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Jumbo Investments Revitalize Grand Rapids

Family fortunes spur building boom, population growth

July 18, 2007 | By Keith Schneider
Great Lakes Bulletin News Service

  A number of wealthy Grand Rapids families have invested heavily in their city’s downtown, helping the town gain population—a rarity in Michigan.

GRAND RAPIDS, MI – This city’s elite business leaders and financiers, an unusually collaborative group of immensely wealthy families, have spent a decade combining their capital and imaginations to turn a worn industrial economy into a showcase of technology, research, education, housing, and entertainment.

But even considering the investments since the late 1990s in new academic campuses, a civic arena, a convention center, new parks, a transit center, and more than 2,800 new units of downtown housing, Grand Rapids has never experienced anything near the concentrated magnitude of the medical research, training, and patient facility construction now occurring on Health Hill.

From the summit of the hill on the city’s north end, and stretching roughly half a mile in both directions along Michigan Street, the city’s major families and medical institutions have teamed up to build a new medical school, a children’s hospital, a biomedical research center, a cancer treatment center, and two medical treatment and office buildings. They also are constructing an underground parking deck that will span seven level, hold 2,300 cars, and cost $30 million.

All told, say construction managers, nearly $1 billion is now being spent here to complete 1.2 million sq. ft. of new buildings. By 2010, when construction is completed, those buildings, several of which were designed by world-renowned architects, will provide enough space to treat thousands of people a day and employ 5,000 people, 2,500 more jobs than exist now.

A Nation-Leading Medical Construction Program
Construction authorities say that just a handful of similar medical development projects rival Health Hill in scope and cost. The University of Kentucky is building a $450 million hospital at its campus in Lexington, part of a $2.5 billion, 20-year project to build what the university calls "the medical campus of the future." Oregon Health and Sciences University just opened a 16-story, $160 million Research Clinic Building, the first of three large buildings the university is planning for the new South Waterfront District of Portland.

The development of Health Hill, which has occurred almost entirely outside of state oversight and funding, is a model of what is possible in Michigan when vision, creativity, and financial strength are joined—all resources in abundance here but in short supply in Lansing, the state capital. In Grand Rapids, say health executives and city officials, the focused investment in one neighborhood and in two disciplines—cancer research and patient care—essentially form the next big thought for sustaining the economy and culture of this rebounding city of more than 193,000 residents, Michigan’s second-largest.

"We’ve been though all kinds of transition," said Eric DeLong, the deputy city manager. "We started here with lumbering and ran out of trees. We developed furniture and then manufacturing. With that came finance, real estate, and banking.

"Now we're claiming our place in the new economy with applied research, medical care, patient treatment," Mr. DeLong added. "These are new, intellectually driven sectors. Health Hill is a concentration of intellectual capacity, and that is what we need in this era."

On an early July afternoon, Health Hill was a din of growling front-end loaders and bulldozers excavating earth from two enormous holes, and whining overhead cranes hoisting masonry and material to the tops of the steel bones of three other buildings. Bill Rietscha, the vice president of facilities at Spectrum Health, the region’s largest provider of cancer treatment, which is involved in financing and constructing three of the five new structures, pointed east and west along Michigan Street.

"This," he said, "is where we are creating the next 50 years of health care infrastructure for west Michigan."

On the south side of Michigan Street, Spectrum Health is building the 14-story, $250 million, 440,000-square-foot Helen DeVos Children’ Hospital, designed by London-based Jonathan Bailey Associates, and scheduled to be finished by December, 2010.

A block away, on Division Street, the Van Andel Institute, an increasingly prominent biomedical research organization, is adding a 240,000-square-foot, $178 million, five-level addition to the dramatic, 160,000-square-foot, $77 million, Rafael Vinoly-designed research building it opened in 2000. The new wing opens in December 2009.

On the north side of Michigan Street, the foundation of Michigan State University’s $70 million, 125,000-square-foot medical school is taking shape, financed in part with gifts from Spectrum Health and the Van Andel Institute. It opens in August 2010. Next to the medical school, Michigan Street Development—a collaboration between the DeVos family, one of the city’s most prominent, and Christman Constructio—is building a 125,000-square-foot, $78 million medical office building, hotel, and research laboratory. It opens next April.

An existing office building will be torn down next summer, once the second building is finished, and replaced with a similar 125,00-square-foot office tower. And next to that, Michigan Street Development and Spectrum Health are building the Lemmen-Holton Cancer Pavillion, a 284,000-square-foot, $100 million patient treatment center that includes an unusual jungle-like atrium. It opens in June 2008.

Interested Investors
Though the Health Hill construction program is immense, even by this city’s standard, its major financiers and broad scope are familiar to residents here. "We’re fortunate to have the kind of people who care about this stuff," said Rick Chapla, vice president of The Right Place, a non-profit economic development agency here.

Indeed, during the 20th century Grand Rapids fostered the development of enormous family fortunes in furniture manufacturing—including those of the Steelcase and Herman Miller companies—as well as in home product sales, Amway, food and consumer goods retailing, Meijer, and a good deal of oil and gas development, insurance, and banking.

Almost all of the venerable families chose to stay in this midsize cosmopolitan city close to Chicago and Detroit, where the fishing in the Grand River and nearby Lake Michigan is excellent. Led by Rich and Helen DeVos, Jay and Betty Van Andel, Fred Meijer, and Peter Wege, the city’s wealthy invested over $1 billion since 1990 in various urban projects, including the $77 million Van Andel Arena in 1996, the $56.5 million downtown DeVos campus building for Grand Valley State University in 2000, the $220 million DeVos convention center in 2003, and a $55 million art museum.

All of this investment has had a profound effect on the city: Grand Rapids was one of just two major Michigan cities to gain population in the 1990s. During the past decade, the city’s income tax revenues more than doubled, to $59 million annually. From 1992 to 2005, according to city figures, taxable property values nearly doubled, to $8.7 billion; annual median household income rose by more than $14,000.

Even before the latest burst of construction, Health Hill had already been the focus of investment by the city’s families. Mr. DeVos and Peter Cook, another important financier, helped Grand Valley State University build a $57 million Center for Health Sciences on Michigan Street in 2003. Fred and Lena Meijer helped Spectrum Health build a $137 million, nine-story cardiac care center that opened in November 2004. And Jay and Betty Van Andel built the medical research institute that bears their name, and invested enough in the endowment to finance most of the institute’s $30 million budget.

Arthur S. Alberts, a cell biologist and senior scientific investigator at the Van Andel Institute, took visitors on a tour of the state of the art laboratory. He explained that he was raised and educated in San Diego and remembers when the Salk Institute for Biological Studies and the Burnham Institute for Medical Research weren’t nearly as well regarded or as central to San Diego’s economy and reputation as they are today.

"You can feel that same potential here," said Dr. Alberts, who oversees the Laboratory of Cell Structure and Signal Integration, one of the Van Andel Institute’s most productive research teams. "This city is building world-class research programs and facilities. People come from 19 counties to work here. When I interviewed here in 1999, my familiarity with Grand Rapids was non-existent. Today, people know. And when they come here they feel like pioneers."

Keith Schneider directs program development at the Michigan Land Use Institute. A version of this article was in the July 11, 2007 edition of The New York Times. Reach him at keith@mlui.org. Read his blog at http://www.modeshift.org/.

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