The Big Deal Pay To Stay

May 15, 2002
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Grand Rapids Business Journal reporter Anne Bond Emrich this week leads a four-part series on the top stock picks for this year, a year in which David J. Wagner and his Old Kent Bank stockholders would be top picks under the word “prosper.” That said, one of the best deals coming into 2001 was that handed to Varnum, Riddering, Schmidt & Howlett attorneys, especially those among the ranks of firm principals, headed by XXXX Williams III.

Imagine this: The firm’s decision last century to relocate its growing stable to developer Robert Grooters’ Bridgewater Place was the make-or-break proposition for the first tower. Grooters is no longer synonymous with Bridgewater, nor is his backer New York Life, nor is there any continued talk of Tower II. If readers believe that all that went up – or down – as a result of Bridgewater was dicey, consider that which almost went down.

(Loud) naysayers back when were especially miffed that the firm would move from the “real” downtown, especially on the unsettled west side of the river, way up there. North Ottawa and North Monroe, however, have since prospered, especially as Spectrum Health continues its march down the hill in and around the renovated old Berkey & Gay building, and building rehab king Sam Cummings continues development even into the Belknap neighborhood. The charge north may be the lingering legacy of Grooters’ Bridgewater.

Recall that DP Fox owner Dan DeVos had a vision for a new high-rise office complex smack in the center of downtown, on Ottawa, between Pearl and Lyon streets. He and partner Ken Ellis, however, shelved the plan last year. Not long after Varnum announced its new – long-term -- lease with the new Bridgewater owners. Now that everyone has returned from extended holiday breaks, so, too, has talk of The Deal.

The Varnum group was expected to lease the first four floors of the DeVos-Ellis tower, right back on the original downtown four corners. But the deal from Bridgewater included leasing “incentives” beyond square-foot rates. Signing bonuses were offered all ‘round. The least senior of the attorneys had an extra $10,000 in year-end cash, and senior partners were said to have at least another zero added – in cash payments.

Signing bonuses evidently were not equitable. One might ask whether the resulting lease terms for other Bridgewater tenants might have been the last straw for Food Quest owner Doug Blackmore, who opened Rembrandt’s at Bridgewater on the heels of renovating an additional two downtown properties, Grand River Saloon and Rhythm Kitchen Café. Blackmore sold his business (also including Gutheries on 44th Street) in the latter half of Y2K. So marks the city’s once-largest law firm as one with say and sway.

  • Meanwhile, in the real downtown, the cost of doing business is marked by additional increases in power costs. Even as GRMAYOR last week in his “State of the City” speech heralded the significance of high tech business in the metro area, the grids were given a zap by the continued rise in natural gas costs.

The impact of those increases is sure to play havoc with the tax assessment proposals for the Downtown Improvement District. The DID group has sustained one controversy after another in its mission to sustain improvements in the core entertainment and business district.

Cost increases for natural gas fueling the generators in the steam plant have hiked bills more than 50 percent from Market to Michigan Street, on the county’s “steam loop system.” Business owners on the “snowmelt” system have seen the city add another $500,000 to budget, a cost which is split between the city and property owners.

  • The un-profitability of ice rinks is legendary, according to studies of the greatest scrutiny, which come directly from experts at University of Michigan. So when Walker city officials last week said a proposed second sheet of ice will support itself, it certainly caught the attention of the ice kings running Southside, Michigan National Ice Center, and those at Belknap Griffins Ice House, where discussion of a second sheet for the league leaders was iced. The proximity and profitability of The Summit, this side of Lansing, also is noted in this discussion, as Lansing Ice Arena now struggles to keep the boards up.

In the rumor rooms it is said Delta Plex may be serious about raising hourly rates to $250 to make it profitable to put up the boards and lay the ice.

Those counting ice time pennies are curious about Walker’s accounting, believing it a tale of hide-and-seek. They say the fiscal year end 1999 audit showed just less than a $400,000 deficit on the city’s ice center. But the end of fiscal Y2K put debt at $7,000. The ice men speculate that when payments on the principal came due along with the interest payments on Walker’s current facility, the accounting was moved from the “enterprise” fund to the general fund – where no service (police, fire, water, sewer) pays for itself. City employees are evidently referring only to operating costs.

Walker city employees estimate a second sheet of ice and fitness center addition will cost another $4.7 million build, and an additional $400,000 in operating costs.

There’s no word on the projected cost of ice time.

Some of those gathering in the rumor room complain about the whining and question whether such costs really outweigh any drive time complaints. These guys remember having to drive to Detroit suburbs – not Holland – just 10 years ago. (One could ask Kentwood/Boston Bruins’ Mike Knuble to share his training strength memories.)           

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