(Community Matters 194) Turning the Former Battle Creek Kmart Site into 80 New Homes

Joe Sobierakski returns from Battle Creek Unlimited to talk about the 8-year journey of turning an vacant site into new housing and why the financing is often the hardest part. 

He also discusses the recent WACO Aircraft closure at the Battle Creek Executive Airport - and what types of aviation tenants they hope to fill that void. 

Episode Resources

Battle Creek Unlimited Website 

ABOUT COMMUNITY MATTERS
Former WBCK Morning Show host Richard Piet (2014-2017) returns to host Community Matters, an interview program focused on community leaders and newsmakers in and around Battle Creek. Community Matters is heard Saturdays, 8:00 AM Eastern on WBCK-FM (95.3) and anytime at battlecreekpodcast.com.

Community Matters is sponsored by Lakeview Ford Lincoln and produced by Livemic Communications.

Transcript

Welcome And Summer Check-In

Joe Sobierakski 0:01

Community Matters Saturdays at 95.3 any day at Battle Creek Podcast.com. It's a service of Lakeview Ford Lincoln. Richard Piet here. Joe Sobierakski's back with us now from Battle Creek Unlimited. Hello, Joe. Hey Richard, how are you doing? We're doing great. Summertime, you know, this is my weather right here. Absolutely. It's beautiful out.

From Old Kmart To New Housing

Richard Piet 0:24

So let's talk about what's new. You guys were uh among those shoveling dirt for the first time at the blue light, the old Kmart site where living situations will be happening. Uh, probably not all that far in the future. Battle Creek Unlimited was part of this process.

Joe Sobierakski 0:42

Yeah, we've been a part of that process for gee, uh over eight years. I think it dates back to when the actual old Kmart facility was there. Yeah. We received uh some grant dollars from the Kellogg Foundation and we tore it down and just kind of got the site ready for its next use. And um not too long after it came down, we started soliciting or pushing the property for for some housing. And developer came along, Hollander Development out of Kalamazoo, which is now has a partnership with Edison Community Partners, and it was about an eight-year journey when you talk about chasing the tax credits and putting the capital stack together. Uh, and so it's been a long time coming.

Richard Piet 1:24

It seems like over that period of time we've had more recognition of the challenges of housing here. If this were to start today, would you think it would have gone faster?

Joe Sobierakski 1:36

Maybe. Yeah, I would say maybe. I think we self-learned and self-taught ourselves here locally and raised some of the issues to the state level. I mean, really, Battle Creek had not had a what they call lie tech tax credit, which is low income housing tax credit, which is really the power behind putting some of these projects together in well over 30 years. And when you started to peel back the layers of, hey, we're a community of 52,000, we're right on the threshold, we share a workforce, some of their grading criteria to get those, we're kind of skewed against Battle Creek. So some changes have been made so that that we can be a little bit more competitive.

Richard Piet 2:19

Is this what you imagined when you started that you'd be helping facilitate these kinds of projects? I think of this, I think of the hotel. You know, I th was that the original thought? I think maybe it might have been, but it might not have been the priority.

Joe Sobierakski 2:37

Yeah, I mean, uh I wouldn't say we we thought we were gonna be as involved, but knowing when you start to peel the layers back that you know there's gonna have to be some sort of mechanism or some sort of organization inserting itself into the process to to make it go, that's that's how we how we got involved. It's there's an issue and it needs to get done. We're gonna insert and there's no other option, we're gonna insert ourselves into the uh equation.

Richard Piet 3:05

Well, and you know what happens when you do that, uh you get asked to do it again. So can the Yes.

Joe Sobierakski 3:10

I I have learned that, yes. Yes, can this be replicated? Absolutely. And like I said, we're we're learning along the way.

Richard Piet 3:18

So there could be more of these uh situations in the future, but what is this 48 units or something? Uh that I seem to remember.

Joe Sobierakski 3:25

It's 80 units. This is phase one. It could be uh there's enough space there for multiple other phases.

Richard Piet 3:32

And that's another point worth mentioning, I guess, is that you know, 10 years ago, Battle Creek Unlimited might not have been involved in residential development like this. This is different, right? Absolutely. Yeah.

Airport Shakeup And New Prospects

Richard Piet 3:44

So uh not long ago, Joe, we had the uh announcement from Waco Aircraft they'd be closing up and leaving the Battle Creek Executive Airport. What kind of uh challenge does that give us?

Joe Sobierakski 3:56

It's disappointing. Uh it's kind of twofold. Uh disappointing to see uh Waco close. I know it was very special to Battle Creek uh based upon you know the type of airplanes they made, the facility there with the restaurant, and and and really unfortunately the employment that went along with it. But I would say stay tuned. I think uh a facility of that size and magnitude that is next to the airport, or what they like to say airside, the individual that owned it put a ton of capital into it, and those things just don't sit around the country, so it's it's gonna provide uh potentially opportunities, and there are already uh folks looking at it. It's a world-class facility, so hopefully somebody comes along that has some good plans and and can hire those individuals back or a portion of them, but I don't think the facility is gonna sit too long.

