City Working Hard On Calder Hotel

September 3, 2002
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GRAND RAPIDS — City officials and developers of a proposed hotel for Calder Plaza met again last week to iron out a deal they can present to city commissioners Sept. 24.

Blue Bridge Ventures, a local real estate development firm, and Houston-based Hines Interests LP want to build a 24-story convention-center hotel on the plaza, which is home to City Hall and the Kent County Administration Building and across Monroe Avenue from the new DeVos Place convention facility that will open in two years.

City Manager Kurt Kimball and his staff have been meeting with the developers since July, and he characterized the series of talks as earnest.

“We have been working very hard with them. We’ve been spending a lot of time, the whole team of my staff and the team of theirs, negotiating and conversing at a furious pace,” said Kimball last week.

“This deal is not as complicated as the one proposed a couple of years ago that involved even more buildings. But we hope to bring forward something to the City Commission in the reasonable near future that they can chew on,” he added.

Kimball said he will to do that in three weeks at noon on Sept. 24.

“That is the target. But I haven’t decided whether we will put it on the actual agenda for the commission or treat the commissioners to lunch on the subject in a more informal way, and then follow that up, if the commission is interested,” he said.

The city and county would have to vacate their buildings and relocate to other sites downtown for the project to go ahead. City Hall would be razed for the hotel, while the county building and the Calder stabile would be integrated into the development.

But city and county officials have told the developers that tax dollars can’t be used for the moves, and operating costs can’t be higher at the new sites than these are now on the plaza.

Kimball said there are questions that still have to be answered before a binding option on a buy-sell agreement for City Hall and the plaza’s underground parking ramp can be written.

Some questions involve a new City Hall, such as will it be a good fit, will it offer enough space and will it be cost effective. Others concern parking, such as how will the city recoup the lost revenue from the ramp, nearly $750,000 last year, and how many public spaces will be available there for events at DeVos Place.

“That is a thorny issue,” said Kimball of the public parking matter.

The property taxes and personal property and income taxes that a downtown hotel would generate are attractive to the city, especially at a time when revenue is down and the city is facing a deficit. The developers have said the hotel would provide 350 jobs and about $4 million in property taxes over 15 years for the city’s SmartZone project.

Still, Kimball felt the main focus should be on what it will cost the city to move — which is supposed to be nothing.

“I know that the proposors are working furiously to try and arrange for that to be a no-cost item for the city and for the county. That’s a tall order, I think,” he said. “But we will see how we do when we present it.

“I think what is going to happen on the 24th is a presentation on where we stand, and we will probably have some draft documents. We’re working on an actual purchase agreement that would be the actionable item.”

If some think that the city isn’t taking these negotiations seriously, they would be wrong. Kimball said that the city replaced one of the two ailing air conditioning units located on the roof at a cost of $1 million, but has held off replacing the other one.

“Why? Because I think it is uncertain on where we are going to end up,” he said. “I didn’t want to be plowing another million dollars into the building if, in fact, down the road in the not-too-distant future we’re going to be leaving.”

Kimball remarked that if a buy-sell agreement would include escape clauses for both sides in the event a problem arises during the due diligence period.

“We’re trying to be pretty clinical about this, in terms of not being wildly for it or fundamentally opposed to it, but to just surface it as a service to city commissioners,” said Kimball of the negotiations.

“At this point, I think it’s a 50-50 chance that they would say, ‘Yes,’ which takes us to the next step. But that doesn’t necessarily mean that City Hall would move anytime soon.”

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