reviews.

Numbers discussed in the meeting: • Total units: staff reported a project total of 547 new units and renovations, including 432 new rental apartments (31 studios, 347 one‑bedrooms, 44 two‑bedrooms and 10 three‑bedrooms); staff also presented a figure of 580 total units when combining new construction and renovated units in some counts — the exact breakdown was discussed during Q&A and may differ by exhibit or phase. • Affordable unit target: a rolling annual average of 20 rental units must be maintained at an AMI threshold defined by MSHDA in the agreement; staff said that average is the level MEDC underwriting will allow without undermining project debt service.

Next steps and context: Ekholm said the transformational brownfield plan and the two agreements will be before the commission for votes the following day; the TBP also requires approval by the Michigan Strategic Fund/ MEDC and is subject to state funding availability. Commissioners asked staff to be prepared to explain pro‑forma assumptions, enforcement timelines, MSHDA rent limits used in the agreement and how the city’s brownfield financing timeline and deferrals interact with the proposed city commitments. Ekholm said staff negotiated a timing structure that, in consultation with the city’s brownfield consultant, should preserve more city revenue over the life of the plan than alternative structures that simply placed some items into the TIF table without a phased deferral.