Richard Piet 4:49

Does the whole drone focus come into play here that that maybe an allied industry or something along those lines somehow finds this attractive? I would say so, yes. It's kind of like you're you're reading our minds. Oh my gosh, I didn't know I had such power. Okay. Well, that's uh interesting to contemplate that this is an example of what you would like to have happen, right? You find a new kind of sector that finds this attractive, you make it possible for them, now the word gets out.

Joe Sobierakski 5:25

Right. So I'll take it one step further. You know, if a drone, somebody from the drone sector ends up there, great. Uh, it kind of fits into our strategic plan. If somebody else uses the facility for an aeronautic use and has jobs associated with it, that's great as well. But I'll kind of go back to even what we're doing with the spec buildings on I-94. You know, companies will always come and go. Obviously, you want them to come and stay, but there's there's always going to be changes in the market and the dynamics. And just by virtue of having inventory of modern facilities, and in this case, a facility with hangers that has apron that's connected to the airport, that's airsite, having that inventory is going to create an opportunity.

Richard Piet 6:07

All right. Well, we'll be curious to see how that plays out over the uh coming months. So here we are in the summer of uh 26. How far ahead do you look in terms of strategy and goals and uh and potential for new development? Uh, the do you look from now till the end of the year? Are you looking beyond

Planning To 2030 With Clear Targets

Richard Piet 6:31

that?

Joe Sobierakski 6:31

Both we take longer looks. Our last strategic plan, which was adopted two years ago, which called out certain sectors, and it really talked a lot about community development, which we talked about earlier with the housing, it really set a date of 2030. So we're taking a longer view, a longer approach, and a little bit more laser focused on a couple of the industrial sectors.

Richard Piet 6:59

So by 2030, what would you like to look back and say, look at what we did? I mean, what what would you say is a success in that?

Joe Sobierakski 7:09

I would say the drone initiative, uh, it's up and operational, and we've landed a company or two, and people are looking and saying, you know, Battle Creek was really ahead of the curve there. I would say that on the primary job creation. On the community development front, I would say we would have over a thousand new units, whether that's a single family home or an apartment complex, over a thousand units in addition into the market and and others going and some more downtown vibrancy and storefronts filled, and really Battle Creek turning the corner on how uh not only we view it locally, but how the outside and the regional uh surrounding region views Battle Creek.

Downtown Momentum And Developer Reality

Richard Piet 7:54

Mm-hmm. Let's talk about the downtown for a second. I presume that the new development of late helps give fuel to others who may be interested. And you can point to Uproot and New Holland and uh some of the other development that's gone on down there and say, look, it's it's happening.

Joe Sobierakski 8:15

Absolutely. And I would say, you know, the average person probably doesn't see it because they're not in it every day, but at Battle Creek Unlimited, when you take a step back, we we get contacted all the time. There is activity of developers and and others looking at this market that wouldn't have looked at it before because they see these things, they see the momentum that's building.

Richard Piet 8:39

When people call you and say, you know, thinking about downtown, what are they asking for?

Joe Sobierakski 8:45

Well, they want to know what the opportunities are, they want to know what what spatial opportunities are, what are our plans, you know, what do we see is needed, how do they fit into that? And then really, most people, none of that really scares them away. It's when you start putting the capital stack together to make it pencil out, and that's where I would say we've learned and we've been pretty successful, and it just takes time to keep that developer interested because they might not be able to just pull the trigger like they were used to in other markets, because I like to say we're a market in transition. The capital stack is the same in another community, but it might not appraise exactly the same because we're in uh a market in transition, and so it creates a gap. So then you gotta you gotta search out the tools and the resources and keep them engaged and how to fulfill it.

Richard Piet 9:38

I think what you're saying is they're not scared by uh a space that's maybe been vacant for a while and they know they gotta do work there, they expect that. Correct.

Joe Sobierakski 9:48

Yeah. It's just got to pencil out, you know. Banks view it one way, uh, investors view it uh another way. Uh locally we view it one way, and you you have to get all of those pieces aligned, and getting those pieces aligned takes time.

Inflation, Interest Rates, And Staying Committed

Richard Piet 10:03

Is the overall rate of inflation? I mean, we we as consumers sit around, we know we're paying more for things. Does this affect these kinds of projects?

Joe Sobierakski 10:13

100%. Uh you look at the the rate on commercial notes, it costs more right now for folks to borrow money. Um, that's not necessarily directly tied to your question of inflation, but uh the rates are high because of inflation. Yeah. And it also the material, the labor, everything continues. So your rates or your cost of capital to borrow are higher, and the raw goods, material, and labor going into the project continue to arise as well. So you get those two dynamics working against you, just creates a larger gap.

Richard Piet 10:51

So the slog is maybe a little bit more of an incline than it had been. Do you see interest drop out because of that? Or be just no, it's gonna be more.

Joe Sobierakski 11:01

I don't see a whole lot of interest dropping out because of it. I think that's because of the momentum that's been built, you know, not just with Battle Creek Unlimited, but you know, we've had a lot of help from the Kellogg Foundation. People see it, they understand it, and and really the developers you're working with aren't unfamiliar with this type of situation because they saw it happen elsewhere.

Final Thoughts And Thanks

Richard Piet 11:22

All right. Joe Sobierakski, Battle Creek Unlimited. We appreciate the updates. Thank you.

Speaker 11:26

Thank you, Richard.